Green fund chief: Stop bickering over a few billion dollars

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Samy Ben-Jaafar says climate markets should aim to grasp at least five per cent of the global market

A Green Climate Fund (GCF) director has accused climate markets of lacking vision and bickering over a few billion dollars, when they should be aiming to grow a market worth tens of trillions.

Samy Ben-Jaafar, private sector director of the GCF, said climate finance and bond markets should be seeking to capture five per cent of the global market share, equal to about $13tr per year.

"It really astonishes me that people are arguing did we do $62bn or $66bn," he said on the sidelines of the COP21 Paris climate change talks earlier this week. "People are getting excited over $60bn of climate finance bonds and are saying we have traction. That's not even the budget of one bank's bonds."

The GCF is a key player in delivering on the international pledge for rich countries to mobilise $100bn per year by 2020 to help poor countries tackle the impacts of climate change and invest in low carbon technologies.

But a major row has broken out during the past week, with China and G77 countries accusing industrialised nations such as the EU and USA of trying to dodge their financial commitments. Countries have also been arguing about how to measure progress to the $100bn goal, with India, China and Brazil dismissing the findings of a report by the think tank OECD, which showed climate finance reached $52bn in 2013, rising to $62bn in 2014.

Jafaar said green markets needed to be more aggressive in their approach, targeting market share rather than a monetary value.

"The heart of the problem is vision," he said. "I hear $100bn, I hear [about a] $500bn gap, and I'm thinking there's a $250tr global balance sheet.

"Any self-respecting private sector entity wants a five per cent market share of whatever it does. And so five per cent market share of $250tr stock is $13tr.

"So to catch up we need to book £13tr and then capture five per cent of all new flows. Those are the numbers we should be talking about."

However, Bill Rogers, managing director of the UK Green Investment Bank, said the lack of investable projects was also a block to scaling up climate finance.

"It's more the projects than the capital," he said. "When we first opened and put a sign on the door saying we had £1bn bring your projects, it wasn't that easy.

"You get a variety of projects coming through the door and so actually it is very important to have the people there who can go and work with the entrepreneurs and the sponsors to turn those ideas and projects into something that's investable."

He also revealed that the UK Green Investment Bank's first international loan is likely to back an Indian solar deal which sells power to commercial and industrial customers.

The investment will be funded by UK Climate Investments, a £200m joint venture pilot project set up by GIB and the UK government. He said the deal was set to be announced in the next three months.

"We're pretty optimistic about the potential to have the same impact there that we've had in the UK," he said.

This article is part of BusinessGreen's Road to Paris hub, hosted in association with PwC.

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