Thank you Dr. Ghosh for the introduction and thank you to FICCI for inviting me to discuss such an important subject.
It is a pleasure to be in India again. The UK and India have a strong relationship and nowhere is this more clear than on energy and climate. The UK is the biggest Foreign Direct Investor in India’s energy sector with BP’s partnership with Reliance.
During Prime Minister Modi’s recent visit to the UK our countries issued a joint statement on climate change and energy, and we signed MoUs on power and renewables and an MoU between the UK and the Indian Department for Atomic Energy to encourage joint training and experience sharing on civil nuclear with the Indian Global Centre for Nuclear Energy Partnership.
I’m delighted to be back in India so soon after the signing of the historic climate change agreement. The UK and India worked closely together to help reach the agreement in Paris and I would like to congratulate India on the role it played. I can’t say strongly enough how pleased I am that the world came together and took this historic step forward with, for the first time ever, almost 200 countries committing to action.
I would like to cover three points today. First is how the Paris agreement is spurring the mobilisation of climate finance. Second, the role of public and private climate finance. Third, examples of work underway to deliver a step change in the scale of climate investment.
Paris and climate finance
The Paris agreement itself was the single most important act to spur the mobilisation of public and private sector climate finance. It sent a critical message to the world, to businesses, investors and citizens, that the future is low carbon.
It is that message, that signal, which has the potential to mobilise finance on the scale needed.
We saw it starting to happen as COP 21 drew closer with commitments to investing billions of pounds in the low carbon economy from the largest companies and investors around the world.
For example, nearly 120 companies have now signed the Montréal Carbon Pledge and the Breakthrough Energy Collation’s members committed private capital to develop early-stage technology coming out of mission innovation countries. This represents real, transformational action which will have impact on the ground in countries, cities and communities around the world.
The Paris agreement marks a clear turning point towards a sustainable and low carbon future. And now is the time to seize that opportunity.
Public and private sector climate finance is needed
Climate Finance from a wide variety of sources, including public and private, is needed to help developing countries take actions to mitigate and adapt to climate change.
In Paris developed countries not only reaffirmed their existing commitment to jointly mobilise $100 billion on climate finance per year by 2020, and they have extended that commitment to 2025.
The UK is fully committed to helping mobilise this amount and we want to see the Green Climate Fund capitalised this year and operational as soon as possible.
Since the $100 billion commitment was made in 2009, the UK has committed over $6.4 billion of climate finance to help the world’s poorest adapt to climate change and promote cleaner, greener growth.
And in September 2015 our PM announced a significant uplift, committing a further £5.8 billion ($8.3 billion) over the next 5 years.
So far our climate finance spend has improved 15 million people’s ability to cope with climate impacts as well as help avoid 23 million tonnes of GHG emissions
In India, UK climate finance is making big investments in through bilateral and multi-lateral programmes. It is also funding technical assistance on energy efficiency, renewable energy and climate resilience.
For example, the UK contributed $210 million to the $775 million India programme of the Clean Technology Fund. This money is being used to finance many of the solar parks and transmission lines being built in India.
Our contributions to the Global Environment Facility, have helped fund projects like the $200 million Rajasthan Renewable Energy Transmission Investment Programme and the $100 million Himachal Pradesh Environmentally Sustainable Development Policy Loan.
The importance of private sector finance
While public finance does and will continue to play an important role, it alone cannot bring about the transformation required for climate resilience and staying below 2°C. This is why it is important to use public money to mobilise private money.
Through the International Climate Fund, the UK is catalysing private investment through a range of innovative and transformational projects.
Through our £51 million contribution to the Climate Public Private Partnership Programme (CP3) we are helping bring in a number of Institutional Investors as co-investors. These funds are run on a strictly commercial basis by professional fund managers. Projects funded include renewable energy, energy efficiency and waste management projects.
We have invested £200mn to support the international pilot of the UK’s Green Investment Bank. In India, it is looking to make equity investments in renewable energy projects.
Working towards a step change in climate finance
I’ve set out several examples of how climate finance is delivering impact. But it is clear that to mobilise the levels of finance required we’ll need to think even bigger. We’ll need to draw on the collective experience of investors, developers, and others to drive investment at scale.
That is exactly what the global innovation lab for climate finance is doing.
Set up in 2014 the lab is an ‘initiative that supports the identification and piloting of cutting edge climate finance instruments. It aims to drive billions of dollars of private investment into climate change mitigation and adaptation in developing countries.’
It seeks to coordinate efforts and draw on the experience and expertise of governments, investors, project developers and development finance institutions from around the world. Together they are identifying, designing and piloting ‘the next generation of climate finance instruments’ with the aim of unblocking billions of dollars of climate investment by solving financing challenges, building new markets and attracting new investors to developing countries.
The UK is proud to be an early supporter of the lab.
Examples of pilots already underway include currently in place in Mexico, which will stimulate $25 million in investment in 190 energy efficiency projects by 2020 and expansion underway to replicate in Latin America.
Very recently, the India innovation lab was set up. It builds on the success of the global lab, but will address specific opportunities and challenges in India. Less than four weeks ago the India lab selected four green finance instrument ideas (Loans4SME, Rooftop Solar Private Sector Financing Facility, P50 Risk Solutions and Renewable Energy Integrated Hedging, Equity and Debt Fund) to develop to the next stage.
It is exactly these sorts of initiatives that have the potential to transform the climate finance landscape.
Let me bring my thoughts to a close.
The Paris agreement sends an important signal for our direction of travel.
If we are to reach our destination in one piece, we will need a huge push on investment in clean, green technology. To achieve the scale of finance required it will be critical for governments, policy makers and businesses to work together in innovative ways.
That is already starting to happen. Events like this one further demonstrate the willingness to do that. And where there is will, there is a way.
Thank you again for inviting me here today to speak with you.