Climate and finance

Climate finance is a pivotal force in the global fight against climate change, serving as a catalyst to mobilise resources and confront the multifaceted challenges posed by climate-related issues. On the international stage, climate finance encompasses a variety of financial instruments carefully designed to bolster mitigation and adaptation initiatives. Its primary aim is to strengthen the resilience of communities vulnerable to the impacts of climate change, guiding countries toward sustainable development and low-carbon practices. Within the realm of climate finance, funding can originate from various sources, including public and private sources, as well as domestic and international contributors. These funds can be allocated towards mitigation strategies, aiming to reduce greenhouse gas (GHG) emissions, or adaptation efforts, which strengthen communities against the impacts of a changing climate. This financial support becomes particularly crucial in guiding countries toward achieving the objectives outlined in international agreements, such as the Paris Agreement (PA) and the Sustainable Development Goals (SDGs).

Climate action demands substantial financing, and the financial commitment required is undeniably significant. It is an investment-intensive endeavour that requires resources for developing and implementing transformative projects. One illustrative measure to assess this financial commitment is the cost associated with reducing one ton of carbon dioxide equivalent (CO2 e). The financial outlay required to achieve this reduction is a critical consideration in climate finance discussions. Understanding these costs highlights the financial scale and commitment necessary to achieve tangible impacts in the global fight against climate change. In essence, climate finance is not only about allocating funds, it represents an investment in a sustainable future. It entails the strategic deployment of resources that transcend borders and sectors, reflecting a collective commitment to mitigating the adverse effects of climate change and fostering a resilient and sustainable global community. The cost of reducing one ton of CO2 e depends on the type of intervention, technology, and sector involved. Due to different assumptions and methodologies used across studies, there is no single definitive answer to estimate the cost.

However, recent literature provides some examples of the cost of reducing one ton of CO2 e (Gillingham & Stock, 2018; Mooney, 2014; and Ashworth, 2022):

• Replacing coal-fired electricity generation with the wind: USD 29 per ton of CO2;
• Weatherising a home: USD 31 per ton of CO2;
• Adopting electric vehicles: USD 58 per ton of CO2;
• Capturing and storing carbon from natural gas power plants: USD 78 per ton of CO2;
• Planting trees: USD 100 per ton of CO2.

source :

https://uclg-aspac.org/wp-content/uploads/2024/09/2024_GCoM_SEA_Climate_Finance_Outlook.pdf#new_tab