The spotlight was on climate finance on Day 5 of the UN COP28 climate summit in Dubai. And money talked. It was the first time the finance sector attended a COP in such vast numbers. That led to a plethora of money pledges and funding initiatives.

Energy transition, climate adaptation, loss and damage, and disaster relief in general, require huge funding and investments to turn ambition into action. The ‘Climate Policy Initiative’ estimated that about $2.4trillion will be needed annually to 2030 in climate finance by developing countries. It pointed out in November that of the $1.3trillion climate finance in 2021-22, only around $30billion went to developing countries – the gap is vast.

The COP28 host nation, UAE, gave the lead when it committed to invest $30billion in a new climate investment venture it named Alterra, aiming to mobilise $250 billion by 2030. Announcing it, Sultan Al Jaber, the COP28 president, said this is “the world’s largest private investment vehicle for climate change action”. In addition, UAE banks pledged to mobilise $270billion in green finance.

Multilateral Development Banks (MDBs) announced, in a joint statement, actions to scale up climate finance, “strengthen country-level collaboration, and increase co-financing and private sector engagemen..” In 2022, MDBs “jointly committed $61billion of climate finance for low and middle-income economies, up 18 per cent from 2021, and close to $100billion across all countries where they work”.

The European Bank for Reconstruction and Development (EBRD) said it has “fully aligned its operations with the goals of the Paris Agreement and aims to make at least 50 per cent of its investment green by 2025,” having met this goal for the past two years.

In addition, EBRD and the EU announced €1billion in new climate finance to “boost lending to projects across various economic sectors, such as energy and municipal infrastructure, industrial, building and logistics”.

Partners and donors involved in the ‘Blue Mediterranean Partnership,’ that coordinates the financing of blue economy projects in the Mediterranean and Red Sea regions, committed to make it operational in early 2024. The EU, Sweden and France committed €15million to it.

The World Bank also announced it “will devote 45 per cent of its annual financing to climate-related projects by 2025, up from a target of 35 per cent, and extend debt repayment pauses following climate disasters”. This will amount to more than $40billion per year.

The Rockefeller Foundation launched a scheme to use carbon credits to retire coal power plants, starting with a pilot project in the Philippines.

The Institute of International Finance said that among the key goals of COP28 is “figuring out ways to attract more private finance for climate action”. But there were warnings that a “lack of bankable projects” is holding private capital back from investing in climate projects in emerging markets, even though the capital is there.

There was much talk about ‘blended finance’, that mixes “public and private funds to get money to places it wouldn’t otherwise reach, in this case for climate-focused projects”.

Mark Carney, the UN special envoy for climate action, said “It’s an exciting moment …we’re finally having a frank conversation about the billions to trillions gap, and the mechanism to do that is blending.”

The IMF managing director, European Commission president and WTO director-general warned that “the world must face the reality that business-as-usual is not delivering the needed cuts to greenhouse gas emissions.” They strongly supported wider carbon pricing, by making polluters pay for what they emit, “to achieve climate objectives while raising new revenues to support developing countries”.

Climate finance will culminate with the ‘Sustainable Finance Forum’ that will be held on December 6 and will be hosted by Climate Action, and others. It will be one of the biggest platforms for open dialogue with the finance sector at COP28. It will bring together “over 400 banks, insurers, investors, policymakers, civil society organisations and scientists for discussions on decarbonisation, policy engagement, the climate-nature nexus, adaptation and best practices to identify, measure, disclose and manage sustainability risks in the financial sector”. Its goal is “to align sustainable finance with the real economy and enable a just transition to net-zero”.

Many more pledges and investments were announced, making Climate Finance a very successful day at COP28. What is important now is to maintain the momentum and translate these into action.

Dr Charles Ellinas is a senior fellow at the Global Energy Centre of the Atlantic Council