In recent years, climate anomalies have brought scorching heat waves to each summer. Even in the middle of December, when we should be ushering in a white Christmas, temperatures reach as high as 30 ˚C. In sum, global warming is no longer an abstract problem. The United Nations Secretary-General António Guterres even declared on July 27, 2023 that “the era of global warming has ended [and], the era of global boiling has arrived.”

Extreme heat not only threatens health but also has a severe impact on the economy due to declines in job productivity. It also poses an existential threat to many vulnerable countries, such as Small Island Developing States (SIDS) in the Pacific. To  address this, the international community  has been discussing countermeasures to global warming through the Conference of the Parties (COP) convened under the United Nations Framework Convention on Climate Change (UNFCCC) every year since 1995. The results of the 28 conferences held so far have often been discussed as part of political wrangling among countries, as was the case with the climate finance plan proposed at COP15 in 2009.

At COP15, developed countries pledged to provide their developing counterparts with an annual US$100 billion in climate financing by 2020. However, when the Paris Agreement was adopted at COP21 in 2015, rich countries abandoned their promise and extended the deadline for financing to 2025, while also promising to increase it. While this pledge may be met in 2023, US$100 billion in climate finance is a drop in the bucket in the face of increasing global warming.

However, financing remains a key to solving global climate problems. That is why climate finance became the focus of discussions at COP28 in 2023. The United Arab Emirates (UAE), this year’s host, has also shown leadership. It not only unveiled the COP28 UAE Leaders’ Declaration on the Global Climate Finance Framework but also established the Global Climate Finance Centre (GCFC)  to accelerate the development of climate finance frameworks and strategies. At the same time, the UAE initiated a climate finance development program named ALTÉRRA, with a goal to raise $250 billion globally by 2030, guiding private markets toward climate investments while focusing on the transformation of emerging markets and developing economies. This proactive approach converts mere ambitions to combat global warming into concrete actions.

In order to help readers understand climate finance and its role, this issue is themed Climate Finance - The Key to Net Zero by 2050. We will approach this topic from multiple angles, including through articles discussing the development status of climate finance, the challenges faced by climate finance, the role of banks in climate finance, and Taiwan’s use of climate finance tools in the process of undertaking foreign assistance work.

This issue’s special report is titled Taiwan’s Thoughts and Actions in the Face of the Global Wave of Sustainable Finance. We interviewed the Chairman of the Taiwan Institute of Economic Research, Dr. Chung-Shu Wu, who also served as a director and supervisor of the TaiwanICDF for many years. Leveraging his extensive expertise in academic research, education, and policy advising, he shares insights with our readers on the opportunities and challenges Taiwan encounters in the global wave of sustainable finance. Additionally, he sheds light on how Taiwan utilizes these financial tools to actively promote foreign assistance projects.

According to the Taiwan  Climate Change Report, there will be no winter in Taiwan  by as early  as 2060. Although such a prediction may sound alarmist, when we think back to when scientists began calling for climate action we see that most people did not immediately recognize the urgency of global warming. It was not until recently, with increasingly extreme climate anomalies, that people began to realize the imminent crisis. Therefore, through this issue, we hope to not only inform readers about   the current status of climate finance, but also reflect on what else they can do to mitigate the threat of climate change.

 

Summaries

Recent Developments in Global Climate Finance

(Jiun-Da Lin, Assistant Professor, Graduate Institute of National Development, National Taiwan University)

This article reviews the development and current status of global climate finance and provides recommendations for climate finance actions in Taiwan. The United Nations Framework Convention on Climate Change (UNFCCC) provides the basic definition and regulations for climate finance. However, developed and developing countries still disagree on several issues, making global climate finance governance a complex system with diverse participants. Additionally, global climate finance is increasing in scale, but funds are still concentrated on mitigation, with relatively less support going to adaptation projects. Even with this rising trend in global climate financing, current aid is insufficient  to meet the financial needs of developing countries. Finally, climate finance projects have begun emphasizing the importance of impact assessments, as opposed to only focusing on scaling up aid amounts. This paper suggests that Taiwan, in promoting climate finance, should strive to adhere to UNFCCC regulations and expand investments in adaptation projects, while also continuing to enhance transparency measures, accountability mechanisms, and impact assessments in its climate finance projects.

 

From Voluntary to Mandatory: Trends in Climate Finance Targets

(Ying-Shih Hsieh, Chairman, Environmental Quality and Education Foundation; Yi-Chan Cheng, Deputy Secretary General, Environmental Quality and Education Foundation)

Moving toward net-zero emissions will necessitate a fundamental shift away from centuries- old patterns. The global community will need to achieve a significant reduction in fossil fuel use, testing the determination of nations and financial institutions. The 2015 Paris Agreement has provided a framework for goal-oriented environmental, social, and governance (ESG) progress, catalyzing a shift from voluntary to mandatory ESG targets. These often emphasize government authority and regulation, as seen in recent actions by the European Union, the United States, and Taiwan’s Financial Supervisory Commission. Likewise, financial institutions must recognize that climate actions should contribute to decarbonization and a just transition. For example, they should identify and minimize greenwashing while also working to strengthen their credibility and transparency. These institutions should also ensure that they use actual carbon reduction as a criterion for evaluation. Taiwan’s foreign aid institutions can improve their impact by learning from these trends, incorporating smart features into their projects and promoting inclusive values.

 

Recommendations for the Banking Sector’s Involvement in International Climate Finance

(Shih-Chieh Lin, Director, Institute of Finance, Taiwan Academy of Banking and Finance)

In recent years, international organizations and major central banks have made several important proposals in the realm of climate finance. These include initiatives for climate change mitigation and response, mechanisms for carbon pricing, and stress-testing and regulatory requirements for evaluating climate risks. Taiwan’s banking industry actively follows or signs effective agreements, enhancing climate risk transparency and aligning with international climate change and decarbonization initiatives. To achieve net zero emissions by 2050, Taiwan’s Financial Supervisory Commission launched the Green Finance Action Plan 3.0, which further strengthened sustainable development in the domestic financial industry. Likewise, Taiwan’s Greenhouse Gas Reduction and Management Act was renamed the Climate Change Response Act in February 2023, and it now encourages more collaboration between central and local governments. However, the funding gap for developing countries to address climate change remains significant, especially as many of Taiwan’s partner countries transition toward better climate change and decarbonization business models. Therefore, the Taiwanese government advocates for collaboration with international organizations, utilizing the experience of Taiwan’s banking sector to develop sustainable finance, integrate public and private sector efforts, and leverage funds wisely to support international climate and sustainability initiatives. In this way, Taiwan can help drive sustainable transformation inside the international banking industry.

 

TaiwanICDF’s Perspective and Vision on Climate Finance Participation

(Xun-Hui Tseng, Division Chief, Lending and Investment Department, TaiwanICDF;

Hui-Wen Hsu, Chief Specialist, Lending and Investment Department, TaiwanICDF)

Even as humanity grapples with the persistent threat of climate change, it must not lose sight of poverty in developing countries. Accordingly, the international community’s development assistance goals encompass three dimensions: economic development, social development, and environmental sustainability. This reflects the growing emphasis on global sustainability and the rise of the 2050 net zero carbon emissions agenda. However, the demand for environmental sustainability in development aid is relatively new, so using innovative approaches to mobilize funds from the public and private sectors is crucial for achieving carbon reduction goals. Financial instruments underlie fund injection and also provide a framework for  resource allocation, so  credit and  investment tools can  be  used to guide industries and societies toward green transformation. Recognizing these changes, the TaiwanICDF works with its international aid partners to leverage financial mechanisms to combine funds from the public and private sectors, making low-carbon or green projects financially viable. By enabling these projects, the organizations become a significan driver in mobilizing capital for climate mitigation and adaptation.

 

• 更新日期: 2024/01/02
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