[Feature] Intensification of the climate crisis: The importance of climate finance
On December 20, 2024, Professor Kwak Jae-sung, a faculty member at Kyung Hee University (KHU)’s College of International Studies, published Developing Countries, Climate Crisis, and Climate Finance through KHU Communication & Press. Other co-authors include Kim Hyo-sun, Vice-Chairman of the Korea Carbon Finance Association, Jo Jeong-hyeon, a World Bank consultant, and Ji Ye-jeong, a youth non-governmental organization Omkim representative. The book highlights the severity of climate change and introduces climate finance. Seriousness of Climate Change The book was written to warn about the seriousness of the climate crisis, highlighting that climate change is not just an environmental issue but a threat to civilization. It emphasizes that developing countries are more vulnerable than developed nations due to economic and resource limitations, making it difficult to respond effectively to the crisis. Prof. Kwak explained, “It is estimated that more than 100 million citizens of developing countries will face extreme poverty due to climate change by 2030. Moreover, climate change negatively affects agriculture and worsens the health conditions of people in these regions. It is estimated that more than 200 million people will become climate refugees by 2050”. | Developing Countries, Climate Crisis, and Climate Finance Photo: Kyobobook (kyobobook.co.kr) |
Prof. Kwak Photo: Kyung Hee Univeristy (khu.ac.kr) | Prof. Kwak stated that he wrote the book to inform readers about the role and significance of climate finance. He mentioned, “The core to responding to the climate crisis is securing financial resources and mobilizing various financial instruments.” In line with this, climate finance plays a crucial role in securing and directing funds toward projects that mitigate climate change. It serves as a crucial tool for supporting economic and social development in developing countries while reducing their vulnerability to climate change. With climate finance, developing countries can enhance their capacity to manage its negative impacts and pursue economic growth in an environmentally sustainable manner. |
Contents of Book
The book is composed of four main chapters, with the first chapter addressing the current state and severity of climate change. The author references a climate change scenario from Mark Lynas’s book Our Final Warning: Six Degrees of Climate Emergency to illustrate the issue, highlighting how each one celcius rise in global temperature intensifies its impact. Additionally, Prof. Kwak discusses global efforts to combat climate change, including the Kyoto Protocol in 1997, the Paris Agreement in 2015, and the Glasgow Climate Pact in 2021, explaining their significance.
The second chapter addresses climate finance, which refers to financial mechanisms that invest in projects aimed at mitigating the impacts of climate change, such as green growth, carbon neutrality, and sustainable development. The book also explores the origins of climate finance, its various types, and its achievements.
The third chapter focuses on the significance of the Paris Agreement, which the book argues is the greatest achievement in international cooperation to address climate change. It emphasizes the importance of Internationally Transferred Mitigation Outcomes (ITMO), the global carbon credit trading market. By enabling countries to trade carbon credit through mutual agreements, ITMOs allow for a more efficient reduction of greenhouse gases.
The final chapter provides a detailed examination of ITMO, highlighting the cooperation between Ghana and Switzerland as an example of collaboration between developing and developed countries. Switzerland has counted a portion of Ghana’s greenhouse gas reductions toward its targets in exchange for supporting Ghana’s transition from fossil fuels to clean energy. This case demonstrates how international cooperation can lead to tangible carbon reduction outcomes.
Details about Climate Finance
The book focuses on climate finance, which plays a crucial role in supporting developing countries' energy transition, climate change mitigation and adaptation, and green growth. The concept of climate finance was first introduced at the 2009 United Nations Climate Change Conference, where developed nations agreed to provide $100 billion in annual financial support to developing countries starting in 2020.
Climate finance is broadly categorized into public and private finance. Public finance includes international financial institutions such as the World Bank and the Green Climate Fund (GCF). Private finance refers to funding from private institutions in developed countries, such as KfW Development Bank and United Kingdom Export Finance.
However, public finance alone is insufficient to support developing countries, leading to cooperation between public and private sectors to address climate change. Prof. Kwak mentioned, “Since it is difficult to cover climate finance with public funds, it is essential to mobilize abundant private resources. To achieve this, public-private collaboration is crucial.” For example, India launched the E-Mobility Finance Programme to replace internal combustion engine vehicles. To support this initiative, GCF partnered with Australia’s Macquarie Alternative Assets Management Limited, demonstrating how public and private finance can work together. Ultimately, climate finance functions as a collaborative system where public and private financial institutions support developing nations in combating climate change. |
GCF Headquarters in Songdo Photo: International Rivers (riverresourcehub.org) |
Now that the climate crisis is becoming a reality, this book urges readers to reconsider its severity. Prof. Kwak mentioned, “Climate change is undoubtedly a major crisis, but it also creates new avenues for investment and business, all made possible through climate finance. I hope all readers take a greater interest in climate finance through this book.” It is hoped that this book will provide an opportunity for readers to think deeply about how the international community should cope with the climate crisis.
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