Developing countries will need trillions of dollars in the years ahead to deal with climate change — but exactly how much is needed, and who is going to pay for it?

These difficult questions will be wrestled at this year’s United Nations climate conference, known as COP29, being hosted in Azerbaijan in November.

– What is climate finance? –

It is the buzzword in this year’s negotiations, but there isn’t one agreed definition of “climate finance”.

In general terms, it’s money spent in a manner “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”, as per phrasing used in the Paris agreement.

That includes government or private money channelled into low-carbon investments in clean energy like wind and solar, technology like electric vehicles, or adaptation measures like dikes to hold back rising seas.

But could a subsidy for a new water-efficient hotel, for example, be included in climate finance?

The COPs — the annual UN-sponsored climate summits — have never defined it.

– How much is needed? –

The Climate Policy Initiative, a nonprofit research group, estimates that $10 trillion per year in climate finance will be needed between 2030 and 2050.

This compares to around $1.3 trillion spent in 2021-2022.

But in the parlance of UN negotiations, climate finance has come to refer to something more specific — the difficulties that developing nations face getting the money they need to adapt to global warming.

The line between climate finance and conventional development aid is sometimes blurred.

But experts commissioned by the UN estimate that developing countries, excluding China, will need an estimated $2.4 trillion per year by 2030.

– Who will pay? –

Under a UN accord adopted in 1992, a handful of countries deemed wealthy, industrialised, and the most responsible for global warming were obligated to provide compensation to the rest of the world.

In 2009, these countries — the United States, the European Union, Japan, the United Kingdom, Canada, Switzerland, Turkey, Norway, Iceland, New Zealand and Australia — committed to paying $100 billion per year by 2020.

They only achieved this for the first time in 2022. The delay eroded trust and fuelled accusations that rich countries were shirking their responsibility.

At COP29, nearly 200 nations are expected to agree on a new finance goal beyond 2025 — but deep divisions remain over how much should be paid, and who should pay it.

India has called for $1 trillion annually, a ten-fold increase in the existing pledge, but countries on the hook to pay it want other major economies to chip in.

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They argue times have changed since 1992. Economies have grown, new powers have emerged, and today the big industrialised nations of the early 1990s represent just 30 percent of historic greenhouse gas emissions.

In particular, there is a push for China — the world’s largest polluter today — and the Gulf countries to pay, a proposal they do not accept.

– Where will they find the money? –

Today, most climate finance aid goes through development banks or funds co-managed with the countries concerned, such as the Green Climate Fund and the Global Environment Facility.

Campaigners are very critical of the $100 billion pledge because two-thirds of the money was distributed as loans, often at preferential rates, but seen as compounding debt woes for poorer nations.

Even revised upwards, it is likely any future commitment will fall well short of what is needed.

But it is viewed as highly symbolic nonetheless, and crucial to unlocking other sources of money, namely private capital.

Financial diplomacy also plays out at the World Bank, the International Monetary Fund and the G20, where hosts Brazil want to craft a global tax on billionaires.

The idea of new global taxes, for example on aviation or maritime transport, is also supported by France, Kenya and Barbados, with the backing of UN chief Antonio Guterres.

Redirecting fossil fuel subsidies towards clean energy or wiping the debt of poor countries in exchange for climate investments are also among the options.

Another proposal, from COP29 host Azerbaijan, has floated asking fossil fuel producers to contribute to a new fund that would channel money to developing countries.

As for the “loss and damage” fund created at COP28 to support vulnerable nations cope with extreme weather events, it is still far from up and running, with just $661 million pledged so far.

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NEW YORK, September 16, 2024–(BUSINESS WIRE)–Off the success of Ease Capital’s (“Ease”) bridge lending program, Ease just launched a new fixed-rate loan program in partnership with a bulge bracket bank. Ease’s new multifamily and mixed-use permanent financing program offers highly competitive 5, 7 or 10-year loans, from $5-$50 Million, for stabilized and near-stabilized properties.

With the agencies tightening underwriting guidelines and banks continuing to pull back from the small balance and lower mid-market space in which they account for 60% of loans, obtaining permanent financing has become increasingly difficult for multifamily properties that have debt maturing. Ease has always focused on serving the traditionally overlooked small balance and lower mid-market segment which accounts for over 98% of multifamily properties and is now well positioned to deliver full-lifecycle solutions to our clients from construction completion through permanent financing and everything in between.

“For multifamily borrowers seeking flexible, interest-only, permanent financing with maximum proceeds, this loan program is perfect,” said Barclay Lynch, Head of Loan Originations at Ease Capital. “We will close over $300 million of bridge loans this year and this new program is a perfect complement to our existing transitional loan business and allows us to serve our clients permanent financing needs.”

Ease’s new loan program can provide non-recourse, interest-only loans, from $5-$50 Million on stabilized and near-stabilized multifamily and mixed-use properties at pricing of Treasuries + 200-300 bps, depending on leverage and term. Under the terms of the partnership, Ease runs all sourcing, sizing and underwriting internally with all loans being securitized.

About Ease Capital:

Founded in 2022, Ease Capital is a nationwide, direct lender focused on providing capital solutions for multifamily and mixed-use commercial real estate assets. Ease prides itself on offering flexible financing solutions for everything from new acquisitions to construction completion to fully stabilized deals (and almost everything in between). Ease Capital’s team is full of experienced and creative deal makers that move fast, are easy to do business with, and are 100% committed to closing on the terms agreed to. Ease offers a range of floating rate loan products including bridge, bridge-to-permanent, and permanent financing solutions for stabilized or near stabilized assets. Backed by leading institutional investors, Ease’s mission is to make real estate ownership more accessible. For more information, please visit www.easecapital.io or reach out to barclay@easecapital.io to find time for an intro call.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20240916832122/en/

Contacts

Guillermo Sanchez, memo@easecapital.io

Carlyle is buying a minority stake in North Bridge ESG LLC, a finance firm that focuses on a type of private credit lending to landlords for clean energy projects.

The transaction also includes Carlyle committing up to $1 billion to help North Bridge make loans, according to a statement seen by Bloomberg.