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The ocean today resembles a “failed state,” with a lack of rules, monitoring or enforcement, yet it covers 71% of the planet’s surface and delivers the majority of global ecosystem value. Given its scale and relevance for the global climate system, and to address mitigation and adaptation challenges cost- effectively, climate funding pathways need to address ocean health and governance challenges and to include significant ocean and coastal funding components.

The developed countries who are Parties to the UN Framework Convention on Climate Change (UNFCCC) made a commitment to mobilize $100 billion[1] per year by 2020 to address climate change needs of developing countries. This commitment requires public and private funding, including green bonds.

We highlight some of the significant and promising funding initiatives under way, and highlight potential further developments needed for Blue Finance to succeed.

[1] All amounts in US dollars.

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The ocean today resembles a “failed state,” with a lack of rules, monitoring or enforcement, yet it covers 71% of the planet’s surface and delivers the majority of global ecosystem value. Given its scale and relevance for the global climate system, and to address mitigation and adaptation challenges cost- effectively, climate funding pathways need to address ocean health and governance challenges and to include significant ocean and coastal funding components.

The developed countries who are Parties to the UN Framework Convention on Climate Change (UNFCCC) made a commitment to mobilize $100 billion[1] per year by 2020 to address climate change needs of developing countries. This commitment requires public and private funding, including green bonds.

We highlight some of the significant and promising funding initiatives under way, and highlight potential further developments needed for Blue Finance to succeed.

Green Climate Fund

The Green Climate Fund (GCF), established to serve as the vehicle for long-term funding under UNFCCC, will finance projects and programs that demonstrate the shift toward low-carbon and climate-resilient sustainable development in developing countries. To date, the GCF has received 35 government pledges for over $10 billion. The GCF will deliver low-cost loans through “accredited entity” partners, who submit funding proposals for specific projects and programs.

The GCF has identified the following investment priorities:

  • Transforming energy generation and access
  • Creating climate-compatible cities
  • Encouraging low-emission and climate-resilient agriculture
  • Scaling up finance for forests and climate change
  • Enhancing resilience in Small Island Developing States (SIDS).

These accredited entities need to be encouraged to include projects aimed at building resilience of ocean and coastal zones, emphasizing nature-based solutions, and integrating conservation measures into the delivery of multi-use infrastructure. Coastal communities and SIDS will be on the front lines of climate change impact and require sustainable solutions. Mitigation components, such as enhancing natural carbon sinks via wholesale mangrove, reef ecosystem and seagrass protection, should be prioritized. The initial list of eight projects includes a wetland restoration scheme in Peru.

Climate Bonds Initiative

The Climate Bonds Initiative uses standards to maximize viable bond issuances with verifiable environmental and social outcomes. Agreed standards and processes allow a broad investor base to access this market. The latest proposals for agriculture and land use-related investments already include support for wetlands, mangroves and coastal and riverine fisheries. Further work will be required to include the full range of sustainable marine infrastructure in such standards.

Given the scale of this sector, its relevance to advanced financial markets, and its ability to deliver new actors and partners rapidly, the initiative holds promise as a key tool for ocean finance. Such green bonds raised $36 billion in 2014 and as of late October $32.15 billion had been raised in 2015.  Standards for agriculture, forests and other land-use are presently under consultation.

More Action Needed: Some Ideas

We need to develop further innovative financing mechanisms to deliver better ocean outcomes, strengthen ocean resilience and deliver a wide range of opportunities for public and private actors to participate in developing ocean solutions. The upcoming Paris Climate Change Conference provides an opportunity to commit to further such efforts.

Not only do we need faster development of innovative solutions, but also deeper engagement. The availability of finance is often constrained by institutional and procedural limitations. Crowdfunding and citizen involvement can bring new monies as well as support to a wider range of projects.

Momentum is growing for setting up a dedicated Ocean Sustainability Bank as initially proposed by a group of leaders of environmental organizations (including myself) in an open letter issued on World Ocean Day this year. Under this proposal, governments and private institutions would commit equity to an institution that would be able to proactively develop public-private partnerships to deliver multi-use ocean infrastructure, act as a touchpoint for corporations to engage with climate solutions at scale, and bring expertise and capacity-building to the sector. Such an institution could be a lasting commitment to a renewed effort to address the opportunities in the ocean-climate finance nexus following the Paris meeting. One way to fund the institution would be to redirect a significant portion of the $30 billion of global subsidies annually provided—mainly in fuel support—to the fishing industry, which has resulted in unsustainable overfishing of the global ocean.

By harnessing the latest technologies and innovations, the private sector can play a crucial role in delivering business approaches through new, dedicated ocean impact venture funds. Defining and delivering projects that are financially and environmentally viable while contributing to overall ocean technology and data solutions will bring a new focus, support cutting-edge science and research, and help bring to market new products for these tough environments.

[1] All amounts in US dollars.

Torsten Thiele is Founder of the Global Ocean Trust and was a 2014 Harvard Advanced Leadership Fellow.  He has over 25 years of experience in project finance, lending and investing, which he now applies to deliver governance, technology and funding for sustainable ocean solutions.

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