Aug. 12, 2020

Ep4: Barbara Buchner 'Counting the Climate Cash'

How much is being invested in climate action around the world? Where and in which sectors are the investments concentrated? How much is needed to get us on track for net zero? If it wasn’t for our Episode 4 guest, Barbara Buchner, it would be impossible to answer these questions.

Barbara Buchner is Global Managing Director of Climate Policy Initiative which publishes the hugely influential annual Global Landscape for Climate Finance and runs the Global Innovation Lab for Climate Finance which has helped mobilize over 2 billion US dollars for sustainable development in developing countries over the past seven years. In 2014 the International Council for Science named Barbara one of the 20 most influential women in climate change and one of the 100 most influential people in climate policy. She is also the lead author on CPI’s Global Landscape of Climate Finance. Barbara built and directs the San Giorgio Group, which brings together key financial institutions actively engaged in green, low-emissions finance in collaboration with the World Bank Group, CLP (China Light & Power), and the OECD. Previously Barbara worked as an analyst and researcher at the International Energy Agency (IEA) and the Fondazione Eni Enrico Mattei (FEEM). She holds a PhD in Economics from the University of Graz and was a Visiting Scholar at MIT. Originally from Austria, Barbara is based out of San Francisco (Austrian living in California engaged in climate policy – sounds familiar?)



Links:



Kirsty’s bio on LinkedIn

https://www.linkedin.com/in/kirsty-gogan-alexander-8153095/



Nuclear Innovation and Research Advisory Board

https://www.nirab.org.uk/



Cost and performance requirements for flexible advanced nuclear plants in US power markets

https://www.lucidcatalyst.com/arpa-e-report-nuclear-costs



IEA Technology Perspectives 2020

https://www.iea.org/topics/energy-technology-perspectives



FT Open Letter on EU sustainable finance for nuclear energy and climate

http://energyforhumanity.org/en/news-events/news/news/ft-open-letter-eu-sustainable-finance-nuclear-energy-climate/



About Cleaning Up

Once a week Michael Liebreich has a conversation (and a drink) with a leader in clean energy, mobility, climate finance or sustainable development.

Each episode covers the technical ground on some aspect of the low-carbon transition – but it also delves into the nature of leadership in the climate transition: whether to be optimistic or pessimistic; how to communicate in order to inspire change; personal credos; and so on.

And it should be fun – most of the guests are Michael’s friends.

Follow Cleaning Up on Twitter: https://twitter.com/MLCleaningUp

Follow Cleaning Up on Linkedin: https://www.linkedin.com/company/cleaning-up-with-michael-liebreich

Follow Cleaning Up on Facebook: https://www.facebook.com/MLCleaningUp

Links to other Podcast Platforms: https://www.cleaningup.live/


How much is being invested in climate action around the world? Where and in which sectors are the investments concentrated? How much is needed to get us on track for net zero? If it wasn’t for our Episode 4 guest, Barbara Buchner, it would be impossible to answer these questions. 

Barbara Buchner is Global Managing Director of Climate Policy Initiative which publishes the hugely influential annual Global Landscape for Climate Finance and runs the Global Innovation Lab for Climate Finance which has helped mobilize over 2 billion US dollars for sustainable development in developing countries over the past seven years. In 2014 the International Council for Science named Barbara one of the 20 most influential women in climate change and one of the 100 most influential people in climate policy. She is also the lead author on CPI’s Global Landscape of Climate Finance. Barbara built and directs the San Giorgio Group, which brings together key financial institutions actively engaged in green, low-emissions finance in collaboration with the World Bank Group, CLP (China Light & Power), and the OECD. Previously Barbara worked as an analyst and researcher at the International Energy Agency (IEA) and the Fondazione Eni Enrico Mattei (FEEM). She holds a PhD in Economics from the University of Graz and was a Visiting Scholar at MIT. Originally from Austria, Barbara is based out of San Francisco (Austrian living in California engaged in climate policy – sounds familiar?) 

 

Links:

 

Kirsty’s bio on LinkedIn

https://www.linkedin.com/in/kirsty-gogan-alexander-8153095/

 

Nuclear Innovation and Research Advisory Board

https://www.nirab.org.uk/

 

Cost and performance requirements for flexible advanced nuclear plants in US power markets

https://www.lucidcatalyst.com/arpa-e-report-nuclear-costs

 

IEA Technology Perspectives 2020

https://www.iea.org/topics/energy-technology-perspectives

 

FT Open Letter on EU sustainable finance for nuclear energy and climate

http://energyforhumanity.org/en/news-events/news/news/ft-open-letter-eu-sustainable-finance-nuclear-energy-climate/

 

About Cleaning Up

Once a week Michael Liebreich has a conversation (and a drink) with a leader in clean energy, mobility, climate finance or sustainable development.

Each episode covers the technical ground on some aspect of the low-carbon transition – but it also delves into the nature of leadership in the climate transition: whether to be optimistic or pessimistic; how to communicate in order to inspire change; personal credos; and so on.

And it should be fun – most of the guests are Michael’s friends.

Follow Cleaning Up on Twitter: https://twitter.com/MLCleaningUp

Follow Cleaning Up on Linkedin: https://www.linkedin.com/company/cleaning-up-with-michael-liebreich

Follow Cleaning Up on Facebook: https://www.facebook.com/MLCleaningUp

Links to other Podcast Platforms: https://www.cleaningup.live/

 

Transcript

ML   

Hello, welcome to the fourth episode of "Cleaning Up". My guest today is Barbara Buchner. She's the Global Managing Director of the Climate Policy Initiative, one of the most influential think tanks working on finance, policy and economics of climate change. They publish the Global Landscape for Climate Finance, which is the benchmark for how much money is flowing into climate solutions in the developed and developing world. She also runs the Global Innovation Lab for Climate Finance. And, I'm going to put this out there right at the beginning, I helped her, I was one of the early partners, one of the early principals. And I've been involved more or less over the last seven or eight years since that was initiated. It's put more than $2 billion to work in climate solutions, mainly in the developing world. And we'll certainly be talking about that. In 2014, Barbara was designated one of the 20 most influential women in climate change and climate policy by the International Council for Science. International Council for Science. Now, interestingly, they only said she was one of the top 100 people overall in climate policy. And so we are going to be talking about gender as well. So, I first met Barbara when she was running something called the San Giorgio Group. And the San Giorgio group was absolutely fabulous, because every year it invited me to Venice to talk about clean energy, climate and other interesting matters. And of course, I couldn't resist, I went to Venice, I met Barbara. And here we are today. So I've got myself a very nice Marques de Riscal, red wine. And I'm going to bring Barbara into the conversation. Good evening, Barbara. 

 

BB   

Good morning to you, Michael, great to see you. 

 

ML   

Good... did you notice that everybody good evening, good morning: so I am in Europe, I'm in Switzerland, Barbara is in...? 

 

BB   

San Francisco. Still a little too early for wine, unfortunately, but I'm with you in my spirit. 

 

ML   

I'm m so sorry, I should be drinking coffee, not wine. I'm being a little bit cheeky here, but it is towards the end of the day here in Switzerland. So let's start with the Climate Policy Initiative. And we'll fill in various parts of your background and your story along the way. But tell me, tell everybody, what is it? 

 

 

 

BB   

Right I'm very happy to do so. So Climate Policy Initative, we're basically an advisory and analytical organization, we got founded now a little over 10 years ago, actually, at the end of 2009, with the overall goal of helping governments, financial institutions, and businesses, really drive economic growth, while addressing climate change. So this, like overall thought of how can we really shift the economy in a better way was really kind of the core motivation for CPI. We now have offices around the world, we have offices in the UK, and here in the US, but also in Indonesia, and India, in Brazil, and in Kenya. And we have about like 90 analysts that work with us overall. And what we are mostly known for is first like, we're tracking sustainable investment trends, we understand, showing what's the benchmark at the moment, where are we in terms of global trends , but also we are known for like developing some of the innovative business models that really can help make a transition to go to low carbon climate resilient future. And we are also, I think... a niche that we have is really being able to bring the right people to the table, and like bring in a very strong analytical and rigorous analysis. And that really helps kind of inform the decision making by policymakers and financial actors. Let me stop. 

 

ML   

So that's a great summary. And embedded in there is something very, very important, which is although you're called the Climate Policy Initiative, you work on business, and finance, and economics, right? Your theory of change is not one of these kind of... you know, it's not degrowth, and it's not about heavy government regulation and top down, it is very much a kind of, I .. Well you'll let you explain, but it seems from your description, and from my knowledge of it, to be very market compatible.  

 

BB   

That is very fair and to be very open with you, Michael, I probably, you know, would choose a different name today. You know, then a little over 10 years ago when we got started, I just because... 

 

ML   

I'm gonna put you on the spot, what would you call it: if you started it today? 

 

BB   

Yeah, you know, I was thinking, you know, you're very good on the acronyms, I'm going to use you like one day. And so I'm going to, you know, I'm just using us more in our acronym at the moment, like CPI and stuff, and instead of Climate Policy Initiative, I do think we are, you know... I think what we really need to do, and what I really want to make sure as we start up second decade of CPI, is that we become mainstream. I don't want to be, you know, in a niche of like climate considerations, what I really want to make sure is, and what our work has really, you know... We've tried to do over the last decade, is really showing that, you know, building a better future, like investing in a more sustainable future, you know, makes sense for you and me, makes sense for businesses is like, it is something that really can, you know, I think the market itself should kind of <inaudible> the more of the greener kind of guidelines, or I think what I really would love to have is more being kind of more mainstream, and, you know, economic institute, like financial, you know, advisory organization that really can help and make sure that climate change is like a factored into every decision, on both the public and private side in the market.  

 

ML   

When you say advisory organization, you don't mean giving individual sort of corporate advisory company, consulting, banking type. You mean, still presumably doing these tremendous analyses of the landscape and communicating, and tracking changes over time, is that correct? 

 

BB   

That is fully correct. I think, again, I think how we distinguish ourselves a little bit from other organizations is really being grounded in very strong, rigorous analysis. Again, I think this is, you know, we want to bring the evidence that then helps decision makers at the beginning, making the right decision. So we are not kind of a consultancy, we are really here to kind of provide sound evidence that can help you, you know, change your, hopefully, decision making going forward. 

 

ML   

Well, that's right. So we first met, I think it was at San Giorgio meeting in Venice. But very soon after that, we were talking about your analysis of the global capital flows, where you came to at the time, I was still running, what was Bloomberg New Energy Finance, but probably only had just become that, had just been acquired by Bloomberg. And you came... You wanted access to data on investment flows in clean energy, which is a part of the global tracking that you do. Talk about that report, sort of where did it come from? And what is it? Where did it come from? And what its impact has been? 

 

BB   

Oh, yeah, so, where did it come from to be very open with you, we started CPI. And, you know, there was, you know, Copenhagen COP was going on, and everyone was talking about climate finance. And no one really understood, you know, including myself what is climate finance, and, you know, what does it mean, what types of flows are we talking about? Who is involved in it? What types of instruments are being used to distribute, you know, money that is basically targeting, you know, activities to reduce emissions or to make, you know, societies more resilient, to really what is this climate finance. And so, as I am, you know, I'm an economist, so, you know, I love data. So, you know, I just wanted to start kind of compiling all the available data on how much money is flowing from which type of sources, through which type of instruments, towards which types of end users and to which geographies? So that's basically in a snapshot, that the landscape so we provide really a snapshot of financial flows, and every year, and showing who basically is behind this flow, so you know, what are the public and private sources behind the flow. And where does the money end up and the goal is really to also highlight, you know, where are entry points to scale up investments. And how can we really do that? So I think that's where it came from, like trying to.. I thought, it's a one-off study, to be very open with you, I thought I'm doing that one time. And that's it. And because it's a lot of work, to bring all the data together. And BNEF data is still kind of one of our the major databases we use for the private side of the overall landscape. I think that impact is has had is pretty big, we've actually helped inform ultimately also the negotiations, that led to the Paris Agreement it's been widely used by negotiators, but it's also been used and more particular on the national scale, where we've done a number of national landscapes to really help governments understand how money is being spent. You know, how can you use money more effectively, to ultimately have an impact. And I think this is just like where we want to go next, is actually really focus more on: okay, we know how much money is flowing, we've seen you know, constant increases in the trends over the last, you know, almost like eight years, nine years that we've been doing it, but I think we still need to understand much better, you know, how, and you know, effective are we using the money? How, you know, what's the impact of the money? And how can we really make sure that we kind of use money in a much more a transformative way to really kind of get an impact on climate change. adaptation, mitigation.  

 

ML   

Okay, now, there's a lot going on in that answer. And I'd like to sort of, I'd like to pick it apart a bit and dive into a few aspects of it. You know, there will be people watching this, at least I hope there'll be people watching this, who won't really recall all of the toing and froing at Copenhagen, the COP meeting, the Conference of the Parties of the UN Framework Convention on Climate Change. Copenhagen was built as this kind of one off chance to save the planet. And, and it all ended up horribly deadlocked, was probably regarded, is probably regarded as a failure by most people. But there was this one extraordinary commitment that was made. And it's called the Copenhagen Commitment, which is the developed world would provide 100 billion dollars per year in climate finance to the developing world. And that was in 2009. So I'm guessing that hundred billion, it became very contested, of course, because there was no definition. So a lot of developing countries, thought well, that's going to be a cheque from the governments of the developed world. And a lot of developed world countries said, and political leaders said: No, no, no, no, no, we meant that our financial institutions, our private sector, our private investors would provide lots of money, that's going to be fine, isn't it? So I guess that's the world that you stepped into to try to say: okay, well, we don't know the answer to who meant, what the definitions are, but at least let's measure it. Is that a fair characterization of the kind of what was going on back there? 

 

BB   

Lots was going on, a very good characterization. Like, I think we really try to just start, again, as we do with our work, start providing some, you know, analytical basis for, you know, some more political discussions about like, ultimately, for the action that needs to happen. So, you know, again, we in our work do not focus on the hundred billion on purpose, because there's still today a lot of definitional issues with that, still today, I wanna to say, 2020. But what we do is like, very transparent of what we count, you know, we provide a global snapshot, so we want to really not only show how much money is going from the developed to the developing country, but we want to really show ultimately, how are we doing against our overall temperature targets, that 1.5 degrees target, you know, the overall kind of targets to getting our world on a better pathway. So that was really... the goal was, and the goal still is, to inform, you know, the processes to provide the right kind of evidence base, the right kind of, you know, understanding to kind of decision makers to use in our data. But yes, good characterization. 

 

ML   

Okay, so this figure of 100 billion dollars per year that was supposed to flow north-south, from the developed world to the developing world., what are the pieces of that? What was that supposed to cover? Because obviously, at Bloomberg New Energy Finance, we could help you with the clean energy investment piece, but that's far from all climate finance, isn't it? 

 

BB   

It's far from all climate finance. And I think, again, it's supposed still to cover and still working on its all public and private sources. So it can come from public and private sources. But it goes beyond renewable energy, it is really kind of all mitigation, adaptation. What does that mean? That encompasses not only renewable energy, but also energy efficiency. But then on the adaptation side, I think that's a bigger piece still to be unpacked. 

 

ML   

I think adaptation is a huge story that we've barely begun to explore from a finance economics and policy perspective, adaptation is happening everywhere, but nobody really knows where it is, and where it's going, you've probably got the best picture of anybody. But I just wanted to, just to clarify, and that 100 billion was the north-south, but you track everything: developed world, developing world, energy, adaptation, land use, all of the flows of money, that are addressing the climate challenge, is that right? 

 

BB   

That is right. And again, what we do, it's not that we ourselves track apart from some smaller service that we do with development finance institutions, for example, but we really triy to bring together different types of data sources, from BNEF, but also from the OECD, you know, from other, you know, data collectors out there. Really try to really make sure that there's no double counting, but there's, a really good basis on how much money is out there. 

 

ML   

Okay, and now, the, well... I was gonna say the billion dollar question, but it's almost the trillion dollar question? What is the number? Where are we? 

 

BB   

So actually, in 2017, for the first time, we crossed the half trillion mark, we are now around 569 billion on an average that the last two years, 2017 - 2018, and in overall flows, and again, I think that's good news, I think we have seen constant increases, and we are trying... We usually try to give actually two years number just because it's better, you know, kind of correct and takes into fluctuations between, you know, single years. But that is where we are like, we crossed the half trillion. So that is good news. But you obviously know that we need far more. 

 

ML   

Well, that's a good question. Because you know, trillion here, a trillion there, pretty soon you're talking real money. But what does it need to be if we were really to see, you know.... I published something just before Christmas, saying: peak emissions are closer than you think. Obviously, that was before COVID. And we've seen them drop this year, they'll presumably, possibly, depending what we do bounce back. But if we really want to see not just peak emissions, but the global economy on track for net zero to address climate, as we all, I think what would like to do. What does that number need to be on an annual basis? Are we halfway there? Are we a third of the way there? Are  we 10% of the way there? Or are we 80% of the way there? 

 

BB   

You know, that is a good question, to be very open with you there, there is still a lot of uncertainties on the exact numbers, there is a number of studies out there that are trying to... just because particularly on the adaptation side, there is so much uncertainty still of, you know, what are the needs and how you... Even methodological issues what I use usually as a figure just to compare a little bit of where we are today and where we need to go. And it's actually more apples to oranges. But if you look at the IPCC numbers of what is needed, just in the energy sector per year to getting us on a low carbon energy system, that is between 1.6 and 3.8, I think, trillion US dollars per year. So obviously, out of our like 580 billion, the energy sector is only a share, it's the largest share of because of the better data, amongst others because of BNEF, but then it still kind of, you know, it just shows that we are falling far short of where we need to be if we want get in on this kind of 1.5 degree or below pathway. 

 

ML   

So, I was just, as you were speaking, trying to triangulate and see if I can answer that question, at least from the energy perspective. And there's around $2 trillion per year invested in energy around the world that's upstream oil and gas, midstream, downstream, renewable energy, the electrical grid, all right across the board. And there's about 700 billion invested in clean energy so renewables, energy efficiency, and so on. And the electrical grid, there's still about 1.3 trillion that's invested elsewhere in the energy system. So from energy alone, I would say we're about a third of the way there, because clearly what we need is the clean stuff to grow. So we're not doing anything but the clean stuff. And you know, maybe it's only... Maybe we're halfway there, because there's some pieces, I don't know, we may end up doing some synthetic fuels, and still, you know, needing to invest in midstream chemical refineries, and so on. So it's not as simple as just saying 'it all has to be wind and solar', clearly not. But I think we're between a half to... We're between a third and a half way there. But my goodness, adaptation, I mean, because it's very difficult to say, what is going to be just upgrading the infrastructure for the emerging economies as they get wealthier and making them safer and more resilient anyway. And what is the climate piece? Do you try and unpick that at all? Are you just say: it just needs to be a big number, we know that. 

 

BB   

Well, I think we don't have the full picture or the figures yet, we are trying to kind of make progress on the methodologies, like really, you know, what is development? What's the boundaries between adaptation and development? You know, what's the incremental part? We also very differently count, mitigation finance, like, you know, can we count renewable energy finance very differently to adaptation finance, where usually we just count the incremental part. So just lots of issues just on the methodological side. But again, just coming back to our overall landscape figures, what we're currently able to track in terms of figures for adaptation finance is 5% of the overall global number that we have. Again, lots of data issues, lots of methodological issues, but I do think it just shows you, again, that the overall challenge that we face and the real need to kind of just think... I think, you know, in total, you know, disruptive, innovative way on how can we really make this adaptation, resilience finance, more attractive for investors, particularly today, you know, in terms of today. 

 

ML   

So I am filled with awe at the work you do, because if anybody watching or listening, thinks that this is easy, just think about one thing. So for instance, climate change causes increases in forest fires. And, so adaptation means you protect yourself from forest fires, but at the same time, countries are getting wealthier, and people are moving out and beginning to live in amongst forests. So, if you stop those new communities or new buildings from burning, is that adaptation? Or is that part of, I mean, what is it? And how does your methodology cope with that? You must have a million sort of edge cases like that, that you have to deal with every year. How do you kind of... Each year, you have to get yourself kind of psyched up to go back and do this once again? Or is it now pretty mechanical, and you sort of do the same thing as last year and get the same data sources, and it sort of does itself? 

 

BB   

Oh no, we continue to push ourselves because again, we know that we, you know... I think the goal from the beginning was to improve the overall understanding of what is climate finance, I think we have done in... And not only ourselves, I think we work with a wide range of partners from, again, development finance institutions, to data providers to, you know, OECD and others, to really kind of try to push, you know, what we know, and like, and become better in our understanding. So we continue to expand our data sources our data coverage. And my big dream, and I hope, something that we will be starting to do more, is actually not having only a climate finance landscape anymore, but really kind of being able to complement that with investments on the fossil fuel side, you know, the high emission investments, to really get a good picture of how we are actually, you know, basically moving in the right direction, because I think, you know, again, it's good to continue to get increases on the green side, on the climate finance side. And I think we got to get a better understanding of how we are doing in terms of the high emission investments and whether there is, you know, a shift happening in, you know, in due time. 

 

ML   

Well you can see that, as somebody who's built big data sets of finance flows... I'm just, you know, I'm fascinated by your process of unpicking these methodologies. But I want to move on to the lab. So the... It's the Global Innovation Lab for Climate Finance. Where did it come from? How does it work? 

 

BB   

Yeah, the lab. So again, you have been helping us a lot at the very beginning on making it become what it is today. So where did it come from? It actually became... Came out of an initial process of, brainstorming process, from the climate finance ministerial. So that was like donor countries, who were, you know, more thinking about how can they use public finance more effectively, in order to unlock, you know, overall capital for climate investment? So, the original discussions were really, and they were informed by, you know, thinking that we have done together, you actually also... You know, how can we become, how can we really harness the entrepreneurs, the innovative thinking, that we know is happening in many places, in order to come up with some concrete projects and financial instruments that really can unlock private investment at scale. Because, again, coming back to our figures from before, public finance, you know, and public resources, more generally, obviously, you know, are the engine behind climate finance at the moment and extremely important in terms of the policies and regulatory frameworks. But if we want to get to the trillions, or the figures the needs, that they are, we know that we need to really kind of engage the private sector at scale, in order to close the current investment gap. So the Lab came out of this initial thinking there. We have refined that then by putting together basically a membership of financial institutions, both on the public and private side, to really help us see how can we crowdsource innovative ideas how can we develop and back them by again, incorporating the expertise of both public and private investors. And how can we then help to really get them off the ground? So in a nutshell, the Lab is a competitive process. It's an incubator, where we, again as  CP, my organization, we are the Secretariat, so we are helping a call for ideas, every year where we, you know, we collect, we gather ideas of submissions for financial instruments. That's really focused on addressing barriers to investors in the market, to private investors particularly, and then we use our Lab membership which is composed by, you know, development finance institutions, governments, but also commercial banks, institutional investors and other private sector participants to really kind of vote for the most promising ideas. And the winners then get about six to nine months of technical support from my teams. Where we work again with the lab members, investors to really develop, basically, the financial instruments from more of a concept stage, an early stage, into a bankable project, project which really is ready to go to market. And maybe let me just stop here. And let's dig a little bit deeper than we have arrived. 

 

ML   

So, in the early years, particularly I was, you know, quite involved because I was what was called a principal. And so these ideas... 

 

BB   

You are still are. 

 

ML   

I still am a principal, although I couldn't find myself on your website, and we need to work on that. Maybe that was my mistake, probably was my mistake. But I did check today before this conversation. But just to be clear, so this is you call it 'an incubator', but it's really 'an accelerator', isn't it? I mean, these are not your ideas, they are you... We, you... We go out into the world and say: what looks promising, what could get a lot of money flowing into these solutions. And then they get worked into this kind of very systematic presentation. And then the principals, which I'm delighted by the way, to say that I'm still a principal, and I promise that I'll be more diligent in my principaling. But then also the members select the ones that they want to promote and set up or help to raise funds and put money to work. So I guess, first of all, what have I missed? Is that a good characterization of the process? And if it is, then there's this figure out there of $2 billion? I don't know if it's up to date. I don't know if it's up to date. So maybe you've got some, some newer figures, how are we doing? How's the Lab doing? 

 

BB   

Now characterization is spot on. And I just checked, obviously, uh, you are on the website. So we are still having you on. But yeah, no we have. Again, the lab, we got inaugurated in 2014, in London, actually. And we're now in our sixth lab cycle, and in this year, since 2014, what we've managed to do, is to develop more than 40 instruments, you know, 41 instruments, and that those have collectively mobilized more than 2 billion. So we're at about 2.1. Now, we continue to count, but you're pretty spot on there. But yet, we've managed to help collectively through the Lab instruments mobilize more than 2 billion US dollars for concrete projects, both on the mitigation and adaptation side. So again, across different sectors, and specific, also... Specifically on some of the hardest sectors where we've tried to focus more over the last years. 

 

ML   

Can you give a couple of examples of instruments ,or as many as you want? But give some examples of instruments. And what sort of thing counts as an instrument? What are we talking about here?  

 

BB   

Sure. Well, for example, we've had one which is an energy savings insurance, which really addresses the issue that particular in, you know, developing countries, in particular, for small and medium enterprises. Very often, you know, kind of get making sure that you invest in energy efficient technologies that might have some higher upfront costs. And maybe, you know, you as a SME, you're not really familiar, and you don't trust that they will really help you save energy. And so you don't make this investment. So this is energy savings insurance, and basically have a product that helps you guarantee innovative performance of this high upfront cost. So you as an investor, as a small and medium enterprise, you just feel more confident of investing into these types of technologies, which helps you ultimately save energy and save money. But again, you will now through this energy savings insurance product, you're actually sure that you have a basically a performance guarantee. So that is one of them. One of the instruments that we've had, but we've had a range of different business model instruments coming out of the Lab. Another one is a very large scale. It's called the Climate Investor One where you basically combine three facilities in one, in order to reduce transaction costs and in a way, kind of, again, accelerate the investments in this case, like renewable energy projects. But they're now in their second phase, actually, it's basically combining a preparation, project preparation facility with a construction finance facility with a refinance facility. And again, this one is certainly one of the successful instruments from the Lab, and we're currently seeing whether we can replicate that for the water sector, as well, to expand it from the energy sector to others. And there is a number of firm, you know, additional, loans and bonds, on the insurance side, we've been focusing more on mangroves insurance, for example, that are coming up in how can you make sure that you conserve and restore mangroves as a really critical part of the ecosystem. But we're also looking at, you know, energy access instruments on, really thinking about, you know, how can you make sure that you provide the right financing to some of the technologies. Okay, so maybe just to share aslo an example from the adaptation side, one of them, I think, the first commercial investment vehicles for adaptation finance is CRAFT, which we have been developing over the last few years with the Lightsmith Group. And CRAFT is basically focusing on expanding the availability of technologies, and solutions for climate adaptation and resilience. And really thinking about like being kind of a more boring, and like a more kind of a standard private equity growth fund, but really been investing in a number of companies that already today have proven technologies and solutions. And that really can help to gather, this kind of an accompanying technical assistance facility to scale investments into resiliency, and adaptation in developing countries. But just to say, we have, again, more than 40 instruments here that range from insurance vehicles to funds, to even platforms, where we help kind of also increase the capacity of local financial institutions, to some specific larger scale instruments like CRAFT that I've just mentioned. 

 

ML   

There's a look, I love this, because, in a way, it just builds on my initial thesis, when I started New Energy Finance, as it then was, which is that, if money flows into clean energy solutions, then we will make progress on climate change, and probably, by the way, on lots of social development and improving human wellbeing across the world. But if money doesn't flow, then that won't happen. And so, what you're essentially saying is with your global landscape, you first tracked all the money. And now you've got an accelerator program, which right across the same landscape, just goes in and finds ways of helping more money get to work, and the more money gets to work, the more impact we're going to have. So, I mean, it's all music to my ears, of course, which is why I became a Lab principal in the first place. But it really spans some very large financial institutions. But it goes right the way down to supply chain players that might be in the supply chain of large agribusinesses, but are really out there in the rural areas in places that have got very poor access to finance, is that correct? 

 

BB   

That is very correct. And I think particular, this thing, you know, after a few years of the Lab, one of the lessons is that the model really works, in the sense of really finding some innovative solutions for... Particularly for the sectors that are harder. So like you said, like, you know, the rural sectors, we have a specific, we have started doing specific streams, in order to really foster some more innovative thinking, for certain areas, like, you know, cities, like, you know, nature <inaudible> like, again, you know, sustainable agriculture in Africa. So, I think we've really tried to kind of use this model to kind of try to trigger more innovative thinking and solutions for the harder sectors and really getting them also by becoming more regional, and like having also some regional lab programs, really getting them to where they need it. 

 

ML   

That's right, because you've got programs in India and Brazil and any others? 

 

BB   

So we have an initial that Southern Africa stream, that we're piloting this year with the support of the Development Bank of Southern Africa, what we try usually to do is really have kind of a local, you know, an anchor institution that works with us. But ultimately, we would love to make sure that we really kind of build up more regional hubs, and certainly also for Africa, like a number of those and more Latin American, expanding it from Brazil. Because what we see is, that having this local investors that help us really develop the instruments from an idea into a real project, are really the key of making sure that we develop them in a way that really kind of accelerates investments. 

 

BB   

Well, let me know, if I can help with that Africa hub, because I've been doing some, initial... I've been having some very interesting discussions with Africa Great Green Wall and the African Union. And I've done lots of stuff, as you know, in Africa over the years. But there's, in addition to the Global Landscape of Climate Finance, and the Global Innovation Lab, there is a sort of third leg to what you do, which is producing a stream of research. I don't know if it's what you call it 'research' or 'collaborations'. And you mentioned one, the last time we met, virtually, was on cities. So that, presumably, I mean, do you see it as the third leg of what you do? Because it's sort of filling in, and working on other areas that are not quite captured, perhaps by those first two. And, you know, what else have you got? You got cities? Anything else? 

 

BB   

Yeah, certainly, just on the three legs here, you fully right. I think, you know, we started with the landscape, giving an overview of sustainable investment trends, you know, having a benchmark, and we actually started, after that, we kind of went into understanding: okay, now we know what's out there. Let's start to analyze, like, do some good, you know, analysis of how effective finance is being used today, this is like our effectiveness stream. And only after that we actually have seen, even if you use existing financial resources more effectively, you need to still come up with new ideas, which is the lab and other, you know, transformative finance projects that we run, particularly in India where we also around that project preparation facility. But the second leg that you mentioned, I think we do a lot on around the cities, particular I think, cities we see, are really key in making sure that, you know, cities is where, we think we have about 70% of future investments will happen in cities. So we need to make sure that we really, you know, help again, and to... You know, analysis that can inform what are specific, you know, tools that can be used in order to scale up investments in cities, but also how can we bring together the different initiatives and partners and like organizations that work on cities. So that cities come, and find the Cities Climate Finance Leadership Alliance that we're running is one of these projects, where we really try to foster this kind of, you know, this... 

 

ML   

Cities are really fascinating, you're right, they are sort of 70% of the investment. Cities drive 70% of emissions around the world. And it's very easy for mayors or municipalities to say: oh, we're going to go climate neutral, I think, you know, by, oh, let's choose a number - 2050, 2040. Mayor of London said 2030. But of course, most of what happens in cities, cities are vibrant, but they're vibrant, because they bring together private players. Everywhere in the world, the investment flows are dominated by private players, not by what the municipality happens to do with its buildings on its energy purchases. So is there any single, you know, if you can give kind of one summary of how do you get cities to sort their climate impact out? What's it going to be from that workstream? 

 

BB   

Well, I think, how we work is, again, you know, we bring our kind of skill set the niche that we have, and the networks that we have is really the financial institutions. How we interact with citizens, actually, mostly at the moment through the city network. So in our Alliance, we actually have all the different city networks, from C40, to, you know, to UCLG, all the different kinds of city networks really helping us to make sure that the work we develop is actually getting... is informed by the needs of cities, but at the same time also addresses and really how we can scale up and information there. One of the workstreams we have under this project is around enabling environments. So we can have to research on what our regulatory, you know, frameworks or like... What are the kind of policies that have helped, actually, attract investments to the cities? And, you know, how can we make sure that, for example, development finance institutions have a chance to directly, you know, lend to cities or provide investments that can be taken up by cities? So, I think this is one of the areas we're working with cities, and just making... But again, I think we work really... We try to make sure that we always work in partnership with others because, again, I think we bring a specific skill sets around the financial and the policy analysis. But, you need to have others that really can... are closer to citizens, can help build the capacity. So I think we cannot provide even like, you know, thinking about how can we come come up this, like ways of trainings for city officials to really kind of be aware of the opportunities, also in the investment space. 

 

ML   

But, I suspect there's a sort of generalizable methodology that you have to first start by measuring what is flowing, how much money is flowing, and then you can start to go into things like best practices, and you can have an accelerator program, and then you can go and do deep dives into particular sort of knotty problems that are not being solved. So I suspect that what you've done with the climate landscape then Lab then dive into cities, you can probably replicate at the city level, first map it, then produce some acceleration solutions, and then go into specifics of... It all sounds very kind of rational and logical. But of course.. 

 

BB   

I just said, you just described basically CPI's theory of change. So that's, that's good. So now, it's how is working on different... 

 

ML   

It's count it, accelerate it, and then deep dive, rinse and repeat. Very good. But of course, one of the things that we've not spoken about yet, but that dramatically is impacting cities today, is, of course, COVID. And, you know, a lot of what we've talked about is your history and what you've been doing up until today, but you have also deployed a team on something that you're calling 'bailouts for a better world'. So tell me about 'bailouts for a better world'? Is it a piece of work that you've already completed? And what have you done with it? Where's it going? 

 

BB   

Yeah, again, I think, as everyone probably around the world, you know, once the pandemic happened like trying to understand, how can we really help inform this recovery efforts and like make sure that we build for it, for a better world. So, we have only started, Michael, to be frank again, you know, we started with our usually a first approach to understanding what's happening. And you know, doing that also through convenings, that we have had those with a COP26 presidency and Germany to bring together, again, actors from across the finance ecosystem to really understand what our needs, what are, you know... Even though you don't want to call it opportunities, but what are opportunities as we will come to the recovery phase, we have, in the context of the Lab, actually, our first element that we see, as part of this, this bigger... No bailouts for a better world stream, which is like really showing out of our Lab pipeline, which are the shovel ready ones, so which are the ones that are ready now, today, as soon as investment is ready to get deployed again. So which are the ones that are ready to be implemented, basically now. So that's kind of the first piece, the second piece that we're currently preparing is a new project around... Which has two parts, one is around principles for financing a sustainable recovery. So really, again, bringing together the stakeholders from across the finance ecosystem and those public policy ecosystem to, you know, informed by our analysis, basically come up with principles that, hopefully, particularly the public side, can commit to really follow going forward to make sure that not only in the short term, you know, rescue efforts, but in the longer term recovery efforts that there is a real clear framework that guides this investment. So I think this is the one part. Okay, so the second component of the work we're doing is around financial blueprints, and there will be again, we would love to have your input on that, Michael. But I think a number of the blueprints we're going to look into is recovery bonds for you really use the savings from, hopefully, fossil fuel subsidy removals to finance, resilience in cities and other parts are like social safety nets, or, you know, accelerated coal retirement, something you've been looking at a lot, but also trying to come up with, you know, what are financial blueprints for climate for debt swaps, and other, you know, ideas there. So I think this is a new wave of work we want to focus on very strongly now, personally, I think, because it's so important to do that as quickly as possible. And we're doing it also, particularly, in some of our country offices, mostly in India, actually, that we see a real opportunity now to come up very quickly with some of this financing, you know, transducing schemes that could help going towards a better, better future. 

 

ML   

Very interesting. And, you know, yes, we're in, you know, July of COVID-19 year, and clearly, we're going to be dealing with the economic aftermath, and hopefully, hopefully, this tragic pandemic, we will work through the health issues, but clearly, balance sheets have just been destroyed at government level, personal level, institutions of all sorts, and we're going to be working on this for some time. There are quite a few groups, IEA has published its green recovery. Actually, I don't know if you read, I wrote about how energy efficiency has to be at the heart of stimulus programs. I called it the 'Swiss Army Knife of stimulus funding' because if you do energy efficiency programs, you put money into the pockets of people right away who are going to spend it. So builders, plumbers, plasterers, etc. But also you make our asset base more efficient. So there's a long term stimulus. And of course, it helps in a very essential way, climate action. So, that's my pitch to put energy efficiency deeply into what you're doing. So if you have a chapter on that work about financing, it should really be dedicated to energy efficiency. I hope you're doing that. 

 

BB   

Couldn't agree more. And obviously, you know, I'm reading all you write. So I have read that one. And, I do agree, I think, and I think it's that, you know... I think energy efficiency is one of these areas that we still haven't really kind of managed to address. I mean, we all know that it is, you know, it is extremely important, first for achieving a transition. And it really is something which can help you achieve the savings. But I don't think we still have managed to at least kind of widely distribute the ways of investing in energy efficiency. So certainly a key area of it. 

 

ML   

So we've just published, I was a member of the Commission for Urgent Action on Energy Efficiency with the IEA. We published 10 recommendations, of which number four is about mobilizing finance. So it does feel to me like a lot of the folks working on this kind of build back better, better bailouts or bailouts for, what is it you call it, 'the bailouts for a better world', you've got Bloomberg New Energy Finance, which is tracking the bailouts. And by the way, at the moment, a tiny proportion of the bailouts to date have been green. So you know, if you were to use your theory of change, you'll probably spend the next few years working maybe with Bloomberg New Energy Finance, tracking exactly what is happening, and then trying to tilt it towards the better bailouts. And I wish you good luck with that. So I just want to move on to, you know, what do you think the next few years bring? Because, it's both in terms of sort of climate, but also in terms of your work, the Climate Policy Initiative. You know, we are in the middle of this extraordinary... It's a pivotal year, it was a pivotal year before COVID. But it became even more pivotal, now with the pandemic, and then these enormous amounts of spending, we're going to see. So tell me what the world is going to look like in 2030, if you can? 

 

BB   

You know, I'm going to use my inner optimist that has an eye, as you know, I'm always 'the glass half full' person. So, I do really hope that, you know, we see, between the next you know, six and 18 months, we'll have 10 to 20 trillion US dollars that will be invested into the recovery. And again, I do hope that we will have a chance to mainstream climate into all that investment. Again, as you said, it's not kind of going to from one day to the other, but I do hope that you will have a better understanding of how can we go to to this net zero future? How can we, you know, by 2030 have a really good understanding of how specific sectors have done and what are concrete solutions to kind of shift. And overall, you know, different sectors towards a net zero future. So I do hope that by 2030, climate will, you know, not be a niche anymore. I hope that 2030 will climate will have been mainstreamed across an everyday decision making. And we certainly will, you know, be doing what we can to help towards this direction. 

 

ML   

So, and, it's interesting, because you said, you're going to put your optimist hat on, but then you said: I hope we're going to be there. So are you really optimistic? Or are you just sort of using that optimistic language? Because you know that sells. 

 

BB   

Look there, I'm actually really optimistic. Just to be frank, you know, what I have heard in over the last few months, in terms of, you know... For the first time really the public wanting, you know, that there are changes, you know, in the economy, but at the same time, you know, just hearing, just a range of partners, colleagues from different sectors really talking about, this as a pivotal moment that, again, can become a turning point. It can become a tipping point that, you know, that is about... I think it can become a turning point. So, I think it will take some political leadership. So that's certainly something you know, we can only support again with the work we do. But again, I hope, but it's me speaking out not because I think that sells but because I really do believe that there is a unique moment now to make this happen. 

 

ML   

And Paul Romer talks about two different sorts of optimism, and I love it because it really encapsulates how I see it. You can be optimistic like a child hoping for a good Christmas present. Or you can be optimistic like a child building a tree house. Active optimism is building a tree house. Passive optimism is just hoping for a good presents. I think we have to be active optimists. And I'm looking forward to talking to Christiana Figueres about her views on optimism. Barbara, I said, we're going to talk about gender. The International Council of Science said that you are one of the top 20 women influencers in climate and climate policy, but only one of the top 100 people overall. So if I do the maths, that suggests that there are 20 women and 80 men in the top 100. Now, that would be a big improvement over when I started New Energy Finance, where major energy conferences had somewhere around 5% to 7% women in the leadership roles. But, are we making progress fast enough? So that we can really solve issues of gender and inclusion, and by the way, minorities inclusion as well, at the same time, and at the same speed that we need to solve the climate challenges? How are we doing? 

 

BB   

I think that's a really good question, Michael. And, you know, just to your last question, I don't think we are making progress fast enough. I don't think that there is still a full understanding that, you know, that gender really matters, when it comes to addressing climate change. And I think it, you know, it's still kind of also not fully understood that women are also more vulnerable to climate change. And I'm saying that, because I kind of feel, you know, all the work that we're doing both in the Lab, where we always have a gender lens, in terms of, you know, how can we come up with financial instruments that really kind of have an impact also on women's employment and women's jobs. But also in my own organization, where from the beginning on, I've tried to make sure that we keep gender in mind when we do our hiring, and like, overall kind of our management structures. But I just feel, in the international discussions, I don't see that we have been really kind of making progress fast enough on kind of addressing these issues, and also minorities, like fast enough. So, you know, I don't think I have the full solutions here. So now I'm rambling... 

 

ML   

To me, there's a... So I've written on this topic. So my views are well known that I don't think that we can address climate without also addressing the issues of inclusion, gender balance, and also minorities. But there are others that could say that the more sort of baggage you load into the climate train, the more you make it conditional on dealing with equality, economic equality, north-south equality, colonial reparations, gender inequality, many of them, the more you load into the climate train, the slower the train is going to go. And of course, there's another point of view, as I say, the one I subscribe to is: no, actually it goes faster. How can we persuade more people? Or how can we win that argument? 

 

BB   

Yeah, I think we need still to try to give women a stronger voice, I don't see yet women being, you know, having, you know... You run into, you know, a group of women in this conversation again, and again, but I feel we need to really open it up, you know, to other sectors and making sure that we also have the underlying analysis that shows actually the impact, as always, you know, in all the work we've been doing once you show actually that the concrete impact of addressing climate change, of investing, in income at activities, and that the concrete now, important role that women and, like, minorities have in this context in order to make sure that we build a future that really kind of becomes more resilient. I think then you could start winning the argument but at the moment, I just don't see that, you know, women have the right, that the full voice yet. 

 

ML   

I don't think they have the full voice, I absolutely agree with you, don't make a mistake, but I am struck by how many women were involved in getting the Paris Agreement across the line. And then you know, you can think of Anne Hidalgo, Paris mayor, there's Laurence Tubiana helping with the French negotiation, Christiana Figueres, there's you providing analysis, there's Amber Rudd, who at the time was the Minister of Energy in the UK. You know, I could go on, but in many ways the Paris Agreement was a women's agreement. Of course, you know, you end up with the French Foreign Minister, that did the actual signing, was not a woman. I'm blanking on his name, but so many influential women, Connie Hedegaard, who laid much of the foundation groundwork as Commissioner of the EU. So I sort of see it as a, you know, as a, you know, as a very sort of gender. But actually, you know, that women played such a leadership role, but of course, right through the energy companies, the banks, the investors, the VCs. I mean, my goodness, when you start to look at new technology, it's 93% men still, huge problem.  

 

BB   

Finance is the other part, I mean, you were talking about, you know, that the energy, the energy conferences. I mean, when I started, like, on the finance, you know, becoming more, you know, finance conferences, this is the same thing. I mean, there is still kind of very few women that are involved on this side. I think, women has been traditionally, I think, more on the, you know, on the diplomatic side, you know, as you say, behind like, you know, trying to enable deals and like making sure that, you know, you kind of push the conversations in the right, in the right... But I think there's still a certain segment of the economy where women are not really represented. 

 

ML   

No, absolutely correct. And, you know, I find it funny, I just, you know, there's like, I think I see... There's one man involved in the Paris Agreement signing Laurent Fabius and I've managed to blank his name. I don't know what that says about me. Now, just look, finally, we're, you know, we had a fantastic conversation. It's always super interesting and invigorating, talking to you, if anything I can do to help. But I do want to ask you also, you were born in Graz in Austria. Arnold Schwarzenegger, I believe is also born in Graz in Austria, you work on climate and are based in California, and Arnold Schwarzenegger is based in California works on climate. So do you kind of hang out? 

 

BB   

Well, hanging out, you know, he certainly is like an idol for me, to be frank, you know, he grew up like very close to where I grew up in Austria, in Styria. And again, you know, we all, you know, obviously, watched him become famous and everything. And I think I was very impressed by when he started getting into the climate conversations and really trying to use, basically, his success and, you know, being famous to really kind of also shift some of the debate. So I started them... Actually he invited me to the first Austrian World Summit, a few years ago, where he really kind of started a series of an annual event in Vienna, where he really brings together very high level leaders to kind of try to push the boundaries and make sure that there's also, I think that the public actually, is also aware of these issues, which again, is, I think, something which is very much needed. So, yes, I've had like, we've had a few dinners,we speak in Styrian and he has invited me down to actually moderate a small roundtable, the Talanoa Roundtable, last year here in Los Angeles, where he lives. This is again like more kind of  local leaders, both from the political and then celebrities as well. And we have kind of continued to talk, particularly through his Institute, the Schwarzenegger Institute that is trying to do much more analysis and like support on the political science side. So yes, I have to say, I'm using that, I'll be back very often, just to make sure. 

 

ML   

Very good. When you say Styria, of course, I can immediately through my mind, I can just see these kind of almost, you know, tourism brochure like videos, because it's a fantastic, beautiful part of the world, when we all get to travel again, after COVID. It's one of the places I would very like to visit. But it does feel like interesting, you mentioned C40 cities earlier, but not... Arnold Schwarzenegger has got his C... what is it? It's R20 regions. And you also talked about wanting to sort of popularize more, wants to go mainstream, and starting to inform individual people's investment decisions with data and information about climate finance. So maybe that's a way that you could work together with Arnold and get your messages out. I don't know if you thought about that. 

 

BB   

Oh, yeah, I saw that. Again. You know, it's not that we're hanging out that, you know, frequently but I mean, again, I met him a few times again, I'm very impressed by how he actually manages to attracts attention. And I think we would need people like him. But you know, also like others, like, you know, there is a few other celebrities that have kind of started to increase, you know, to voice, their concerns about climate about water. You know, there's Matt Damon, there's you know, Leonardo Di Caprio, there's a few others, I do really think that if you want to shift kind of the masses and like make sure, that this is something that everyone is aware of, maybe I think having their support could be extremely, extremely kind of powerful. 

 

ML   

So Barbara, I'm afraid we've reached the end of our allotted time. I try to keep these to about an hour, you and I could keep talking forever, and it's very invigorating. And there's plenty of ground still to cover. But we're going to leave it there. I'm just going to leave you with an opportunity to use again, those famous Styrian words. If I was to invite you back to a future episode of 'Cleaning Up', what would you say? 

 

BB   

Hasta la vista, Baby. I'll be back. 

 

ML   

Barbara, thank you. Good night here in Switzerland. Good morning in San Francisco. 

 

BB   

Thanks so much. 

 

ML   

So that was Barbara Buchner joining us from San Francisco. Barbara is the Global Managing Director of the Climate Policy Initiative. And if we know, how much is being invested in climate action around the world, it's all down to Barbara. So thank you for joining me for this fourth episode of 'Cleaning Up'. I hope you'll join me next week. Our guest will be Kirsty Gogan. Kirsty runs something called Energy for Humanity. She also runs a consulting company called LucidCatalyst, and she's one of the foremost experts in the policy and economics around nuclear power. So join me next week for Episode 5 of 'Cleaning Up'. Cheers!