Managing adaptation risk
16 November 2021
By Alec Joubert, Head of Risk at Camco
Climate change poses an existential threat to lives and livelihoods across the globe. In deliberately simple terms, climate risks can be addressed by reducing fossil emissions (mitigation – the need for a just transition to net zero as fast as possible, to keep global warming below the 1.5°C agreed at COP26), and by adapting to those changes which cannot be avoided. In both cases, it is a necessity to mobilise vast amounts of public and private finance to mount an adequate and timely response to the challenge. In this article, we focus on the risks associated with mounting an adequate response to the adaptation challenge.
Adaptation under the Paris Agreement
Pursuant to Article 7 of the Paris Agreement, the global community has committed to enhance adaptive capacity, strengthen resilience and reduce vulnerability to climate change. In scaling up climate finance for a just transition to net zero by mid-century, Article 9.4 targets a balance between adaptation and mitigation finance. To date, far greater resources have been raised and deployed to mitigation. For example, in nominal terms, only 38% of funding available to the Green Climate Fund has been deployed to adaptation projects to date.
As a consequence, in its planning for the presidency of COP26, the UK identified the need to adapt to climate change amongst its four key goals and included a need to increase finance for adaptation as a priority under its Climate Finance Delivery Plan for 2021-2025.
COP26 outcomes: Closing the adaptation gap
Adaptation was a major focus of COP26. with significant progress achieved. Parties to the COP established a two-year Glasgow–Sharm el-Sheikh work programme on the global goal on adaptation. Work to enhance understanding of the adaptation goal will be inclusive, conducted in a gender-responsive manner and driven by a country-level understanding of national adaptation plans and priorities.
The Glasgow Climate Pack also “urges” developed countries “to at least double their collective provision of climate finance for adaptation to developing country parties from 2019 levels by 2025 in the context of achieving a balance between mitigation and adaptation”. Notably, the United States pledged its first contribution to the Adaption Fund and further support for that fund will be generated by the finalised Paris Agreement Rule Book, which provides for a 5% levy (the “Share of Proceeds”) from Article 6.4 emission reduction transfers.
In conclusion, COP26 witnessed an important shift in the focus of climate change responses – with a welcome recognition of the urgent need for a concerted adaptation response to reduce climate change risks, build adaptive capacity and improve climate change resilience – particularly amongst vulnerable communities in developing countries. Progress on climate change under the UN Framework Convention may be agonisingly slow, but this is a step in the right direction.