COP28: De-risking the green transition

George Anastasi, Senior Policy Manager

COP28, officially known as the 2028 United Nations Climate Change Conference, commences this week in the United Arab Emirates. 

As nations continue their efforts to cap long-term global temperature increases at 1.5°C, their citizens are increasingly feeling the effects of policies limiting carbon emissions. Not least of which is the cost of moving to a net zero future – a cost which the organisers of COP28 recognise can only be met with the critical support of finance, a key theme of the conference.

This is why the FLA has been calling for simplification of the UK tax system to incentivise the acquisition of green assets and, most critically, greater risk-sharing between funders and the government. Green assets can be challenging to fund, with uncertain residual values, a lack of a clear secondary market, and technological risks all making them a riskier and more expensive proposition.

We set out our case in our Autumn Statement submission and evidence to the Treasury Committee for its enquiry into SME Access to Finance. We have also produced a series of policy papers covering these topics. Not only that but we are in ongoing dialogue with HM Treasury and the British Business Bank on how a Green Finance Growth Guarantee would work.

We have pointed out to both Government and the Opposition, that the significant investment required to move to net zero is partly due to the higher costs of green assets, as a result of the higher risks of funding them.  

 These risks also extend to the non-green assets they are designed to replace, which are still likely to be needed for some time yet, but face an uncertain future- including the risks of them becoming stranded assets.

 We will be monitoring the outputs of COP28 and look forward to our members continuing to play a key role in the green transition. 

Published 30 Nov 2023

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