This month I spoke at the IMF/World Bank Annual Meetings 2023 in Morocco, as part of the UM6P Climate Finance Forum.
This is the second in a series that lays out the messages I delivered there to our global financial institutions, as they face the need to rapidly accelerate the pace of investment in climate change.
The first piece – on the risks of a climate finance bubble – you can find here.
This week’s article looks at the questions of resilience and scale, and asks: how effective are global solutions for a global problem like climate?
Trouble in paradise
The island of Barbados has a special place in my heart. I have visited every summer for years, and my family has a home on the island. I feel a strong sense of connection to its natural beauty, culture and the many friends I have made.
Sadly, climate chaos has already reached its shores. The destruction following ever more violent hurricanes has been tragic and humbling to see first-hand. It also highlights our environmental inequalities, as those places (like Barbados) most exposed also have the fewest available resources to recover and adapt.
Of course, these societies are producing real climate leadership in response. I applaud Barbados’ Prime Minister Mia Mottley for her Bridgetown Initiative, which I’ve written about here. But they cannot go it alone.
From London to Bridgetown to Beijing, we are recognising climate change as a global problem – so we look for simple global solutions. We attend IMF and World Bank meetings and address panels on themes like, ‘Climate Resilience in Africa.’ We cheer the IEA’s annual announcement of another hundred billion in clean energy investment. We track gate prices for Chinese solar and the cost of carbon on the European market.
This is no longer enough. Thinking globally has got us only so far. The future of resilient climate investment must start thinking more locally instead.
Insuring Hurricane Alley
To illustrate what I mean, let's go back to Barbados.
After many years of laying down roots and building relationships, I wanted to help bring some much-needed clean energy to the island. I had no idea how challenging (or how rewarding) that journey would be.
To most clean energy developers around the world, insurance is just another cost of doing business. There are plenty of providers and products to match the various stages of development, and in Europe and America, it is a straightforward part of the job.
Coming to Barbados, we encountered insurance as an existential problem for the first time. Simply put, 100m tall turbines live a much riskier life on an island in the middle of Hurricane Alley! As a result, we couldn’t find a single insurer willing to underwrite a wind project there. The product simply didn’t exist.
Any firm looking to replicate a cookie-cutter development would have fallen at the first hurdle. But I don’t believe in accepting something as impossible too early in the process. Instead, we got creative – and that meant really adapting to local conditions.
Firstly, we went to India and found a manufacturing partner who had designed a specialised tower, which can be laid flat to minimise storm damage.
Then, we worked with local contractors to secure planning to space the turbines around the island, rather than group them in a single farm as is the industry standard. This made it more resilient to any given storm.
Finally, we tapped into our networks in the United Kingdom’s insurance market and worked with an underwriter to design an entirely new kind of insurance. It requires us to keep backup turbines in bonded warehouses as a security on the contract.
All that done, we could finally raise finance from our existing network of partners, a long road but one well worth travelling.
The power of the particular
If we weren’t already experts in clean energy development for small-island communities – across Ireland, the Isle of Man and the Canaries, for example – I don’t know we would have succeeded. But solving complex problems in the most challenging geographies is something we pride ourselves on.
Big developers have already picked a lot of the low-hanging fruit around the world; many of the best sites in the easiest markets have already been built out. Now we have a duty to focus on the harder problems and let go of some familiar tropes.
For example, how useful is it to keep talking about climate solutions for ‘Africa?’ Morocco is as different from the Congo or South Africa or Chad, as France is from Turkey or Pakistan or China. The World Bank doesn’t talk about ‘Eurasia’ as a single place, but we do hear a lot about Africa. It’s well-meaning, but it’s not always helpful. We can’t simply carpet a continent in distributed solar and say, ‘job done.’
Instead, we have to think more granularly. Resilience means different things in different places.
In Barbados, it was about managing hurricane risk in a less financialised market.
In Scotland, where we are currently building out a number of large projects, resilience means supply-side management. There is already so much wind energy there that storage and grid optimisation are the keys to successful local integration.
In the Republic of Ireland, by contrast, a bigger hurdle is planning procedures. Partnering with a major employer – particularly a tech firm - for direct generation is a key strategy for project-level resilience
Cats and dogs
Yes, climate is a global problem. But there is no simple set of global solutions that can be replicated in a top-down fashion everywhere in the world. That’s a recipe for systemic fragility.
Instead, we must meet conditions as we find them, in the most vulnerable places above all. Every dollar spent, in adaptation or mitigation, will be unique in its own way – and that is only something to celebrate.
As they say in Barbados: “Cat luck ain dog luck!”
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