Finance has been front of mind for national delegations at this year’s COP. As countries decide on the New Collective Quantified Goal (NCQG) for climate finance, there is chatter inside and outside the negotiation rooms about how climate finance can best be scaled in a way that is equitable and accessible. Throughout the week, I had the opportunity to attend several panel discussions that dove into this topic. I was particularly interested in understanding how the private sector can do a better job of supporting climate finance – moving away from loans and towards collaborative investment.

Below are a few key takeaways from these discussions.

Insurance has a major role to play in climate finance

Involving the private sector in climate finance requires derisking transactions. At a panel in the Singapore Pavilion, experts discussed how it is difficult to derisk climate investments because current insurance models are not built for the sector. Because this space is still nascent, insurers and investors have not developed a forward price curve to manage risk. This means that insurers must review projects on a case-by-case basis, which often leads to high insurance expenses. For this reason, projects are often left to choose between risk and profitability a tradeoff that can quickly turn off investors when more lucrative opportunities are available.

Energy finance is lacking in the global south

At an event hosted by the Climate Reality Project, panelists spoke about how limited access to finance is holding back the deployment of renewables in Africa. While the continent has 60 percent of the global potential for solar power, it currently has fewer solar panels than the state of Florida. Panelists outlined that this is partially due to the fact that renewable energy development is often funded by private capital, which has historically shied away from projects in developing nations.

Public finance from developed nations (as committed under the NCQG) could be a major step in supporting Africa’s green energy expansion. While the panel did not touch on how to incentivize green private finance in Africa, I wonder how enhanced insurance and derisking efforts could also have a role to play in solving this problem when public finance falls short.

Nations are finding creative ways to finance the energy transition

In another event at the Singapore Pavilion, the Monetary Authority of Singapore hosted a panel discussion on the Transition Credits Coalition (TRACTION), which brings together public, private, and nonprofit institutions to analyze a potential market for energy transition credits in Asia. I was particularly excited to attend this discussion because I had a small role in supporting RMI, the coalition’s secretariat, in its work on this project.

TRACTION is taking a unique approach to financing the energy transition by studying how transition credits could be issued to finance the early retirement of coal plants. Ideally, proceeds from the sale of these transition credits would replace the coal plant’s foregone future revenues while also supporting the development of equitable and durable renewable energy projects. This coalition-based approach to financing offers an interesting example of how public and private actors can combine their strengths to accelerate the energy transition.