Published on November 14th, 2016 | by Sandy Dechert0
Climate Finance: The Hottest Issue At COP22
November 14th, 2016 by Sandy Dechert
Climate finance is likely the most important issue the delegates of COP22 are working on. The term refers to the local, national, or transnational loans, grants, and other financing put forward to meet climate change goals. Finance may come from public, private, and/or alternative sources. The table below presents current sources of climate finance data.
Because significantly reducing emissions of greenhouse gases — especially in sectors that emit large quantities — requires large-scale investments, climate finance is critical to mitigating climate change. Climate finance is equally important for adaptation: nations must expend significant financial resources to adapt to the adverse effects and reduce the impacts of climate change.
In accordance with the UNFCCC’s recently declared principle of common but differentiated responsibility, the developed countries (Annex II Parties) have pledged to provide financial resources to assist developing (Annex I) countries in implementing the overall objectives of the international treaty. The 2016 climate funding snapshot below shows the UNFCCC Secretariat’s compilation of these resources for 2016.
Governments and other stakeholders need to understand and assess both the financial needs of developing countries and their available sources. Funding provided to developing countries will have to take into account both the nation’s particular vulnerability to climate change and the urgency of its needs.
Governments will also be looking to increase clarity for adaptation finance and for a mechanism to strengthen capacity-building, which helps developing countries build up their internal skills and institutional strengths and form their own clean-energy, sustainable futures.
Ways by which financial resources can be transferred to and accessed by developing countries are also important. Developing countries need to know that financial resources are predictable, adequate, sustainable, and capable of access directly without difficulty. The developed countries must perceive that developing countries can effectively receive and utilize the resources.
Over the long term, as these nations take on more responsibilities and as the impacts of climate change intensify, financial resources required to enable developing countries to mitigate and adapt to climate change will become more and more significant. Full transparency about the ways in which resources are used for mitigation and adaptation is vital.
In this respect, news from Climate Home is discouraging: donor countries as a group are becoming less transparent in reporting their climate finance. The group analyzed climate finance reports from 23 countries and the European Union and compared them with transparency benchmarks set forth by the UNFCCC. The reporting in the 2016 biennial reports scored only 52% of available points, compared with a 58% average for 2014 reports.
The 2016 biennial reports failed to report these markers:
- How much of total funding was directed to Small Island Developing States or Least Developed Countries
- How contributions are being allocated to specific projects
- How donor countries are planning on contributing to the $100 billion per year level of climate financing agreed to at COP15
Trust among parties to the convention and also external actors depends on effective measurement, reporting, and verification of climate finance.
At COP22, developed countries are presenting the guidelines (“roadmaps”) that will mobilize $100 billion dollars pledged in annual support to developing countries by 2020.
The UNFCCC created a Standing Committee on Finance to assist Paris Agreement nations with responsibilities like transparency, efficiency, and effectiveness in the delivery of climate finance. Twenty members comprise the committee: 10 members from developing countries and 10 from developed countries. The Standing Committee, which meets at least twice a year, is currently tackling four specific functions:
- Assisting the COP in improving coherence and coordination in the delivery of climate change financing
- Assisting the COP in a rationalization of the Financial Mechanism of the UNFCCC
- Supporting the COP in mobilizing of financial resources
- Supporting the COP in measurement, reporting, and verification of support provided to the developing countries
Here’s a complete overview of UNFCCC’s work on climate finance in Marrakesh.
Another effort on the financial front involves COP22 reviewing initiatives that support implementation of the Nationally Determined Contributions. These are the actual amounts to which countries committed themselves last year with the Paris Agreement. An NDC describes how each nation will integrate climate action and implement sustainable development and risk management across sectors and ministries. Interactions at COP22 will help each country integrate financial contributions into its sustainable development goals.
Successful fulfillment of the Paris Agreement depends on climate-friendly national policies. This is especially so because the Agreement rests squarely on full implementation of the global set of national climate action plans. In this context, the recent US election may have scuttled plans for about 20% of world emissions.