They flagged on countries’ imminent threats, banks’ evolvement, climate shocks funding, and community-based finance.
A key committee on climate finance has released four new reports that will form an important basis for government discussions at the United Nations Climate Change Conference COP27 in Sharm el-Sheikh (November 6-18).
The reports make clear where the world stands in its efforts to mobilize the billions of dollars needed each year to promote the green economy and build resilience to the inevitable impacts of climate change.
The reports published by the UNFCCC Standing Committee on Finance (SCF) draw on the experiences of countries, multilateral development banks, climate funds, and the broader finance community.
They provide a comprehensive landscape of climate finance from the perspective of current climate finance flows, progress towards the joint mobilization target of USD 100 billion per year, definitions of climate finance, and efforts to make financial flows consistent with a low greenhouse gas emission trajectory.
The reports show that while there has been an increase in global climate finance flows, key climate finance mobilization targets for developing countries have not been met.
“Climate finance from developed to developing countries increased from 6 percent to 17 percent in 2019-2020, either directly from developed to developing countries or through climate funds and multilateral development banks,” the statement said.
The report shows that global climate finance flows were 12 percent higher in 2019-2020 than in the previous biennium, reaching an annual average of $803 billion. This increase is primarily due to increased investments in energy efficiency in buildings, investments in electric vehicles, and climate change adaptation measures such as building new flood defenses.
The report identified that mitigation funding (greenhouse gas emission reductions) makes up the largest share of climate-specific financial support, but the share of adaptation funding continues to increase and has grown at a higher rate than mitigation funding.
The report reiterates that focusing solely on positive climate finance flows will not be enough to achieve the overall goals of the Paris Agreement, and that finance flows must integrate climate risks into decision-making and avoid increasing the likelihood of negative climate outcomes.
Mobilizing $100 billion each year
The technical report on progress towards the joint mobilization of USD 100 billion per year for consideration by governments at COP27 represents the first such effort undertaken by the SCF and examined progress in three dimensions of the goal, financial flows for USD 100 billion , how the needs of developing countries are being addressed, and progress in the context of meaningful mitigation action and transparency in implementation.
The report confirmed that the target was not met by 2020. It also identified the role of international public climate finance as critical in the face of current economic challenges in developing countries due to extreme weather, food and energy crises.
Work on definitions of climate finance
This work was based on 18 submissions received from Parties and 4 submissions from non-Parties. It highlights how views on definitions can differ in three areas, which climate-related activities should be financed, how finance should be accounted for, and which actors should be included.
It notes that different definitions are used for specific purposes such as tracking global climate finance, tracking finance from developed to developing countries, or tracking finance in government budgets.
Work related to Article 2, paragraph 1(c) of the Paris Agreement (making financial flows consistent with a pathway to low greenhouse gas emissions and climate resilient development)
In this work, the SCF identified ways to achieve the objective of Article 2, paragraph 1(c) of the Paris Agreement based on 14 submissions received from Parties and non-Party stakeholders. It identified the type of finance and actors that might be relevant to the target, particularly asset managers and banks, as well as some ways that Parties could continue to work on this topic.
SCF has also mapped updated information relevant to the goal. For example, there has been a 16% increase in the number of policy and regulatory actions on green finance since the end of 2020, and a number of new collective initiatives for the financial sector have been established as part of the Race to Zero and the Glasgow Financial Alliance for Net Zero (GFANZ). While there has been an increase in the engagement of public sector financial institutions in developing countries in these initiatives, greater participation of private financial institutions in developing countries is important to the private sector initiatives.
Next Steps for Review of Reports
At COP27 in Sharm el-Sheikh, the work of the SCF will be launched at a side event on November 10 and will inform the negotiations on the finance-related agenda items as well as the high-level ministerial dialogues on the new collective quantified target on climate finance (November 9) and on climate finance (November 14).
This article has been published with support from MESHA/IDRC grant for coverage of COP-27 by African science journalists
