Climate Finance – A Handy Cheat Sheet for the Busy Minister

ECO overheard on several occasions — even at the plenary yesterday — some alarming conversations between negotiators and Ministers. After three years, there still seems to be some confusion of two very different notions of “finance” in the context of climate ambition!

So, in an attempt to help out busy Ministers (and negotiators, as and if needed), here is a little summary on the fundamental differences – and complementarities – between the two finances:

  1. Making Finance Flow – aka Shifting the Trillions “consistent with a pathway towards low greenhouse gas emissions and climate- resilient development” (Art. 2.1c); and
  2. International Climate Finance, to be provided by developed countries to developing country parties to support their action and compliance within the UNFCCC (Art. 9 & relevant paragraphs of 1/CP.21)

Make no mistake, both are urgently needed and an assessment of progress towards both climate finance mobilization goals and Article 2.1c must be part of the global stocktake. What is important to distinguish is that “shifting the trillions” should not divert developed countries from their climate finance obligations under the Paris Agreement, and the recognition for support for loss and damage.

Typical characteristics to look out for, that determine…

…International Climate Finance (Art 9 & paragraph 114 1/CP.21)

…Climate-proof & -resilient Finance Flows (Art 2.1 c)

Specific funding, provided and mobilized by developed to devel- oping countries in fulfilment of their legal obligations under the Convention and the Paris Agreement.

What

All global finance flows – public and private, internation- al and domestic.

Support the poorest and most vulnerable to (i) fulfil their obli- gations under the Paris Agreement and (ii) cope with the conse- quences of climate change by specifically financing mitigation and adaptation action in developing countries – in addition to development aid.

Purpose

Stop financing proliferation of greenhouse gas emis- sions, support emissions reductions and ensure resilient investments by decarbonizing investments, assets and any other finance flows worldwide…

Public climate-specific finance and private finance mobilized through public interventions.

Source

Any type of finance, including private investments, domestic public investments, broader development finance, etc..

$100 billion per year by 2020, continuing at this level to 2025.

Scale

All finance flows worldwide (aka “the trillions”)