The Intergovernmental Panel on Climate Change (IPCC) in its 6th Assessment Report highlights the irreversible impact of human activity on the climate system and the increasing frequency and severity of extreme weather events around the world. The report provides evidence of heat extremes and record high levels of global greenhouse gas concentrations, sea level rise, ocean temperatures and ocean acidification indicators in 2021.
Despite growing national and international commitments to tackling climate change, effective mobilization of essential resources for transformative action remains elusive, particularly for Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The total adaptation costs for developing countries alone are estimated to be up to $300bn per year by 2030. Therefore, there is an urgent need to rethink global climate finance and renew delivery plans to ensure wider accessibility, to limit global warming to 1.5 degrees, enable delivery of ‘finance flows [are] consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’ in accordance with the Paris Agreement of 2015, and facilitate effective implementation of updated Nationally Determined Commitments (NDCs) from CoP26 in Glasgow in 2021.
Access to Climate Finance:
The $100 billion per year climate finance target was reaffirmed through the Paris Agreement in 2015, to support developing countries meet the multiplicity of challenges posed by the accelerating climate crisis, and though numerous funds and other distribution mechanisms have been established, this target is yet to be reached.
Global climate financing instruments are increasingly diversified with establishment of a wide number of multilateral funders including the Green Climate Fund, Global Environment Facility, Adaptation Fund, Least Developed Country Fund. The climate finance landscape includes loans, grants, direct and indirect private sector investment, Public-Private-Partnership (PPP) models, debt swaps, dedicated green and blue climate bonds among others.
Yet the access, transfer, and distribution of pledged and deposited global climate finance towards countries and projects remains lagged. According to OECD only 25% of all climate funding goes towards adaptation initiatives. An analysis of 27 multilateral climate funds shows that only 30% of the US$ 34.8 bn deposited climate finance over the past decades had been distributed to countries and projects up to January 2022 (Calculations by author. Data from Climate Funds Update Data Dashboard by ODI and Heinrich Böll Stiftung).
The Commonwealth Secretariat Toolkit to Enhance Access to Climate Finance identifies several challenges that need to be addressed to improve facilitation and distribution of global climate finance:
· Limited domestic human and institutional capacity leading to a lack of bankable and value-for-money project proposals.
· Complex procedures and standards required by global climate funders leading to delays in accreditation, approval, and distribution of funds.
· Limited evidence-based research and data availability to support proposals, especially historical and modelled climate data and socioeconomic statistics.
· Pre-existing deficits in access to concessional development finance which compounds existing vulnerability and inhibits the transition from short-term crisis response to long-term sustainable development planning.
· Domestic vertical and horizontal misalignment of policy and regulatory frameworks including capacity limitations for developing and implementing national-level climate strategies.
· Intersectoral distribution inequalities and systemic investment gaps including nascent public-private sector partnerships.
Commonwealth Climate Finance Access Hub:
Initiatives such as the Commonwealth Climate Finance Access Hub (CCFAH) have enabled member countries to access global climate finance to achieve their NDCs. The CCFAH enables inter-regional knowledge sharing of best practices and lessons learned; technical assistance; capacity building; evidence-based research and analysis. CCFAH also provides accreditation support and development of new, ambitious, and bankable projects in collaboration with member countries according to national climate priorities to meet their NDC goals to 2030, 2050 and beyond.
Training and capacity building workshops organised by CCFAH enable institutional learning and provide an effective platform to work actively with countries in a cost-effective and timely manner to identify gaps, strengthen data analysis and enhance their access to available global climate finance.
A few examples of effective project development and enabling access to finance include
(i) implementing a National Climate Finance Strategy in Belize
(ii) a Climate Public Expenditure and Institutional Review (CPEIR) in Eswatini
(iii) a study leading to the introduction of climate change budgeting into national budgetary processes in Jamaica
(iv) sharing knowledge and best practices from Jamaica’s National Private Sector Readiness project to inform the subsequent development and submission of a Private Sector Readiness Project for Tonga. Thereby CCFAH enables South-South cooperation.
Enhancing multi-disciplinary and multi-sectoral collaborations towards building forward better:
A systemic approach that mainstreams climate action within both economic recovery planning and longer-term development aspirations Is crucial to build forward better for inclusive and sustainable development.
The progress made in poverty reduction (SDG-1) has undergone unexpected backsliding for the first time in twenty years, with an estimated 119-124 million people having been pushed into extreme poverty in 2020. The ongoing economic, environment and socio-political challenges continue to threaten the attainment of Sustainable Development Goals (SDGs) to 2030. Particularly considering domestic fiscal constraints that continue to stress public finances over the past decade, it has been challenging for countries around the world to balance their multiple priorities for sustainable development. While there is clear evidence of the relationship between climate change and health outcomes, and an estimated COVID-19 fiscal stimulus US $16.7 trillion deployed to June 2021, fewer than one-third of countries (of 66 countries assessed by UNEP, 2020) have funded COVID-19 recovery measures to address climate risks. Therefore there is a need to better utilise available funding to address climate change and health challenges.
Scaling up multi-sectoral partnerships and entrepreneurship in climate-resilient investments, including renewable technologies and sustainable infrastructure development, are crucial toward building forward better. Working closely together is essential in an increasingly connected global digital world and provides key opportunities to unlock the potential for investment in innovation and development of new pathways including clean energy; greener transportation for an increasingly mobile population; nature-based solutions; and creation of jobs and entrepreneurial opportunities that, while enabling prosperity for the eight billon world population, are also sustainable for the planet.
The growing severity of climate change requires ambitious, transformative initiatives including financial commitments that can deliver value for money. Developing effective climate finance mechanisms, implementation plans and processes to meet national and international climate objectives requires multidisciplinary skillset and an understanding of both social and physical sciences. The roles of civil servants, administrators, local stakeholders, and communities are crucial to ensure effective implementation of high-level climate pledges. Multi-dimensional and innovative financing mechanisms, with established funds working alongside key government partners and dynamic private sector institutions, are essential to enable a more resilient future.
The IPCC Sixth Assessment Report assessed the impacts of climate change, looking at ecosystems, biodiversity, and human communities at global and regional levels. Working Group II of this IPCC report 2022 reviewed vulnerabilities and the capacities and limits of the natural world and human societies to adapt to climate change. There is further need for enhancing understanding of the challenges and the modus operandi to tackle the severe impacts due to climate change. Therefore, there is crucial need for further multi-disciplinary evidence-based research and collaboration between social sciences and sciences, technology, engineering, and maths (STEM) to better comprehend the causes and effects due to climate change on our multi-dimensional world.
CoP27 in Sharm el-Sheikh in November 2022 provides further opportunity to enhance commitments to achieve the Nationally Determined Commitments to meet climate priorities. A more sustainable and climate-resilient future is achievable only through enhancing collaborations between multiple sectoral partners, and financing agencies and initiatives.
Photo Credits: Andrew Stutesman on Unsplash
About the author
Ruth Kattumuri is Senior Director of Economic, Youth and Sustainable Development at the Commonwealth of Nations. She is responsible for Commonwealth of Nations’ programmes pertaining to sustainable and inclusive development involving advocacy; technical assistance, knowledge sharing and capacity building. Ruth is also Founder and Co-Director of the India Observatory at the LSE. Ruth is a Fellow of the UK Academy of Social Sciences and she has published extensively on various topics related to sustainable and inclusive development.