Financing the Answer to Climate Change: Challenging but Feasible. Egmont Paper No. 51, September 2011

D’Oultremont, Clémentine (2011) Financing the Answer to Climate Change: Challenging but Feasible. Egmont Paper No. 51, September 2011. [Policy Paper]

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Abstract

An agreement on climate finance is crucial to ensure an equitable approach between developed and developing countries in the fight against climate change. Given their economic capabilities and their historical responsibility for global warming, developed countries are expected to bear the majority of the costs associated with global climate action. The Cancun Agreements formalise a commitment by developed countries to jointly provide USD 30 billion for the period between 2010 and 2012 and USD 100 billion annually by 2020 for developing countries. The objective is to help these countries adapt to the adverse impacts of climate change and to undertake mitigation actions so as to bring them towards a low-carbon economy. This report addresses the following question: How is it possible to secure a framework for mobilising, administrating and delivering financing on the necessary scale? The mobilisation of USD 100 billion per year by 2020 is feasible, but represents an enormous challenge. The money will come from various sources, public and private, multilateral and bilateral, including alternative sources. However, the question of how to raise the money from these sources is highly political and raises very contentious issues. As for the administration of climate finance, the current intricate network of existing funds and the Green Climate Fund established in Cancun will have to be organised coherently. Moreover, transparency and accountability are essential for a more efficient and coordinated approach towards the administration of climate funds. Finally, building the capacity to deal with the delivery of scaled-up funding in an efficient, effective and equitable way represents a huge challenge. Without a credible framework, the risk remains that developing countries’ actions to tackle climate change will be insufficient, inefficient, inadequate and delayed. The global costs would thereby increase and the path towards a low-carbon future would be jeopardized.

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