The goals of the Paris Agreement will be missed unless there is a rapid and substantial increase in investment in emerging market and developing countries, leading finance experts have warned today (Wednesday 30 November) in a new report commissioned by the COP27 and COP28 Presidencies and the United Nations High-Level Climate Champions for COP27 and COP28.

The report presents a new framework for climate finance that will deliver the goals of the Paris Agreement. It points out that the lack of investment means emerging market and developing countries (EMDCs) are falling behind in the race for clean energy.

A climate finance framework: decisive action to deliver on the Paris Agreement’ is the second report of the Independent High-Level Expert Group on Climate Finance, which is co-chaired by Dr Vera Songwe, Chair of the Board of the Liquidity and Sustainability Facility, and Professor Lord Nicholas Stern of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. The Group has 28 other members, with Amar Bhattacharya of the Brookings Institution as Executive Secretary.

It is published at the start of the COP28 United Nations Climate Change Summit in Dubai, at which the first Global Stocktake of action under the Paris Agreement will be completed.

The report states:

“We are far behind on climate action globally, as evident from the first Global Stocktake. This is because the world is not investing sufficiently and too much of the investment is still misdirected. Investment in fossil fuel production and power generation still continues to outstrip what is being invested in renewable power generation.

“While global efforts to tackle climate change are increasing, albeit more slowly than necessary, EMDCs are facing setbacks and obstacles in every critical aspect of the low-carbon transition. This includes the shift to clean energy in both its supply and use, enhancing adaptation and resilience, addressing loss and damage, the protection and restoration of nature, and ensuring a just transition.

“EMDCs (other than China) are being left behind on clean energy. Global clean energy investments hit an all-time peak in 2023, driven largely by growth in solar PV and electric vehicles (EVs), but more than 90% of the increase in such investment since 2021 has taken place in developed economies and China. Low- and lower-middle income countries accounted for only 7% of clean energy spending in 2022. Challenges include higher interest rates, unclear policy frameworks and market design, financially-strained utilities and a high cost of capital. A massive increase in renewable energy is the cornerstone of an energy transition strategy for EMDCs that delivers on both Paris and development goals.”

The first report of the Group, which was published in November 2022 at COP27 in Sharm el Sheikh, concluded that the total annual investment needs for EMDCs (other than China) to deliver on the Paris Agreement are estimated to be $1 trillion in 2025 and $2.4 trillion by 2030.

The new report finds that global climate investment has increased but is not on track to deliver the scale outlined in the Group’s first report, and has stalled in EMDCs. It sets out how the necessary acceleration in investment could be achieved through specific actions to deliver on the Paris Agreement.

The report assesses current progress on climate finance and concludes: “The amount of global climate finance committed has more than tripled over the last decade, reaching $1.27 trillion in 2021/22, approximately 1% of global GDP. Despite a clear increase, global climate finance flows are still too low compared with the levels needed to achieve the low-carbon transition and build resilience to climate change.”

However, it also notes: “There are important shortcomings from the perspective of EMDCs: climate finance is concentrated in developed economies and China, and in mitigation rather than adaptation. Private finance is insufficient. Climate finance is primarily delivered in the form of debt. And most financing remains in its country of origin.”

The report points out: “Fiscal deficits that resulted from the response to COVID-19 and the current food and energy crises have left many EMDCs with a legacy of high public debt. All EMDCs feel this tension in how to manage their fiscal space.”

The report stresses that “developed countries must live up to past commitments and deliver on immediate priorities to restore trust”. It notes that the pledge by developed countries in 2009 and 2010 to mobilise $100 billion per year for developing countries by 2020 was not realised, and thus “eroding trust”, but provisional assessments indicate the target was met in 2022 and 2023.

The report calls on countries to adopt a climate finance framework that is “fit for purpose”. It recommends that the framework should “embody justice and inclusion: ensuring an equitable distribution of resources, recognising the differential impacts of climate change on countries and communities, and addressing historical responsibilities.” The framework should also “scale up all sources of finance and utilise them more effectively: climate finance for EMDCs will need to quadruple between now and 2030”.

The report states: “A more holistic, comprehensive strategy is needed to deliver bigger, better and faster climate finance. An overall financing strategy must utilise the complementary strengths of different pools of finance to ensure the right scale and kind of finance and to reduce the cost of capital rather than simply focusing on an aggregate number.”

It also states: “Mobilising the scale and quality of finance to meet the large anticipated requirements will require an integrated approach that boosts all sources of finance – public and private, domestic and international – and uses their complementary strengths”.

The report indicates that “the role of the private sector in both investment and finance will be crucial and both domestic and international private finance must be boosted”. It adds: “International private finance to EMDCs for climate action will need to be increased by more than 15 times on current levels to deliver on climate mitigation goals”.

The new report also notes that the G20 Expert Group on Strengthening Multilateral Development Banks earlier this year called for a tripling in sustainable annual lending levels to $390 billion by 2030. The new report calls for the Banks to work with the private sector to manage risks and to reduce the cost of capital for investments. It stresses that these Banks, governments, and the private sector should work together to create the right conditions to mobilise the investment needed.


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