Beyond the $100 billion: financing a sustainable and resilient future
In this policy note Amar Bhattacharya and Nicholas Stern set out where we are on developed countries’ climate finance pledge to developing countries and where we must go now, presenting an action agenda with five elements.
- Developed countries’ commitment to mobilise $100 billion a year by 2020 to support developing countries on climate action is both an intensely important symbol of trust and foundational to progress on climate action by developing countries.
- The commitment, made at COP15 in 2009, formalised at COP16 and reaffirmed in the Paris Agreement, reflected the importance of climate justice and what is possible with the right support. That spirit applies with equal force today.
- Donors collectively fell short of the goal in 2020, but there is an opportunity to step up and deliver in 2022.
- Developed countries must go beyond the $100 billion in three important respects: delivering on the scale and quality of climate finance needed to ramp up ambition; utilising the complementary strengths of the different pools of finance rather than simply focusing on the aggregate number; and creating the necessary partnerships to deliver concrete results.
- Effective finance that matches the scale and nature of challenges facing developing countries is critical if developing countries are to implement a green recovery from COVID-19, raise ambition on climate change mitigation, build climate resilience, and make the necessary investments in restoring natural capital, including biodiversity.
- In turn, the scale and pace of investments in developing countries will determine whether the world as a whole is able to stay on course to keep global warming to within 1.5°C, build adequate resilience against climate change impacts and meet global targets on nature.
- COP26 must pave the way for constructive discussions and substantive and credible proposals on how to mobilise the trillions of dollars that will be needed for a green recovery and sustained transformation. Weak and delayed action will further undermine trust and lead to a downward spiral in the ability of the world to act together on the scale and at the pace needed.
The action agenda must encompass five elements:
- Donors must double bilateral climate finance to $60 billion by 2025 from its 2018 level.
- Donors should step up their financing of the multilateral concessional funds – starting with ongoing replenishments – given their important catalytic and leveraging role.
- The multilateral development banks (MDBs) must be prepared to triple their level of financing by 2025 from their 2018 levels.
- The private sector and the official sector must work together to greatly expand the mobilisation of private finance.
- All parties should pursue innovative solutions to scale up and leverage climate finance.
Beyond the $100 billion: financing a sustainable and resilient future event at COP26
A shorter 15 minute discussion between Nicholas Stern and Bob Ward on this publication is also available to view on Facebook Live