How big is climate finance?
Global climate finance approached USD 1.3 trillion on annual average in 2021/2022 compared to USD 653 billion in 2019/2020.
Development Finance Institutions – this includes both multilateral sources (such as the Inter-American, Asian and African Development Banks) and bilateral sources (such as JICA (Japan), KfW (Germany) and the UK Development Fund (UK)).
To be specific, that growing gap to fund the climate transition equates to the difference between the $100 billion annually committed by donor countries and the more than $2.4 trillion needed per year by 2030 .
WHERE ARE WE HEADED? In the average scenario, the annual climate finance needed through 2030 increases steadily from $8.1 to $9 trillion. Then, estimated needs jump to over $10 trillion each year from 2031 to 2050.
Climate financing serves as a critical pathway to invest in the climate adaptation and resilience efforts of conflict-affected and climate-vulnerable countries. Without adequate climate action, communities become increasingly vulnerable to climate shocks like floods and droughts.
The Trust Fund Committee of the Climate Investment Funds (CIF) announced today the appointment of Tariye Gbadegesin as Chief Executive Officer, effective March 2024.
Director and Chief Executive Officer
Andrew Johnstone has overall responsibility for the delivery of all fund management services.
However, the figure was not reached by 2020, nor is it deemed sufficient to cover the needs of developing countries. Beyond the level of financing, there are claims of an unjust distribution of funds. Moreover, most of the money is given as loans, exacerbating debt problems in many developing countries.
In 2009, developed countries promised that from 2020 they would transfer $100 billion a year to poorer nations hit by worsening climate change-fuelled disasters. Rich countries had previously signalled the target would not be met until 2023.
The 100 billion U.S. dollars a year is a collective commitment of developed countries. There is no official assessment of each country's share of the goal. However, developed countries are required to provide forward and backward-looking information regarding their climate finance commitments.
What is the current state of climate finance?
U.S. international public climate finance increased 286% from 2021 to 2022, reaching $5.8 billion in 2022. In 2023, preliminary estimates suggest that U.S. climate finance will exceed $9.5 billion, on track to meet the President's pledge in 2024.
Main funds of climate finance
Set up by the UNFCCC in 2010, it is the world's largest fund devoted to helping developing countries reduce their GHG emissions and adapt to the impact of climate change, paying particular attention to the needs of the most vulnerable countries.
In 2016-2020, Asia was the main beneficiary region of climate finance provided and mobilised by developed countries, accounting for 42% of the total. Africa (26% of the total), the Americas (17%), Europe (5%) and Oceania (1%) followed.
Climate finance should not be confused with carbon finance as the two are totally different; climate finance refers to the funds required for addressing the climate change whereas carbon finance is the revenue realized by projects through sale of carbon credits earned.
Climate finance is a subset of environmental, or green, finance. Green finance is finance that supports action on the full range of environmental issues, including climate change. For example, green finance might include actions that support pollution reduction or biodiversity.
Adaptation finance dropped by USD 4 billion (-14%) in 2021, resulting in a decrease in its share of total climate finance from 34% to 27%. At the same time, cross-cutting finance, increased from USD 6 billion in 2020 to USD 11.2 billion in 2021.
Examples of climate finance include grants provided by multilateral funds, market-based and concessional loans from financial institutions, sovereign green bonds issued by national governments, and resources mobilized through carbon trading and carbon taxes.
Who owns and manages this site? The National Oceanic and Atmospheric Administration (NOAA) led development of the U.S. Climate Resilience Toolkit, in partnership with the National Aeronautics and Space Administration (NASA) and other departments and agencies in the United States Global Change Research Program.
Sheri Hickok
With a focus on clients, partnership, and impact, she leads our work with climate-leading businesses and high impact projects to drive the global transformation to a low carbon economy.
Dr. Andrew Steer is the President and CEO of the Bezos Earth Fund.
Who is Mafalda Duarte?
Mafalda Duarte is the Executive Director of the Green Climate Fund, the world's largest multilateral climate fund, since August 1, 2023.
Mafalda Duarte, Executive Director
Originally from Portugal, Mafalda is a proud mother to three daughters and a champion of social inclusion and equity.
- Banks and other intermediaries to transfer capital overseas.
- Financial markets to price energy commodities.
- Derivative markets to hedge and exchange risks related to energy prices.
Looming over the talks is wealthy nations' failure to meet a 2009 pledge to provide $100 billion per year from 2020 in climate finance to poorer nations. That broken promise has fuelled mistrust and resentment among poor nations facing calls to cut their CO2 emissions but struggling raise money to do this.
Impacts. Humans and wild animals face new challenges for survival because of climate change. More frequent and intense drought, storms, heat waves, rising sea levels, melting glaciers and warming oceans can directly harm animals, destroy the places they live, and wreak havoc on people's livelihoods and communities.
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