Finance is at the heart of all that the world is doing to combat climate change. Mitigation, adaptation, loss and damage, climate technology – all of it requires sufficient funds to function properly and to yield the desired results.
On this crucial topic, COP27 created a pathway to align the broader finance flows towards low emissions and climate resilient development.
The COP27 cover decision, known as the Sharm el-Sheikh Implementation Plan, highlights that a global transformation to a low-carbon economy is expected to require investments of at least USD 4-6 trillion a year. Delivering such funding will require a swift and comprehensive transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.
One of the key outcomes of the various decisions on climate finance is a call for developed country Parties to provide resources for the second replenishment of the Green Climate Fund. All countries welcomed the recent pledges made to the Adaptation Fund (totaling USD 211.58 million), the Least Developed Countries Fund (totaling 70.6 million), and the Special Climate Change Fund (totaling 35.0 million).
At COP27, deliberations continued on setting a ‘new collective quantified goal on climate finance’ in 2024, taking into account the needs and priorities of developing countries.
However, serious concern was expressed that the goal of developed country Parties to mobilize jointly USD 100 billion per year by 2020 has not yet been met, with developed countries urged to meet the goal, and multilateral development banks and international financial institutions called on to mobilize climate finance.
UN Climate Change’s Standing Committee on Finance was requested to prepare a report on doubling adaptation finance for consideration at COP28 next year, as well as the biennial progress report on the USD 100 billion goal starting 2024.