New Pathways for International Climate Funding

BONN, GERMANY/WASHINGTON, June 3, 2015—A New analysis from World Resources Institute finds countries can achieve the goal of mobilizing $100 billion per year in international climate funding by 2020.

The new paper finds the goal can be reached through multiple pathways and will require bringing in funding from various sources, including the public and private sectors.

Getting to $100 Billion: Climate Finance Scenarios and Projections to 2020 is one of the first quantitative analyses of funding scenarios to achieve the $100 billion goal. WRI’s paper finds greater clarity and stronger commitments will be necessary to reach the funding target, but if all considered sources are included, climate finance could total $109 to $155 billion in 2020 under projections of low/medium growth and leverage.

“An international climate agreement at COP21, including agreement on finance, depends on developed countries providing a credible pathway to honor their commitments with strong provisions for predictable and adequate climate finance,” said Athena Ballesteros, director, sustainable finance initiative, World Resources Institute.

“While $100 billion is not sufficient on its own to create a low-carbon transformation, it is an important political goal to signal developed countries’ are committed to scaling up climate finance.”

Four public and private financing sources that might count toward the $100 billion goal are grouped into potential funding scenarios and projected forward from 2012 to 2020, using various growth rates and assumptions about how much private investment could be leveraged by public dollars.

All four potential pathways require steady increases in public finance and inclusion of new funding sources to reach the $100 billion by 2020 goal:

  • Scenario one, which includes developed country climate finance alone, will not reach $100 billion by 2020, unless it grows at an annual rate of 25 percent.
  • Scenario two, which adds the private sector finance leveraged by developed country climate finance, could meet the target only under a high growth/high leverage projection.
  • Scenario three, which includes developed country climate finance and MDB climate finance and private sector investment leveraged by both these sources could meet the $100 billion target under a medium growth/medium leverage projection.
  • Scenario four which combines developed country climate finance and MDB climate finance and private sector leverage and climate-related ODA, could reach the $100 billion under a low growth rate/low leverage projection.

“Forging an agreement on the path to $100 billion is essential to build trust and bring countries together ahead of the Paris climate conference in December,” said Michael Westphal, senior associate, WRI and the paper’s lead author.

“We urge negotiators to use the report’s recommendations as a political middle ground to move the world toward the $100 billion goal.”

Scenario_4

Getting to $100 Billion outlines three key recommendations to achieve a credible and politically feasible path forward:

  • Developed nations should commit to increasing all public funding flows above current levels to 2020 – as of 2012 climate-specific finance totaled $17 billion.
  • Developed countries should consider using new and innovative sources of finance including redirection of fossil fuel subsidies, carbon market revenue, financial transaction taxes, export credits, and debt relief – many of which have so far been underutilized to mobilize climate finance.
  • Parties should clarify the definition of climate finance and development of methodologies, including those for calculating and attributing leveraged private sector investment, to improve accounting and reporting.

“As stated by President Hollande, we can’t secure an agreement in Paris without an agreement on finance,” said Pascal Canfin, senior advisor for international climate affairs, WRI.

“Therefore, showing a credible and balanced pathway towards the $100 billion goal is an issue of strategic importance for the upcoming G7 summit.”

A more detailed Working Paper is available here

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