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Begin New Search Topic Climate Finance Political Geography Global Focus

1. The Distribution of Climate Finance among Annex-II Countries: A CBDR-RC Approach for Partial Funding of the Developing Countries

Author:
Shouvik Chakraborty
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Developing nations face the significant challenge of reconciling their efforts in climate change mitigation with the urgent need for financial resources to adapt to climate-related disasters, achieve sustainable development, and stabilize their economies. The financial requirements for addressing climate impacts span various sectors, including energy transition, energy efficiency, transportation, agriculture, forestry, other land use (AFOLU), and adaptation strategies. Estimates provided by reputable international organizations, such as the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), and the Intergovernmental Panel on Climate Change (IPCC), suggest that the annual global climate finance needs may range from $4.2 trillion to $5.7 trillion. Within this framework, the share allocated to developing countries is estimated to constitute approximately $1.9 trillion to $2.0 trillion annually, mainly to support mitigation efforts. It is widely acknowledged that developing countries are unlikely to meet these financial demands independently. Consequently, it is projected that around $1 trillion must be sourced from advanced economies, particularly the AnnexII countries. This paper introduces a methodology grounded in the principles of common but differentiated responsibility and respective capability (CBDR-RC). It facilitates a structured distribution of financing responsibilities among Annex II nations. The methodology incorporates the notion of historical responsibility, quantified as carbon debt, while also measuring capability through a balanced consideration of the wealth and gross domestic product (GDP) of the AnnexII countries. The analysis conducted reveals that the United States of America (USA) is required to contribute nearly half of the total financial obligations among the AnnexII countries, with the remaining funds to be apportioned among other nations within this group.
Topic:
Development, Finance, Climate Finance, and Burden Sharing
Political Geography:
Global Focus

2. Lowering the Cost of Capital for Climate and SDG Finance in Emerging Markets and Developing Economies (EMDEs)

Author:
Jeffrey Sachs, Lisa Sachs, Ana Maria Camelo Vega, and Bradford M. Willis
Publication Date:
04-2025
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Today, the world’s fastest-growing economies face the steepest borrowing costs — even for clean energy projects with solid fundamentals. This is not a function of global capital scarcity. Trillions are available. The problem lies in systemic barriers that prevent capital from flowing to where it’s most urgently needed. The high cost of capital in EMDEs not only undermines critical financing for the energy transition and sustainable development; it also limits the ability for US- and EU-based financial institutions to invest in and finance projects in EMDEs, despite institutional and stakeholder appetite and interest for transition finance. This paper provides a holistic diagnosis of the structural forces inflating the cost of capital in EMDEs – including sovereign credit ratings, investor risk perceptions, development finance mandates, and regulatory norms – and it outlines ten actionable solutions to unlock long-term, affordable finance for climate and sustainable development – at the speed and scale required by both global goals and national ambitions. Each of the proposed approaches deserves careful discussion, consideration, and exploration; they are presented in this paper as a roadmap for discussion, including in the context of relevant global discussions on financing climate action and sustainable development, including the UN Financing for Development Agenda, the UNFCCC COP process, and the G20 Sustainable Finance Working Group.
Topic:
Development, Emerging Markets, Climate Finance, Sustainable Development Goals, and Capital
Political Geography:
Global Focus

3. The Battle for Green Supremacy: Carbon Markets, Artificial Intelligence, and the Problem of Climate Finance

Author:
Carlos Roa and Shubham Dwivedi
Publication Date:
04-2024
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
Observe the bee as it pollinates flowers, fruits, vegetables, and a wide variety of other crops; according to the United Nations’ Food and Agriculture Organization, around one-third of the world’s food production depends on their little wings. Watch as the beaver builds its dam, shaping the landscape of its local environment. Its pond stores carbon, improves water quality, creates a suitable habitat to support biodiversity, and helps reduce climate impacts. One cannot help but conclude that some higher order guides the work of these and other creatures; someone or something seems to be managing the delicate ecology of our world. Unfortunately, human beings are not as adept at such complex environmental management. As the world increasingly bears witness to the dramatic effects of climate change, the urgency for decisive action has never been more critical. With the planet’s average temperature continuing to rise, resulting in more frequent, severe, and unusual weather events, the global community faces a stark reminder of the imperative to mitigate this environmental degradation. The upcoming UN Climate Change Conference in Baku (COP29) represents a pivotal moment for states to commit to ambitious strategies and deepen international collaboration in the fight against climate change. At the forefront is the pressing need to explore and affordably implement effective mechanisms that can significantly reduce carbon emissions on a global scale.
Topic:
Markets, Climate Finance, Artificial Intelligence, and Carbon Emissions
Political Geography:
Global Focus

4. Leaving No One Behind: A green bargain for people and planet

Author:
Mathew Truscott and Erica Mason
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
With the increasing frequency of fires, floods, droughts and other extreme weather events, countries across the world are facing a new era of climate-linked crises. The international climate finance system – through mitigation, adaptation and potentially now through loss and damage – is seeking to reduce and address these impacts. In parallel, the humanitarian system is increasingly having to respond to climate-linked crisis, or the impacts of climate change on already fragile or conflict-affected states. Both systems are chronically underfunded and increasingly overstretched and must now make difficult choices regarding the way in which funding is raised, distributed and used. As the climate crisis intensifies, climate and humanitarian finance must find ways to plan and programme together more effectively. While many important debates over principles and mechanisms continue, this paper seeks to provide a broad guide for those engaging at the intersection of climate and humanitarian finance to understand both systems and generate discussion on how both sectors can better coordinate for a more effective response to the climate crisis.
Topic:
Climate Change, Natural Disasters, Climate Finance, Weather, and Climate Justice
Political Geography:
Global Focus

5. Beyond Crises: The future of Special Drawing Rights as a source of development and climate finance

Author:
Didier Jacobs
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
The allocation of Special Drawing Rights (SDRs) during the COVID-19 pandemic has generated considerable interest in using SDRs as a tool for development and climate finance. This policy brief argues that the monetary logic that underpins SDRs justifies regular allocations of at least $200 billion a year, and more than doubling the share of low-and middle-income countries. Once allocated, governments can use SDRs in multiple ways, including to fund some development or climate projects. The brief also discusses reforms to deepen the SDR system in the interest of all countries.
Topic:
Development, Climate Finance, Sustainable Development Goals, Economic Policy, and IMF
Political Geography:
Global Focus

6. The economic case for climate finance at scale

Author:
Patrick Bolton, Alissa M. Kleinnijenhuis, and Jeromin Zettelmeyer
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
It will be impossible to contain the global temperature rise to 1.5 to 2 degrees Celsius above pre-industrial levels unless emerging market and developing economies (EMDEs) decarbonise much more rapidly. This policy brief examines the economic case for advanced-country financial support for replacement of coal with renewable energy sources in EMDEs. Such conditional financial support is necessary in the sense that an exit from coal consistent with keeping the global temperature rise to between 1.5°C and 2°C will not happen without it, desirable from the perspective of the financier countries, and financially feasible. Although the global economic benefits of phasing out coal are very large, the costs of exiting coal generally exceed the benefits to EMDEs. However, the collective economic benefits to advanced countries greatly exceed those costs. These net benefits are positive even for small coalitions of advanced countries (G7 or G7 plus EU). The fiscal costs of financing the coal exit in EMDEs (without China) are modest as a share of G7+EU GDP at about 0.3 percent of GDP per year, assuming public-sector participation in renewable energy investment costs through blended finance of around 25 percent. Although providing climate finance to EMDEs is economically desirable and feasible from the G7 perspective, it is not happening at the necessary scale, partly because of incentives and political-economy challenges. Advanced countries are more likely to be willing to commit financing to climate action outside their borders if they have more control over how this money is spent. Developing countries are reluctant to phase out coal unless sufficiently large financial support is forthcoming for renewable investments that are consistent with their development goals. These problems could be overcome by tying renewable finance to a coal phase-out. Already-existing Just Energy Transition Partnerships with South Africa, Indonesia and Vietnam are prototypes of this approach. They should be scaled up, with sufficient grants to pay for coal closures and the social transition in coal communities, by explicitly conditioning funding on a coal phase-out and through a stronger governance structure to implement these deals.
Topic:
Climate Change, Emerging Markets, Climate Finance, Renewable Energy, Coal, Carbon Emissions, and Emerging Economies
Political Geography:
Global Focus

7. The Road to Baku, Belém, and Beyond: A 5-Year Outlook for U.S. International Climate Finance

Author:
Courtney Federico
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
The United States must work to establish an ambitious new international climate finance goal this year at COP29 as part of a five-year plan to scale resources to combat the climate crisis.
Topic:
Climate Change, Diplomacy, Climate Finance, and Conference of the Parties (COP)
Political Geography:
Global Focus and United States of America

8. Climate Adaptation Finance: The Gap Between Needs and Resources Continues to Grow

Author:
Jamal Saghir and Ede Jorge Ijjasz-Vasquez
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University (ISID)
Abstract:
Our recent research on the state and trends of climate adaptation finance needs, gaps, and trends globally and in Africa provides new insights that call for greater urgency in adaptation action and financing. The global adaptation funding gap continues to widen because the understanding of needs shows much higher levels of investment required, and the rate of increase of adaptation financing is insufficient. In this policy brief, we review global climate finance trends, the growing funding gap in climate adaptation finance globally and in Africa, financial instruments used for climate adaptation, and challenges and recommendations to improve the tracking of climate adaptation finance.
Topic:
Climate Change, Climate Finance, International Development, Funding, and Adaptation
Political Geography:
Africa and Global Focus

9. Unveiling Challenges and Gaps in Climate Finance in Conflict Areas

Author:
Karen Meijer and Abeer S. Ahmad
Publication Date:
10-2024
Content Type:
Commentary and Analysis
Institution:
Stockholm International Peace Research Institute (SIPRI)
Abstract:
This SIPRI Insights addresses challenges related to climate finance distribution in conflict-affected countries, where vulnerabilities to climate change are significantly exacerbated. Conflict reduces the ability of populations to adapt, making effective climate finance even more critical. Despite increasing global climate finance commitments, conflict-affected countries consistently receive disproportionately low amounts of per capita climate adaptation official development assistance (ODA) compared to non-conflict-affected countries with similar income levels and climate vulnerabilities. The paper’s analysis, covering both bilateral and multilateral ODA flows between 2015 and 2021, highlights significant disparities in per capita climate adaptation funding. For example, small island developing states receive over US$100 per capita annually, while many conflict-affected countries receive less than $1. Methodological challenges such as those related to ‘regional’ or ‘unspecified’ funds and limited data transparency prevent accurate assessments. The paper highlights the need for improved transparency, equitable redistribution of funds and stronger donor–recipient coordination to ensure climate finance reaches the most vulnerable populations, especially in conflict settings.
Topic:
Climate Change, Development, Climate Finance, Conflict, and Transparency
Political Geography:
Global Focus

10. Climate and Development KPIs

Author:
Ian Mitchell and Edward Wickstead
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
How committed are countries to tackling climate change at home and in developing countries? These tables provides nine key indicators on the world’s major economies spanning their climate contributions in three areas: emissions, policy, and international finance. Indicators are calculated to be comparable between countries with several expressed relative to population or economy size. Countries are ordered by the number of indicators on which they score in the best quartile, with indicators shaded for top quartile performance.
Topic:
Climate Change, Development, Climate Finance, and Economy
Political Geography:
Global Focus