As Qatar prepares to host COP 18, decisions on how to deliver and channel finance to help developing countries respond to climate change will again be on the agenda. Climate finance is mobilized in the context of UNFCCC principles that recognize countries common but differentiated responsibilities to act to address climate change. Despite fiscal pressures, we see some encouraging signs that countries are delivering public climate finance in this year’s series of Climate Finance Fundamentals.
Climate Finance Fundamentals are based on data from Climate Funds Update, a joint initiative of the Overseas Development Institute (ODI) and Heinrich Böll Stiftung (HBF), which monitors climate funds from the stage when donors pledge funding through to the actual disbursement of financing for projects.
In 2012, 1.2 billion dollars of climate finance has been pledged. The total volume of climate finance pledged through the 23 dedicated public funds we monitor on CFU now amounts to $29.8 billion.
Between 2003 and 2012, $7.28 billion has been pledged to finance activities. About $5.61 billion of this pledged amount has been deposited to the designated funds. The volume of finance approved for REDD+ activities increased by about $120 million in 2012, adding to the $ 1 billion total approved for REDD+ activities. Disbursement of finance continues to be slow.
Since 2003 only 15% of climate finance approved for projects has gone to finance adaptation. But support is growing. This year $556.3 million was pledged to finance adaptation activities, bringing the total since 2003 to $2.73 billion; of this, about $2.23 billion has been deposited.
The total amount approved for projects in sub-Saharan Africa has increased by $300 million since 2011. Of the total climate finance channeled to sub-Saharan Africa, 56% supports mitigation activities, while adaptation projects receive 28% of funding in this highly vulnerable region.
Climate finance for the Middle East and North Africa, the host region for this year’s COP, has increased by 5% in 2012. Egypt and Morocco, however, receive 80% of the total approved climate finance.
The Latin America and the Caribbean region continues to receive the most REDD+ funding, with a total of $598 million approved for projects.
$2.27 billion has been approved for projects in the Asia –Pacific region since 2003. This year alone, $735 million was approved for new projects. Of the total, a full 67% supports mitigation activities.
How is this finance channelled? The global climate finance architecture is multifaceted. Some finance is spent through multilateral funds – such as the Global Environment Facility and the Climate Investment Funds. But a large share of public climate finance is spent bilaterally, administered by existing development agencies such as Japan’s JICA and the US Agency for International Development (USAID). Some countries, notably Brazil and Indonesia, have set up their own national climate change funds. Their objective is to establish funds with high levels of accountability that can finance projects that reflect national circumstances and priorities.
It is also necessary to consider the social dimensions of climate finance. There is evidence to suggest that women are disproportionally affected by climate change impacts. As a result, global interest in options to strengthen the linkages between gender equity and climate change finance has increased.
There is an expectation that the Green Climate Fund (GCF) may help to fill some of the gaps in the current climate finance architecture, especially when it comes to more adaptation finance for vulnerable countries. The precise volume of finance to be channelled through the GCF remains unclear, although it could potentially manage tens of billions of dollars per year over time.