New analysis from WRI shows a credible and politically balanced path towards US$100 billion in 2020 is possible by including a larger set of climate finance sources in a balanced way while scaling up all public finance.
Getting to $100 Billion: Climate Finance Scenarios and Projections to 2020 is one of the first quantitative analyses of realistic funding scenarios to achieve the US$100 billion goal. It shows that if all considered sources are included, climate finance could total US$109 to US$155 billion in 2020 under projections of low-medium growth and leverage.
At COP15 in Copenhagen in 2009, developed countries committed to a goal of jointly mobilising US$100 billion dollars a year by 2020 from a “wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.” However, five years later, ambiguity remains on the sources, instruments and channels that will enable developed countries to achieve this goal.
Forging an agreement on the path to US$100 billion is essential to build trust and bring countries together ahead of this December’s climate conference in Paris. Although the Paris agreement is centred on the post-2020 period climate regime, political agreement on post-2020 finance is unlikely as long as developed countries have not provided a pathway to honour the commitment made in Copenhagen on the pre-2020 period.
And, developing countries are unlikely to sign an agreement in Paris without strong provisions for predictable and adequate climate finance. Defining a realistic and politically acceptable way to achieve the US$100 billion is a critical condition for a successful Paris agreement.
We grouped finance sources that might count toward the US$100 billion goal into four scenarios, taking care to remove any overlap among them:
· Scenario 1: Developed country climate finance only, as contained in countries’ biennial reports to the UNFCCC
· Scenario 2: Developed country climate finance plus leveraged private sector investment
· Scenario 3: Developed country climate finance, multilateral development bank (MDB) climate finance (weighted by developed countries’ capital share), and the combined leveraged private sector investment for both sources of public finance
· Scenario 4: The previous sources, plus climate-related official development assistance (ODA) as compiled by the OECD, adjusted for overlap with the country biennial reports.
Getting to $100 Billion does not advocate for any specific scenario, but our analysis suggests a combination of sources will likely be needed to reach the target. This could entail the inclusion of more sources but in a balanced way.
Developed nations should do their part by committing to keep increasing all public funding flows to 2020, and we’re already seeing new commitments – Germany’s recent announcement to double its climate finance to 4 billion euros by 2020 is a welcome step forward.
How does the GCF impact China?
China has been calling for the fund to adopt operational policies swiftly and complete the process by which resources will be mobilised so the GCF can be truly open for business. GCF is soon meant to be disbursing funds. In the future, the Asia Infrastructure and Investment Bank could potentially work with the GCF in channeling and deploying funds to ensure climate resilient and low carbon infrastructure projects in Asia.
In order to keep global temperatures below 2C, infrastructure and energy development need to undergo a fundamental paradigm shift towards low carbon activities.
This is where the required climate financing, including the US$100 billion will come in to enable this shift and transition in countries such as China.
As the country is major emerging economy (and largest developing country emitter) it stands to benefit directly and will have access to these funds and have huge potential to get resources based on the scale of ambition it commits to (for mitigation and adaptation). China will also need to leverage and mobilize its own domestic resources to attract further international climate finance.