Developed countries have just released a Delivery Plan on mobilising $100bn annually in climate finance for developing countries, to build assurances before COP26 begins in Glasgow.
The Plan shows recent pledges will bridge the gap of approximately $20bn, projecting the $100bn would be surpassed from 2023 onward, after being nearly attained in 2022, and exceeded thereafter.
The Plan shows that the 100bn will be met on average over 2021-2025, but developed countries were unable to agree to commit to averaging 100bn/year over 2020-25, a key ask of vulnerable countries ahead of COP26 next week.
Negotiations over a COP26 ambition acceleration deal to “keep 1.5C alive” must now agree a wider finance acceleration offer, on access, adaptation finance targets, coordinated efforts to mobilize trillions from the via finance platforms, and a robust launch to deliberations on a new post-2025 finance goal under the Paris Agreement framework.
Prepared by Canada’s Minister Jonathan Wilkinson and Germany’s State Secretary Jochen Flasbarth, the Delivery Plan is intended to provide confidence to developing countries that developed countries will meet their commitment to mobilise an annual $100bn in climate finance over 2020-25.
Formally commissioned by COP26 President-Designate Alok Sharma in July, the Plan also responds to similar requests from the UN Secretary General and V20 group of climate-vulnerable countries. The Delivery Plan process since July has seen various new countries, most notably the USA, come forward with new finance pledges.
Whereas OECD data shows that climate finance only reached $80bn in 2019, 20bn below the 2020 target, the new plan shows that the gap will be bridged by 2023, after being nearly attained in 2022, and would be surpassed thereafter. Using conservative assumptions for mobilization of private finance, the Plan estimates that climate finance could reach almost $120bn by 2025.
One key expectation from vulnerable countries and civil society has been that the $100bn would be met on average if not met on time, i.e. that finance in later years would make up for shortfalls on the $100bn in initial years. The V20 group of vulnerable countries called for averaging $100bn/year over 2020-24, while civil society called for it to be averaged over 2020-25. The Plan shows that $100bn/year will be averaged over 2021-25, and could possibly be averaged over 2020-25, but stops short of accepting responsibility for compensating for initial shortfalls between 2020-2022. As reported last week, while some developed countries advocated for stronger commitments in this respect, other countries were unwilling to make an explicit commitment to averaging or compensating past shortfalls.
While the Plan is a step towards restoring trust, much more will be required at Glasgow to meet developing country expectations in full. Notably, countries need to see new targets for adaptation finance, clear steps to improve access, a coordinated efforts to mobilize trillions via finance mobilization platforms, and a robust launch to deliberations on a new post-2025 finance goal under the Paris Agreement framework.
These asks are expected to be revisited at Glasgow in the context of efforts to agree an ambition acceleration package to “keep 1.5 alive”. Unlocking this will require a finance acceleration package of sufficient breadth and scale, responding to the needs of different developing country constituencies under the UNFCCC.
Nick Mabey, Chief Executive of E3G said:
“At the last minute developed countries have come up with a just about credible plan to deliver on their long standing promise of $100bn a year in climate assistance. This should hopefully support collaboration between “high ambition” countries going into the crucial COP 26 negotiations but more clarity will be needed in Glasgow on how to ensure a fair share of finance goes to helping the most vulnerable countries and communities respond to rising climate impacts”
Alex Scott, E3G Programme Lead for Geopolitics and Climate Diplomacy, said:
“Another step forward in rebuilding trust is only valuable if the next step makes the final leap. To build trust on the unanswered asks from this delivery plan, developed countries need to come to the G20 and COP26 Leaders Summits with a broad finance acceleration package that mobilises the trillions in finance needed, deals with messy access barriers, scales up finance for adaptation, and ensures access to concessional finance for all climate vulnerable developing countries.”
Iskander Erzini Vernoit, E3G Policy Advisor on Climate Finance, said:
“This Delivery Plan, a crucial test for trust at COP26, indicates the 100bn may be exceeded by 2023. However, it falls short of committing to meet $600bn over 6 years, or offering a serious scaled-up adaptation finance target for 2025. Moving into Glasgow, these expectations and wider finance needs will need to be revisited to secure a broader Glasgow package to keep 1.5 alive.”
Julian Havers, E3G Public banks programme lead, said:
“High borrowing costs in developing economies continue to be one of the main blockers for a political COP26 agreement to keep 1,5-C alive. There are trillions of dollars in the pockets of sustainability-conscious savers in rich countries, but this money is not yet flowing at scale to emerging economies, where investment needs are greatest.”