High-level Climate Finance deliberations start at the COP27 in Sharm El-Sheikh, Egypt and will last for two weeks until 18 November. This Note aims to provide an overview of the climate finance architecture in the UNFCCC and summarises recent developments in Climate Finance talks in light of the COP26 outcomes. It then focuses on the priorities set for COP27, their prospects and potential impacts in the increasing need of developing countries and LDCs for financial support to meet adaptation and mitigation goals and to make up for their losses from adverse and extreme climate change-induced events.
The financial capacities of countries are one of the key determinant factors of their ability to cope with or mitigate climate change impacts. In this regard, Climate Finance constitutes a core element of the United Nations Framework Convention on Climate Change (UNFCCC) adopted in 1991, constituting the multilateral regime for Climate Change global governance.
The UNFCCC refers to Climate Finance as the “local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change”. Financial assistance from developed Parties (Annex II Parties) to developing Parties is an integral part of the Convention, in line with its principle of “common but differentiated responsibility and respective capabilities”. Hence, developed Parties’ obligations and the importance of mobilising climate finance to assist less endowed and more vulnerable countries are emphasised again in the Kyoto Protocol and the Paris Agreement.
Accordingly, the UNFCCC established a financial mechanism to facilitate the delivery of developed countries’ obligations and facilitate the provision of financial support to countries in need. The UNFCCC architecture of climate finance is driven by the Conference of the Parties (COP) decisions and has evolved throughout the years. In 2010, developed Parties committed in the Cancun Agreement of COP16 to mobilise jointly USD 100 billion per year by 2020 to address the needs of developing countries. And at COP21, the Paris Agreement called for a concrete road map to achieve this pledge by 2020. However, meeting this target has so far remained elusive.