Briefing papers by Neil BirdCharlene Watson and Liane Schalatek for ODI.

Climate finance fundamentals present short introductory briefings on various aspects of international climate finance, designed for readers new to this critical area. In light of the fast pace of developments in climate finance, the briefs allow the reader to gain a better understanding of the quantity and quality of financial flows going to developing countries.

Climate finance remains central to achieving low-carbon, climate resilient development. The global climate finance architecture is complex and always evolving. Funds flow through multilateral channels – both within and outside of the United Nations Framework Convention on Climate Change Financial Mechanism – and increasingly through bilateral, as well as through regional and national climate change channels and funds. Monitoring the flows of climate finance is difficult, as there is no agreed definition of what constitutes climate finance or consistent accounting rules. The wide range of climate finance mechanisms continues to challenge coordination. But efforts to increase inclusiveness and complementarity as well as to simplify access continue.

A study commissioned by the French and Peruvian Governments, in their capacities as Presidents of COP 21 and 20, concluded that USD 62 billion in public and private sources were directed to developing countries from developed countries in 2014 (OECD, 2015). It is notable that the majority of this wider reading of climate related funding comes from the private sector and the additionality of public finance identified is unclear (i.e. how much of this represents effort over and above existing development finance commitments). CFF 1 presents a longer discussion of the principle of additionality. The second Biennial Assessment and Overview of Climate Finance Flows of the UNFCCC, released in November 2016, recorded USD 41 billion of public international finance flowing to developing countries in 2013-14.

Photo: United Nations Photo (CC BY-NC-ND 2.0)