1 - Climate finance

What is it and why do we need it

The Climate Mentor
October 15th, 2024 • Estimated Reading Time: 4 minutes

What is climate finance?

Climate finance 🌍 refers to local, national, or international funding 💰 sourced from public, private, and alternative financial sectors. These funds are essential for supporting climate change adaptation 🌱 and mitigation initiatives 🌿. The primary goal is to reduce the impacts of global warming 🌡️, enhance the resilience of vulnerable countries, and transition economies to sustainable, low-carbon models.

The Paris Agreement 📜, Kyoto Protocol 📜, and the UNFCCC Convention 📜 require wealthier nations to provide financial support 💸 to those more vulnerable 🌍 to climate change. This framework acknowledges the wide variations in countries' contributions to climate change, as well as their ability to mitigate and manage its effects 🌪️

Climate finance is therefore not just about investments; it's about ensuring climate justice, as those most affected often contribute the least to global emissions

Mitigation and Adaptation: The Dual Role of Climate Finance

As global temperatures continue to rise, the urgency for climate finance has never been greater.

The impacts of climate change—such as extreme weather events 🌧️, rising sea levels 🌊, and biodiversity loss 🐾—are disproportionately felt by developing nations, which often lack the resources to combat these challenges.

Climate finance aims to bridge this gap by providing the necessary financial support for both mitigation and adaptation.

Mitigation 💡 involves reducing greenhouse gas emissions through large-scale investments in renewable energy, energy efficiency, and sustainable infrastructure.
Adaptation 💪 refers to helping countries adjust to the adverse effects of a changing climate, such as building flood defenses, transitioning to climate-resilient crops and improving water management.

Global temperatures have already risen approximately 1.3°C above pre-industrial levels, and 2024 is projected to be the hottest year on record 🔥.

Without significant action, the goal of limiting global warming to 1.5°C is becoming increasingly difficult to achieve. As a result, the need for substantial climate finance is more pressing than ever.

COP29 and the Financial Commitments for Climate Action

The upcoming COP29 summit in Azerbaijan represents a critical moment in the global fight against climate change. While experts agree that trillions of dollars are needed 🌍 to effectively address the crisis, COP29 leaders are negotiating a more "realistic" goal of mobilizing "hundreds of billions" 💸 annually to fund climate initiatives.

At present, the $100 billion per year target, established under the Paris Agreement, falls short of the total financial needs for combating climate change 🌡️. This new commitment aims to address the gap by focusing on both public and private sector involvement in mobilizing funds. Importantly, COP29 will seek to balance support for both mitigation and adaptation efforts, ensuring that vulnerable countries are not left behind.

The role of developed nations

Wealthier nations, particularly those with significant industrial emissions 🏭, are expected to lead the way in providing financial support. This reflects the principle of "common but differentiated responsibilities", which recognizes that while all countries share a responsibility to address climate change, wealthier nations bear a larger burden due to their historical contributions to greenhouse gas emissions.

At COP29, the discussions will focus on expanding financial contributions from developed nations 💼, while also encouraging private sector investments. One of the major objectives is to mobilize finance for projects such as:

Renewable energy development ⚡ in countries transitioning from fossil fuels.
Sustainable agriculture 🌾 to increase food security in regions impacted by changing climates.
Infrastructure resilience 🏗️ to help communities withstand the effects of extreme weather events.