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Climate Finance Climate change is an impending disaster, already affecting people’s livelihood and causing havoc all over the world. The frequent wildfires, high-intensity tropical storms during non-season periods, and longer periods of droughts are some of the effects of climate change. The longer we wait to tackle climate change the more expensive it becomes. Climate finance refers to 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. In short, climate finance aims to collect money from the developed countries and industries that can help developing and underdeveloped nations in cutting down greenhouse gas emissions and adapt more environmentally friendly projects and policies. The rationale behind this is, industrialized economies emit more greenhouse gases and cause extensive damage to the environment and the underprivileged and developing countries face the major brunt of these climate changes. So it is a move to remove inequality between the haves and the have-nots. In a UN climate summit held at Copenhagen in 2009, the developed countries agreed to pay the poorer nations 100 Billion dollars annually by 2020 to tackle global warming. But they have been falling short of the goal every year. In 2017 the total climate finance was around 71.2 Billion and it rose by 11% to 78.9 Billion dollars by 2018. The European Union and its member countries are the biggest contributors to climate finance and its contribution is steadily increasing every year. According to the EU, its contribution to climate finance in 2019 was 21.9 Billion Euros. Climate finance will help the poor countries overcome the barrier of lack of financial resources and successfully implement policies that will help mitigate climate change. They will also help in the economic progress of developing countries. Climate-related finance could be bilateral or multilateral. That is either a single developed country could provide financial assistance to a developing country or many countries could together provide financial assistance to a developing country through an International Organization. Several climate change funds channel climate finance like the Global Environment Facility, the Adaptation Fund, the Climate Investment Funds, and the Green Climate Fund (GCF). The Green climate fund which was created during the 2010 Cancun Agreement is the main channel for Climate finance. Many recipient countries are setting up their funds which will receive money from multiple sources and will help in coordinated distribution efforts to better align with the national priorities. Almost 60% of the total money donated as part of the climate finance are used for mitigation purposes, 27% for adaptation purposes, and 13% for overlap of both mitigation and adaptation.

Adaptation; 27.00%

Mitigation; 60.00%

Overlap; 13.00%

A total of 24 countries together form the Development Assistant Committee (DAC). Japan, South Korea, Australia, Canada, the United States, and The European Union are some of the major members of the DAC. The DAC collects and analyzes development data and provides a forum where the world’s major bilateral aid donors meet to discuss, review, and coordinate aid policy to expand the volume and effectiveness of official resource transfers to developing countries. 44% of the Climate finance assistance comes from the DAC donors, whereas 56% comes from private finance. The top 5 contributors to the Climate fund are the US, UK, Germany, Japan, and Norway.

Pledged current amount in USD Million 7000 6000 5000 4000 3000 2000 1000 0 United states

United Kingdom

Germany

Japan

Norway

Pledged current amount in USD Million

Other than these five countries Canada, France, Australia, Spain, Sweden, and Italy are the other major contributors. India is the biggest recipient of the Climate fund with the currently approved funding at 1230 USD million. Brazil, Morocco, Mexico, and Indonesia occupy the next four positions.

Amount of funding approved in USD millions 1400 1200 1000 800 600 400 200 0 India

Brazil

Morocco

Mexico

Indonesia

Amount of funding approved in USD millions

In 2017 multilateral climate funds approved over 2 Billion USD across 152 projects and 70 countries. More funds are approved for the mitigation projects, rather than adaptation projects. Bangladesh and Niger are the two counties receiving the most funds for the Adaptation programs with 214.6 and 175.8 USD Million, respectively. India and Morocco receive the highest amount of funds for the Mitigation programs. The five major funds which channel the Climate finance are the Green Climate Fund, Clean Technology fund, Amazon fund, Least developed countries fund and Global Climate Change Alliance.

Pledged fund in USD Million 12000 10000 8000 6000 4000 2000 0

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Asia and Pacific receive over a quarter of the approved funds. Sub-Saharan Africa, Latin America, and the Caribbean (LAC) follow Closely behind. This is because the majority of the underdeveloped and poor countries are contained in these areas. But the nature of the finance differs from area to area. Asia as well as LAC receive 40% of their funding as concession loans whereas Sub Saharan area receives 70% of its funding as grant finance. Though the water sector requires a lot of funding only 4% of the total climate finance goes to address water issues. There is much room for improvement in the water sector.Lots of Initiatives have been taken as part of the Climate finance to encourage a sustainable finance system. Task forces have been set up for climate-related Financial disclosures and developments are being made to bring about Sustainable banking networks and insurance forums.

The majority of the women living in very poor countries still cook with traditional biomass and are often more affected by climate change impacts, which aggravate the existing gender inequality and discrimination. The Cancun agreements acknowledge the necessity for active participation of women to make better climate response and the need for Gender-responsive climate financing instruments and funding allocations. Though many funds started gender blind, many recent changes have been brought about in these funds to make them more gender-responsive. The US backing out from the Paris Agreement has made a severe dent in the Climate finance funds at a time when the countries were not already achieving their goals. Even though many countries are coming forward and donating large sums of money, a significant gap still exists between the National needs and the Climate finance provided. Analysis indicates that the counties receive more international help via Multilateral International banks rather than from Multilateral climate funds. COP26 planned to happen in November 2020 in Glasglow was supposed to be a turning point for Climate finance. But because of the Coronavirus pandemic, the event was postponed. The pandemic will also disrupt climate finance funding as Governments across the world will prioritize mitigating the effects of the pandemic. Countries and organizations across the world should take this hiatus from international climate action to reexamine how to better implement the funding and climate action plans and create a better, sustainable world....