International climate finance

IPCC reports II and III: What are the implications for climate finance?

Photo: S. Minninger, Brot für die Welt

The IPCC has recently published two important documents. The report by Working Group II, “Impacts, Adaptation, and Vulnerability,” sheds special light on the consequences of climate change, while Working Group III’s report, “Mitigation of Climate Change,” presents the current state of scientific knowledge regarding emissions reduction.

Which aspects of the Working Group II and III reports are most relevant for debates around public climate finance?

Transformation — starting today: The IPCC has shown that limiting temperature change to below 2°C is an achievable goal, but one that will require profound transformations, especially in the energy infrastructure. Across the world, any delay makes that target more expensive to reach.

Mitigation — the greatest need is in developing nations: For cost-effective global climate protection, the lion’s share of climate protection measures must be implemented in those countries where emissions are set to rise in future years. That means primarily the developing countries. Yet it is the industrialized countries that have the most economic capacities and bear the biggest responsibility for climate change. Against this backdrop, climate finance plans as the promise to mobilize US$100 billion annually for emissions mitigation and climate adaptation in developing countries are an attempt to fund climate protection based on the “polluter pays” principle and reduce its cost worldwide.

Private sector finance — growing, but not yet sufficient: In each of the past three years, between US$343 billion and US$385 billion have been mobilized for low-emission technologies. But a recent estimation by investors predicts that by 2030 at least US$1 trillion per year needs to be diverted into the clean economy. Public funding is crucial here, especially in the least developed countries.

100 billion a year by 2020 — the necessary climate finance growth in developing countries: If developing countries are to make adequate investment in emissions mitigation and climate adaptation, support will have to grow steadily. In the IPCC’s view, the rich countries’ pledge to mobilize US$100 billion a year is challenging, but feasible.

Climate change impacts — rising costs, especially in developing countries: The impacts of climate change on people and the environment are apparent in every region of the world today. Adverse effects on food production, food prices, and poor population groups are already being felt. The IPCC explains the future impacts of climate change that will arise from higher temperatures, extreme weather events, and changing precipitation. Without the necessary mitigation measures, often disastrous impacts on global food production, water supply, coastal regions, or sensitive ecosystems such as coral reefs can be expected.

Adaptation finance — massive increase required: The IPCC reports show very clearly the enormous gap between the estimated need for adaptation finance and the actual resources available, especially in poor countries. It is difficult to make economic assessments of the funds required for adaptation, and the amounts named are probably underestimates, but the IPCC sees a need for up to US$100 billion annually through 2050 in developing countries alone.

Sönke Kreft, Germanwatch