International climate finance

Climate finance at the Addis Ababa Conference on Financing for Development: in substance, not much happened

The Addis Ababa Action Agenda is a missed opportunity for climate finance. Photo: E. Hanfstängl, Brot für die Welt

The UN Conference on Financing for Development concluded with a decision on an action agenda to finance the United Nations development framework from 2015 to 2030. The outcome of the Addis Ababa conference is one of four building blocks for the global development agenda from 2015 to 2030 to be adopted by the UN General Assembly in September.

Climate change represents the most important planetary limit. Integrating the impact of climate change on development into the negotiations of the development agenda, including the sustainable development goals (SDGs), is thus a key issue. The encouraging signal from Addis Ababa is that the narrative has clearly recognized the importance of the fight against climate change for development. Little of substance emerged from the conference with regard the concrete financing of mitigation and adaptation measures, however. This is due to the political decisions of many countries to not play the climate finance card long before the climate conference in Paris.

Positive signals for climate protection and climate finance

The Addis Ababa conference succeeded in sending a number of positive signals. This is especially true for the professed intention to phase out subsidies for fossil fuels. A commitment for states to reduce environmentally damaging subsidies was formulated, albeit in a watered-down form. Existing climate finance was acknowledged by recognizing the progress of the Green Climate Fund and underscoring the commitment of the industrialized countries to mobilize $100 billion annually by 2020 for climate protection and adaptation measures in developing countries. And finally, the need for enhancing the transparency architecture for climate finance was recognized.

Blind spots: additionality of climate finance

Some political decisions that are important for the climate conference in Paris in December were not made, however. It is positive that the commitment of the rich countries to contribute 0.7 percent of their gross national income toward future investments in development and sustainability in developing countries was restated and reinforced in Addis Ababa. The EU pledged to meet this target throughout the EU by 2030.

Yet the outcome document of the Addis Ababa conference does not provide developing countries in particular a guarantee that climate finance will not lead to a decline of traditional development cooperation. The language on the need to integrate climate protection and climate risks into development cooperation and finance is thus correspondingly weak. It succeeded only partially – by mentioning South-South cooperation – in doing justice to the tectonic shifts in the international world in recent years and broadening international responsibility to include newly-industrialized oil and emerging countries.

Climate finance for Paris: more will be needed

Addis Ababa also failed to send a strong signal regarding innovative financing instruments for development and climate finance. Vital instruments such as a financial transaction tax or the auctioning of emission allowances in air traffic and other sectors were not mentioned in the outcome document.

Some aspects of climate finance were thus decided in Addis Ababa, but the climate finance showdown will likely take place shortly before or at the Paris conference. Reliable commitments and processes for climate protection and adaptation will be essential to putting money on the climate table on a major scale. Paris also needs to redefine global responsibility for the provision of climate finance. The foundation for this, however, will be a credible roadmap by the industrialized countries indicating how they intend to meet their previous commitments by 2020.

Sönke Kreft, Germanwatch