Financing: a key issue in the fight against climate change


Finance, a key issue in the fight against climate change

The joint effort of the developed countries has thus far not been sufficient to mobilize climate finance in developing countries. The OECD therefore set an objective of $100 billion for 2023. At the Summit for a New Global Financing Pact, which took place in Paris in June 2023, developed countries demonstrated their confidence in their ability to reach this objective in 2023.

Mobilizing climate finance for developing countries: a renewed commitment by developed countries at COP21

In 2009, developed countries committed to providing $100 billion dollars each year in climate finance for developing countries up until 2020. In 2015, at COP21 in Paris, they made this an annual commitment up to 2025. The Agreement stipulates that a balance between mitigation financing and adaptation financing must be sought, and notes that a new joint quantitative objective will be set by 2025.

In 2020, the climate finance raised by developed countries for developing countries reached $83.3 billion (OECD figures), a slight increase on 2019 (+4%). This climate finance is mainly dedicated to mitigating the causes of climate change (58%). The portion dedicated to adaptation to its effects (35%) and adaptation and mitigation simultaneously (7%) is smaller.

The European Union (EU) and its Member States are the leading contributors to international climate finance, dedicating €21.9 billion in 2019 in public funding to the fight against climate change in developing countries (EU27). This financial support has more than doubled since 2013.

Several channels are used to raise finance: developed countries offer finance via their official bilateral development agencies, as well as through multilateral development banks and multilateral climate funds like the Green Climate Fund and the Global Environment Facility.

Almost $10 billion for the Green Climate Fund

The Green Climate Fund, which has been operational since 2015, is the main multilateral fund dedicated to financing the fight against climate change. It has significant financing capacity and can leverage private funds, as well as a large network of implementing entities and intermediaries. Its purpose is to address both mitigation and adaptation.

The Green Climate Fund Board is made of equal numbers of representatives of donor and recipient countries. France has a seat on the Board and was Co-Chair for two years in a row, with Mexico in 2021 and South Africa in 2022

At the High-Level Pledging Conference for its second replenishment, which took place n Bonn on 5 October 2023, France confirmed that it would contribute €1.61 billion to the Fund for the 2024-2027 period. This French contribution, which is the largest amount since the Fund was created, places France third among its contributors. Twenty-five countries pledged to donate $9.3 billion in total.

In October 2023, the Green Climate Fund had 228 projects in 128 countries worth a total of $12.7 billion (an increase of €2.7 billion in two years). These projects will help avoid 2.9 billion tonnes of CO₂ equivalent and strengthen the resilience of one billion people around the world.

COP28: a crucial conference for the international fight against climate change

What is France doing for climate finance?

France committed to increasing its public climate finance in developing countries from €3 billion in 2015 to €5 billion in 2020. This objective was reached and exceeded in 2019. Since then, France has stepped up and extended its commitment made at COP21, increasing it to €6 billion per year between 2021 and 2025, a third of which is dedicated to adaptation.

France respects its promises: in 2021, it raised €6.1 billion, €2.2 billion of which was for adaptation. In 2022, France provided €7.6 billion in climate finance, €2.6 billion of which was for adaptation, despite the annual objective being €6 billion.

In a context where developing countries are calling for enhanced natural disaster response mechanisms, France supports the call of the Secretary-General of the United Nations to ensure early warning systems are in place in every country in the world: France announced that it would double its contribution to the CREWS initiative, increasing it to €8 million per year. Launched by France at COP21, this initiative has already raised $110 million, $42 million of which was provided by France, to create early warning systems in vulnerable countries.

The Summit for a New Global Financing Pact convened by the French President in Paris on 22 and 23 June 2023, enabled the financial boost that was much awaited by many partners in the global South, in order to address the main global issues and related financial challenges: fighting poverty, decarbonizing our economies to achieve carbon neutrality by 2050, and protecting biodiversity. The Summit was a first step and generated new political momentum to raise greater financial resources, adapt the international financial architecture to the needs of the 21st century and lighten the immediate fiscal burden for the most vulnerable countries.

The Agence Française de Développement (AFD), an agency of the Ministry for Europe and Foreign Affairs, implements a significant portion of France’s climate finance, responding to the specific needs of the most vulnerable countries. In 2017, it was the first development bank to make the commitment to align itself with the Paris Agreement, as it ended financing for any project that goes against climate action.

France’s commitment also involves a major contribution to multilateral climate finance funds. France is one of the leading contributors to the Green Climate Fund, the main financial mechanism of the Paris Agreement, and the Global Environment Facility. French financing goes towards tangible projects in various countries:

  • financing solar farms;
  • modernizing energy grids;
  • building clean public transport systems;
  • improving water supply;
  • conserving forests;
  • rolling out early warning systems for disaster risks.

In addition to finance provided by developed countries to developing countries, the alignment of public policies with the goals of the Paris Agreement should direct all public and private financial flows towards achieving the goals to limit global warming and to boost resilience.

Updated: November 2023