A Key to Unlock Climate Finance

Developing countries are in need of significant financial investments to reduce greenhouse gas emissions and build climate resilience. In most developing countries, government investments for climate change are limited. Therefore, in order to fulfill their commitments to the Paris Agreement, governments need to rely on other external sources of funding. Identifying and accessing these funds, however, still remains a big challenge.

To help solve this problem, the NDC Partnership – a global coalition that helps countries achieve their climate goals - developed the NDC Funding and Initiatives Navigator, an online database for financial opportunities and technical support. “NDC” stands for “Nationally Determined Contribution,” a climate quota set by international decision makers.

According to Robert Bradley, the NDC Partnership’s director of knowledge and research, anyone with an Internet connection can access this as well as other tools that are located on the partnership platform. In addition, all the information in the tool can be downloaded to ensure its availability to anyone who wishes to use it.

But whom is it primarily for? Although anyone can use it, the tool was designed to help countries that are wrestling with the first steps of their quest to access climate finance.

The tool should enable government decision makers “to take that first step on the roads to finding the right kinds of finance and backing,” Bradley said.

It is important to emphasize, however, that the funding navigator on its own “by no means meets the full array of challenges that would be in front of countries as they try to access climate funds,” Bradley said.

The tool was developed to help countries find the right partners and financial opportunities to reduce their greenhouse gas emissions and develop sustainably.

After identifying specific funding opportunities, countries have the possibility to formally request more systematic support from the partnership. “The partnership works closely with countries that request this support,” Bradley said.

Specifically the partnership helps these nations translate their climate challenges into a list with specific technical asks, Bradley said. Through workshops, the partnership then collaborates with countries to gather all the relevant partners that can provide financial or technical assistance. In this way, a streamlined problem-solving process is created.

Currently, the partnership is working closely with 22 countries that have requested support.

Turning applications into successful funding outcomes can take an extensive amount of time. Therefore, it is too soon to have a clear estimate of how many financial opportunities have been unlocked through the tool. Bradley said that this year, the team has identified opportunities that will turn into the actual deployment of funds.

According to Katie Lebling, research analyst at the World Resources Institute, the partnership is currently in the process of revising and improving aspects of the tool.

Changes will include having a stronger focus on some of the largest climate funds like the Global Environment Fund (GEF), the Green Climate Fund (GCF), and the Adaptation Fund. Additional contextual information on different types of climate finance and application procedures will also be included.

Climate Investments Are Not Meeting the World’s Needs

To satisfy the needs of the world’s increasing population, the World Economic Forum predicts that by 2020, $5 trillion USD per year will need to be invested in infrastructure in the agriculture, power, transport and water sectors. At least an additional $700 billion USD per year will be required to transition from business-as-usual investments to green opportunities that ensure sustainable growth.

Similarly, the UN Commission on Trade and Development, projects that, from 2015 to 2030, meeting the Sustainable Development Goals will require $5 to 7 trillion USD in investments per year.

According to the Organisation for Economic Co-operation and Development (OECD), developed countries have committed to provide $100 billion US per year by 2020 in climate finance for developing nations.

Climate Policy Initiative estimates that, globally, public and private climate investments reached $437 billion USD in 2015 and $383 billion USD in 2016.

The current climate investments only cover a small fraction of what is needed to transition to a low-carbon economy. Sources of funding need to continuously grow and be accessible to ensure the world is able to satisfy people’s needs in a sustainable manner.

Organizations Face further Challenges

In conjunction, the NDCs dictate the feasibility of achieving the long-term goals of the Paris Agreement. Still, according to the United Nations Environment Programme (UNEP), the targets and actions indicated in the current NDCs are not ambitious enough to successfully fulfill the goals of the Paris Agreement.

According to the adoption of the agreement, all parties will communicate new or updated NDCs by 2020 and will continue to do so five years thereafter. Therefore, the efforts included in the NDCs are not only expected to be fulfilled but also strengthened in future years.

But, apart from struggling to identify and access funds, what are the biggest challenges countries face when trying to advance their NDCs?

According to Bradley, one of the biggest challenges countries face is “the process of turning a document like the NDC into something that is actually integrated into the core economic and planning process” of a country.

In one way or another, Bradley said, most countries need to “bridge the gap between the people who have experience working on issues related to climate change and the financial and planning experts that have had little exposure to these topics.”

Numerous countries are dealing with capacity shortages. These include shortages of qualified staff and lack of adequate data.

Limited available budgets, complex financial processes, and fund deployment delays are also significant challenges, according to Bradley.

Given the ample challenges, using the Navigator tool can be a good initial step to find and access the most appropriate – and rather scarce – resources and support.

Join our LinkedIn group to discuss this article. You may also email the author directly using our contact form.