Climate finance: 5 takeaways from a Paris climate deal

A new UN climate pact has the potential to shift trillions into green energy and help poorer countries prepare for future impacts

After five month’s training in solar power engineering, four women in Tinginaput, India show off their lamps (Flickr/DFID)

After five month’s training in solar power engineering, four women in Tinginaput, India show off their lamps (Flickr/DFID)

By Athena Ballesteros in Paris

One of the aims of the Paris Agreement is to make all financial flows consistent with a pathway towards low emissions and climate-resilient development.

Coupled with the goal of keeping the world to well below 2 C degrees of warming (ideally 1.5 C degrees), this sends a strong signal that all finance – both public and private – needs to shift to respond the urgency of the climate challenge.

Provision of Finance

The Agreement is clear that developed countries must continue to support mitigation and adaptation efforts in developing countries. It also encourages other countries to provide support, which opens the door for expanding who contributes climate finance and recognizes that some developing countries are already doing so.

Increasing Support Beyond 2020

An important outstanding question is the extent to which climate finance will increase after 2020. The current commitment by developed countries is to mobilize $100 billion a year in climate finance by 2020, and this still stands. In the Agreement, they agree to continue this commitment through 2025. Prior to 2025, governments will adopt a new, higher, collective goal.

But it is not clear when this will be agreed and who will be responsible for meeting it. The current language is ambiguous on how much climate finance will increase between 2020 and 2025. This issue is crucial for developing countries because they need to know that climate finance will continue to grow in a predictable way so that they can make long-term, transformational plans.

Related to the question the predictability of financial flows is how finance ties into the global stocktake. There are cycles for reviewing and updating countries’ mitigation and adaptation efforts, but there is no cycle for finance. Nevertheless, finance provided and countries’ support needs will be considered as part of the stocktake; finance is an input but not an output of the stocktake.

Adaptation Finance

Support for adaptation has historically lagged behind funding for mitigation. To respond to this, countries will aim to balance public finance between adaptation and mitigation. Developed countries will also significantly increase support for adaptation as part of meeting the $100 billion goal in 2020, although they do not provide a specific number.


Governments agreed to improve reporting on provision and receipt of finance. Developed countries committed to both forward and backward looking reporting every two years on the finance they will provide, and developing countries agreed to report on the finance they have received as well as their future needs. There is little detail on what needs to be reported, but countries will initiate a process to develop rules next year.

Athena Ballesteros is director, climate finance at the World Resources Institute

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