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Cop28 Climate Finance Cheat Sheet

Loss and damage fund

Negotiation or announcement?

Any funds pledged for loss and damage are not negotiated, they are announcements straight from political leaders. Most of the negotiating work was finalized in November.

Key issues and countries to watch Latest developments and backgrounders
It is expected that pledges in the region of $500m or more may be announced at COP28.

The US is under a lot of pressure to pledge adequate funds given its obstruction on the loss and damage text.

Gulf states, the UAE in particular, are also being called on to contribute to the fund.

The EU will be making a pledge but it is conditional to the outcomes of the official negotiations.

 Here’s a summary from Carbon Brief of what happened during the last round of technical negotiations (“transitional committee”, or TC5) on the text

Latest comments from the EU on contributing to the fund

Here are some details about the agreement and what to expect at COP28 from a member of the transitional committee on Loss and Damage.

Green Climate Fund (GCF) replenishment

Negotiation or announcement?

Expect more announcements on the second replenishment of the Green Climate Fund. There is no negotiation to follow.

Key issues and countries to watch Latest developments and backgrounders
Gulf states, including UAE, are being pressured to become contributors.

The US, Australia and Italy, Switzerland and Sweden stated in October that they will be making pledges but no figures have been shared yet.

Portugal and Greece are the only two developed countries who have not made or stated their intention to make any pledges yet.

 NRDC tracks all the countries that have made GCF replenishments pledges here.

 

Debt reforms

Negotiation or announcement?

Expect statements during the World Leaders Summit. While it is not on the negotiating agenda, avoiding additional debt burdens on developing countries is critical for many countries and negotiating blocs.

 

Key issues and countries to watch Latest developments and backgrounders
Leaders who have been vocal about it in the past couple of years are likely to reiterate the need to address the debt crisis in their statements. Watch for speeches from Barbados PM Mottley; Colombia’s President Petro; Kenya’s President Ruto; Brazil’s President Lula. 

Debt pause clauses, which automatically suspend loan payments for up to two years when a country is hit by a natural disaster or pandemic, could be endorsed by more world leaders.

Watch for statements and announcements on debt-for-nature swaps as these continue to gain popularity.

 See Chapter 3 of IMF’s World Economic Outlook for the key data on countries in debt distress.

See here the Open Society Foundation’s latest polling on public attitudes to debt.

This explainer from Eurodad focuses on the link between the climate emergency and debt.

Read here a background explainer on debt-for-nature swaps.

 

MDB and IMF reform

Negotiation or announcement?

Expect statements during the World Leaders Summit. While it is not on the agenda, the reform of these institutions and the financial system is a priority for many countries and negotiating blocs. 

The UAE COP28 President has urged the MDBs to do more to tackle climate challenges at COP28 and this is likely to reemerge during the conference.

Key issues and countries to watch Latest developments and backgrounders
Several initiatives are expected to demonstrate progress on the reforms of the international financial institutions. Watch for various announcements.

Watch for speeches of world leaders including Mia Mottley, William Ruto, Lula da Silva, Sultan Al Jaber and Emmanuel Macron among others

.

 See here a blog from E3G detailing the progress on MDB reforms and what needs to happen at COP28.

See here for details of the meeting between leading economists, the COP28 Presidency and international financial institutions

NCQG

Negotiation or announcement?

It is a negotiated item. In 2015, countries agreed to negotiate a new collective quantified goal (NCQG) for the post-2025 period, from a floor of $100 billion. Negotiations have been taking place for two years, but there has been limited progress in narrowing down options..

Key issues and countries to watch Latest developments and backgrounders
At this COP we need to see convergence from political leaders on key aspects of the NCQG, to lock in progress and ensure they can conclude negotiations as scheduled at COP29 next year. See here the original decision on the NCQG.

2.1c

Negotiation or announcement?

This is not a formal negotiated item, but it’s an article of the Paris Agreement that has never been addressed on the agenda of COP. 

Article 2.1(c) of the Paris Agreement calls for financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. It is broader than the traditional climate finance focus of flows going from developed to developing countries, to encompass everything: domestic spending, fossil fuel subsidies, financial systems reform, all converging towards delivering on the temperature and adaptation goals. Article 2.1c has yet to find a clear “home” in the COP negotiations process.

Key issues and countries to watch Latest developments and backgrounders
In recent years, the EU has been pushing for a new agenda item on 2.1c, and developing countries want it reflected in the Global Stocktake. Some developing countries have expressed concerns that this could be used to distract focus from delivery on international public climate finance commitments like the still unmet $100 billion goal. Progress on both is vital, so one to watch as countries hash out how Article 2.1c will be addressed.

 

 See here an explainer from the World Resources Institute on Article 2.1c.

Carbon markets

Negotiation or announcement?

Voluntary carbon markets are still rife with integrity issues, but expect announcements from the private sector to continue coming up. 

Two things to watch as announcements from countries:

  • Under the COP26 Forest Declaration countries made a financial pledge to protect and restore forests, and some of the financial deals will now be announced
  • Countries set a goal of protecting 30% of the planet for nature by 2030, which included the creation of a Global Biodiversity Fund. We may see some next steps announced around this fund at COP28.

As part of the negotiations on Article 6.8, Brazil is going to kick start more concerted negotiations into non-market based approaches for financing lower-income countries for the protection and restoration of forests.

Key issues and countries to watch Latest developments and backgrounders
3 or 4 countries will announce financial deals under the COP26 Forest Declaration

Watch for Brazil’s position on moving away from market solutions for financing forests and nature

 This Q&A from Carbon Brief is a must read on everything around carbon offsets, integrity issues, and their impacts

Taxes

Negotiation or announcement?

A taskforce on international taxation as a source of innovative climate finance will be released by France and Kenya during the World Leaders Summit.

Key issues and countries to watch Latest developments and backgrounders
     –  

This is what we know so far about the taxation taskforce

JETPs

Negotiation or announcement?

There are no new Just Energy Transition Partnerships (JETPs) on the horizon, so the focus this year shifts to solidifying the current commitments for South Africa, Indonesia, Vietnam, and Senegal. 

It’s time to expedite implementation and get the funds flowing swiftly, as the recipient countries are growing increasingly impatient. New political momentum needs to be injected, otherwise there’s a risk that JETPs might be dismissed as yet another faded finance deal from the Global North.

The investment plan for the Vietnam JETP is expected during COP.

Key issues and countries to watch Latest developments and backgrounders
Indonesia is set to steal the spotlight, having unveiled the Comprehensive Investment and Policy Plan(CIPP) just ahead of COP28, with strategic events planned in its wake. Delegates will also delve into carbon trading, riding on Indonesia’s recent launch of a new carbon trading exchange – a move aimed at attracting private capital to fuel the energy transition A group of Indonesian CSOs reviewed the country’s JETP investment plan and provided their recommendations.

Other climate finance sources

Negotiation or announcement?

The latest progress report from the OECD on the $100 billion goal showed that climate finance reached $89.6 bn in 2021 (an 8% increase compared to 2020), but was still just over $10bn short of US$100bn. While the overall figures for 2021 showed a positive trend, with climate finance continuing to grow by 8%, the shortfalls in 2020 ($16.7bn) and 2021 ($10.4bn) have led to a gap of over $27.1bn in the agreed financing. 

Separately, CPI’s projections showed that global climate finance approached $1.3 trillion on annual average in 2021/2022 compared to $653 billion in 2019/2020. However, most of this finance went towards mitigation financing.  

Adaptation finance is now the most urgent financial flow for the poorest countries, yet we saw a drop of $4bn (a 14% decline) in 2021. The share of overall finance to Least Developed Countries also dropped from 25% in 2020 to 20% in 2021.For the 2022 data, there have been claims that the $100bn figure has been met, but so far only the EU released the data on their contribution to climate finance, amounting to EUR 28.5 billion from public finance

Key issues and countries to watch Latest developments and backgrounders
Developed countries may announce new pledges for adaptation finance.

MDBs may announce a new target for adaptation finance.

The UAE is expected to announce a $25 billion or larger fund to spur clean energy investments.

 See here the latest OECD update on the $100bn climate finance goal.

See here CPI’s Global Landscape of Climate Finance report.

See IISD’s latest research on public finance going to fossil fuels versus clean energy, covering public subsidies, state-owned enterprises, lending from public financial institutions, countries and multilateral development banks