Funding the Green Transition: Navigating Developing Countries’ Climate Finance Needs

Climate adaptation, preparedness and solidarity features prominently in the Political Guidelines for the new EU mandate, unveiled by Commission President Ursula von der Leyen in July. And with good reason: infrastructures, access to water, food production, life in European cities – to name but a few – are increasingly impacted by the effects of climate change. Europe urgently needs to prepare better for the impact of climate change, was the message in the European Climate Risk Assessment published by the European Environment Agency earlier this year.

To address the growing impacts of heatwaves on economic activities and populations, the adaptation of the building sector is becoming a new imperative. While the question of “how” to adapt has been the subject of numerous studies, the question of “how much” has so far received little attention. To move forward on this issue, we present in this report: an overview of current knowledge regarding the costs of adapting the building sector to heatwaves and the methodology we used to estimate the additional costs of adapting to heatwaves, based on available information and discussions with experts.

This autumn’s busy negotiation agendas, offer a window of opportunity to move the reform of the international climate finance architecture (IFA) up one level. This acceleration is urgent if we want to keep pace with the dramatic change in scale needed to finance the climate transition.  In 2023, developed countries announced that they had – for the first time since 2009 – achieved their USD 100bn/year climate finance target to support climate action in developing countries. Just two years later, this target is already obsolete, with needs for emerging and developing economies (excluding China) estimated at around USD 2.4 trillion per year by 2030.