Gearing up the reform of the international climate finance architecture

6 September 2024 - Foreword of the week - By : Claire ESCHALIER

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. 

 

There are at least three aspects central to the IFA that need to come together for an ambitious reform.

 

First, settling on an ambitious New Collective Quantified Goal on Climate Finance (NCQG), to replace the USD 100bn/year target. In addition to the quantum, which is rightly receiving a lot of attention, the NCQG should seek to maximise the impact of public finance, consistent with countries’ differentiated contexts and long-term strategies. The reformed financial architecture should ultimately support the alignment of all financial flows with the Paris Agreement objectives, while channelling scarce public resource towards investments that contribute to a deep transformation of the economy. I4CE recently published 2 papers to lay out what ambitious Paris alignment implies for public financial institutions.

 

Second, the third generation of Nationally Determined Contributions (NDCs), due in 2025, should help the reformed IFA bring tailored and actionable solutions to differentiated country needs. Based on existing practice, I4CE is currently exploring the role of country financing plans in responding to these investment needs. 

 

Third, the G20, through its Sustainable Finance Roadmap, can drive ambition and develop concrete actions to scale up finance towards climate objectives. But we need a better overview of the implementation efforts and progress in each G20 country. I4CE is supporting these efforts by working on the development of an independent, comprehensive and ambitious accountability framework to assess progress in the Roadmap’s implementation.

 

In the coming months, I4CE will be further developing our work related to these agendas and their associated milestones (World Bank/IMF Annual Assemblies, G20, COP 29). 

 

Read the newsletter

To learn more
  • 04/19/2024 Foreword of the week
    World bank and IMF Spring Meetings: How can the reformed institutions play a leading role in funding the transition?

    Rethinking how development can be financed to take into account the rising challenges of our time is a fastidious task, especially when thousands of experts, decision makers and practitioners want to leave their print. The outline of the new international financial architecture is being debated again this week, with more questions open for discussion than consensus on the answers. 

  • 04/19/2024 Blog post
    More and better finance: maximising positive climate impacts for a timely transition 

    Since the Paris Agreement in 2015, significant strides have been made to foster the commitment of countries and financial institutions to address the climate crisis and ensure that climate risks and opportunities are considered in investments. However, with emissions required to peak before 2025, our window of opportunity is rapidly closing to keep +1.5°C within reach. Financial needs to lower greenhouse gas (GHG) emissions and to address adaptation priorities are increasing rapidly in the meantime. Luis Zamarioli Santos and Diana Cárdenas Monar, from I4CE, believe that commitment must urgently translate into action, and action must bring the urgent change the world needs. Both governments and public financial institutions have a central role to play to deliver more and better finance, maximising positive impacts. This blogpost highlights some opportunities to advance in the path for a systemic transformation, involving key stakeholders with a whole-economy approach.  

  • 03/08/2024 Foreword of the week
    Fossil fuel phase-out: Development banks need to play a bigger role

    A couple of months ago, COP28 called for the acceleration of efforts “towards the phase-down of unabated coal power”. Limiting temperature rise to 1.5°C requires stopping the construction of new coal power plants, that’s for sure. But it also requires retiring existing plants before the end of their lifetimes, which can be more challenging. Public development banks (PDBs) are well-positioned to help overcome barriers to coal phase-out and support countries with the transition to decarbonised electricity systems. A growing number of these banks are exploring strategies to accelerate the early retirement of coal plants. Yet these efforts may carry risks of unintended adverse impacts.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer