The European Council calls for progress and assessment of progress on making finance flows consistent with a pathway towards low GHG emissions and climate-resilient development.
The Council emphasizes building on existing processes to improve predictability of climate finance, and strategies for and approaches to scaling up climate finance.
The Council’s conclusions calls on MDBs to further mainstream climate aspects throughout their portfolios while using their resources more effectively to further leverage private finance.
The European Council supports various carbon pricing initiatives, including those promoting the phasing out of environmentally and economically harmful subsidies and rapid phasing down of financing for emission-intensive projects.
In December 2018, the UNFCCC will convene the 24th session of the Conference of the Parties (COP 24) in Katowice, Poland, with a challenging task: to complete negotiations on the operationalization of the Paris Agreement on climate change. On 6 November 2018, the European Council adopted conclusions outlining the EU’s position on climate finance. In its conclusions, the Council highlights that developing “a robust and fully functioning set of rules” under the Paris Agreement Work Programme (PAWP) is essential for laying the groundwork for enhanced ambition, support and investment to enable the achievement of the Paris Agreement’s objectives.
One aim of the Paris Agreement is to make finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development. On this issue, the Council stresses the need to encourage and effectively assess collective progress, such as through the global stocktake (GST). Paris Agreement Article 14 stipulates that starting in 2023, Parties will convene the GST at five-year intervals to review collective progress on mitigation, adaptation and means of implementation. The Council further emphasizes that public finance alone can never be sufficient to finance the planned transition, highlighting: the need to ensure an enabling environment for sustainable investment; the role of public policy; and the European Commission’s action plan on financing sustainable growth at national and international levels.
Carbon pricing, the conclusions stress, is a key component of an enabling environment for the shift in financial flows towards sustainable investments and promoting innovative solutions to reduce emissions. The Council supports various carbon pricing initiatives, including those that contribute to the phasing out of environmentally and economically harmful subsidies and rapid phasing down of financing for emission-intensive projects.
Specifically on climate finance, the Council reaffirms the EU and its member States’ commitment to scale up the mobilization of international climate finance, as part of developed countries’ collective goal to jointly mobilize US$100 billion per year by 2020 for mitigation and adaptation purposes, as well as to fulfill the mandate from COP 21 in Paris, France, to decide, prior to 2025, on a new collective quantified goal from a floor of US$100 billion per year. The EU and its member States contributed 20.4 billion Euros in climate finance in 2017. The Council highlights the EU’s leadership demonstrated thus far, and the Union’s forward-looking commitment to global efforts under Paris Agreement Article 9 on mobilizing climate finance from a wide variety of sources, instruments and channels.
The Council further emphasizes the importance of an outcome-oriented perspective on climate finance that would ensure the greatest possible impact of funds provided and mobilized. The conclusions further underline that:
- a wide variety of funding sources, as well as a broader range of contributors, are needed;
- other developed countries ought to continue to scale up the provision of climate finance; and
- the private sector is a key source of climate finance, and there is a need to target public finance to leverage more effectively and efficiently private sector funding to finance mitigation and adaptation actions.
The Council’s conclusions call on multilateral development banks (MDBs) to:
- continue to scale up climate-related investments;
- further mainstream climate aspects throughout their portfolios while using their resources more effectively to further leverage private finance; and
- speed up the alignment of their activities with the objective of making finance flows consistent with a pathway towards low GHG emissions and climate-resilient development.
The transparency framework for action and support, established by Paris Agreement Article 13, is crucial for providing clarity on support provided and received by relevant individual Parties in the context of climate change actions. It will also help provide a full overview of aggregate financial support provided to inform the GST. In Katowice, negotiations will focus on the modalities, procedures and guidelines for the transparency framework. In this regard, the Council’s conclusions stress the need to ensure balanced progress across all aspects of the transparency framework, and for the agreement of a robust reporting framework at COP 24, which incentivizes effective action, support and investment. The Council supports the need to further develop methodologies for tracking private finance mobilized through public interventions that enable aggregation while avoiding double counting.
On improving predictability of climate finance and strategies and approaches for scaling up climate finance, the Council emphasizes the importance of building on existing processes, which will allow for the sharing of quantitative and qualitative information in a flexible manner.
The Council also stresses the need to improve the effectiveness and complementarity of the current institutional climate finance architecture, including the effectiveness and efficiency of the operations of the UNFCCC’s financial mechanism.
On balancing the mobilization of finance for adaptation and mitigation purposes, the Council recognizes:
- the important role of public finance for adaptation and for support to the most vulnerable countries, especially to Least Developed Countries (LDCs) and small island developing States (SIDS), stressing the importance of the effectiveness and efficiency of such finance;
- that the Green Climate Fund (GCF) is on track to meet its target of providing 50% of all its adaptation programming to LDCs, SIDS and Africa; and
- the important contribution of the Adaptation Fund (AF) and the Least Developed Countries Fund (LDCF) to which EU member States are the largest donors.
Climate finance matters, and the EU Council’s conclusions confirm the need to concentrate on the subject. Numerous climate finance issues will be addressed in the upcoming negotiations at COP 24 on Paris Agreement implementation guidelines. These include: guidance on climate finance information to be provided; accounting for financial resources provided and mobilized through public interventions; and matters related to the AF. Issues under negotiation also relate to the modalities, procedures and guidelines for the transparency framework, and to the GST, including in relation to progress on means of implementation and support and advancements made towards making the financial flows consistent with the pathways towards low GHG emissions and climate resilience. Though negotiation efforts benefited from an additional meeting that took place in September in Bangkok, Thailand, its results, captured in a 307 page long compilation document which served as the basis for textual proposals formulated by the Presiding Officers of the UNFCCC Subsidiary Bodies, still contain a long list of options and issues to be resolved in Katowice. [European Council Press Release] [SDG Knowledge Hub Coverage of UNFCCC COP 24] [IISD RS Coverage of UNFCCC COP 24] [SDG Knowledge Hub Story on African Group’s Expectations for COP 24] [SDG Knowledge Hub Story on LDC’s Priorities for COP 24] [SDG Knowledge Hub Story on AOSIS Chair Urging Increased Focus on Loss and Damage]