Climate Finance in the Spotlight at COP28

Transparency and accountability will be critical to ensure financing aligns with achieving the goals of the Paris Agreement

By Brendan Hickey, Financial Planning and Modelling lead, Enduring Earth

December 8, 2023: As the first week of the 28th session of the Conference of the Parties (COP28) to the UN Framework Convention on Climate Change (UNFCCC) concludes in Dubai, UAE, climate finance has been in the spotlight.

During a speech on Wednesday, the COP28 Presidency shared that more than $83 billion has been mobilized for climate action, with pledges from governments, development banks, philanthropy, and the finance and technology sectors. Funds are targeted to address loss and damage, nature, technology, renewable energy, food, water, justice, and local action, where new financing is needed to assist the most vulnerable countries impacted by climate change.

New climate funding is critical. An analysis released on December 4 reported that emerging markets and developing countries will need $2.4 trillion a year by 2030 across the priorities of a just energy transition, adaptation and resilience, loss and damage, and the conservation and restoration of nature. This is a four-fold increase from current levels devoted to these areas.

“Finance for loss and damage must be new finance. We cannot shift adaptation finance to loss and damage” shared Kathrin Henneberger, member of the German parliament, at COP28.

With several more days of the conference remaining, negotiators continue to work on the draft text of the first ‘Global Stocktake’ of the implementation of the Paris Agreement, that aims to assess the world’s collective progress towards achieving its climate goals. As conversations continue into week two, transparency and accountability will be critical to ensure financing aligns with achieving the goals of the Paris Agreement, particularly for vulnerable communities most impacted by the changing climate.

With one more week of the conference remaining, negotiators continue to work on the draft text of the first ‘Global Stocktake’ of the implementation of the Paris Agreement, that aims to assess the world’s collective progress towards achieving its climate goals. As conversations continue into week two, transparency and accountability will be critical to ensure financing aligns with achieving the goals of the Paris Agreement, particularly for vulnerable communities most impacted by the changing climate.

Summary of COP28 Climate Finance Announcements: (updated as of December 7, 2023)

Originally agreed upon at UNFCCC COP27 last year, the new Loss and Damage Fund was formally operationalized this week, with countries having pledged $726 million to the Fund so far, to help vulnerable developing countries address loss and damage arising from climate change.

The United States announced a $3 billion pledge for the Green Climate Fund (GCF) for its Second Replenishment (GCF-2, 2024-2027). Estonia, Italy, Portugal, and Switzerland also announced pledges to GCF, nearing an additional $450 million. The GCF was established in 2010 to mobilize finance to help developing countries reduce their emissions, strengthen the resilience of their economies and critical infrastructure, enhance energy security through diversification of energy sources, and assist the most vulnerable in these countries to adapt to the impacts of a changing climate.

Pacific Islands State Leaders launched the new Unlocking Blue Pacific Prosperity initiative to safeguard and revitalize the Blue Pacific Continent. With $100 million in funding committed from the Bezos Earth Fund, the initiative will establish sustainable management across 100 percent of the Blue Pacific Continent, protecting 30 percent of the continent (more than 1 billion hectares) and strengthening the ocean’s resilience to climate impacts.

Eight governments – Belgium, Canada, France, Germany, Norway, Spain, Sweden, and the United Kingdom – announced new pledges totaling $174 million to the GEF-managed Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF), significantly higher than the amount pledged at COP27 last year.

“We can only tackle climate change by working together, and adaptation finance is an important piece of this,” Global Environment Facility CEO and Chairperson Carlos Manuel Rodriguez said. “The LDCF and SCCF are critical pieces of this architecture, and we are grateful for the contributions and endorsements of our approach.”

The World Bank announced its commitment to allocate at least 45 percent of its financing to climate projects by 2025, representing about $9 billion per year more than its previous target.

The Adaptation Fund, established under the Kyoto Protocol of the UNFCCC, announced $166 million in new pledges from governments to support the most climate vulnerable through adaptation and resilience projects and programs.

The Australian Government pledged A$150 million to the Pacific Resilience Facility, a trust fund to invest in small-scale climate and disaster resilience projects across Pacific countries, and $50 million to the Green Climate Fund, the world’s largest climate financing mechanism.

The government of the Democratic Republic of Congo announced “People, Forests and Nature: Partnership for the New Climate Economy of the Democratic Republic of Congo,” the country’s vision for a new climate economy. International partners include the United States of America, France, Germany, the United Kingdom, Norway, the Bezos Earth Fund, the Seed Fund (France, Conservation International, the Walton Foundation, the Moore Foundation), the David and Lucile Packard Foundation, Forest People Climate, Rockefeller Brothers, and Southbridge Investments. The initiative launches with $62 million in initial funding commitments.

The United Kingdom, France, World Bank, Inter-American Development Bank, European Investment Bank, European Bank for Reconstruction and Development, and African Development Bank made new commitments to expand Climate-Resilient Debt Clauses in their lending. Japan and France also announced a commitment to support the African Development Bank’s facility to leverage Special Drawing Rights (SDRs) for climate and development. These mechanisms can help make climate finance more accessible and affordable to vulnerable countries.

A group of philanthropies, including Bloomberg Philanthropies, Builders Vision, and Oceankind, announced $250 million of new finance under the Ocean Resilience Climate Alliance, targeting protection for vulnerable marine areas, ocean-based mitigation efforts, and research on climate impacts.

Investcorp, an alternative investment management firm, announced a new $750 million climate solutions investment platform in collaboration with the Innovate for Climate Tech Coalition. The platform will provide growth capital to companies that provide products, services, and technologies that drive decarbonization and address the impacts of climate change.

Public and private funders announced the launch of the Allied Climate Partners platform, with an initial $825 million to help developing countries shift to a low-carbon economy. Initial funders include Three Cairns Group, the Bezos Earth Fund, and the IFC, and the venture hopes to eventually raise $11 billion in debt and equity finance for climate-related projects.

The European Investment Bank and Allianz Global Investors announced new capital commitments to the Emerging Market Climate Action Fund (EMCAF) totaling €43 million from the UK’s Foreign, Commonwealth & Development Office and Germany’s Kreditanstalt für Wiederaufbau. With these new commitments, EMCAF will likely hold its third close with a total of €385 million in the coming weeks.

Brazil unveiled a proposal to establish “Tropical Forests Forever” for rainforests a that it hopes can raise $250 billion from sovereign wealth funds and other investors. The fund would provide funding to 80 countries that have tropical forests, with annual payments based on the hectares conserved or restored.

Brazil also announced the “Arc of Restoration” program. Managed through the Brazilian national development bank (BNDES), the program will allocate $205 million to restore 60,000 square km of deforested and degraded forest land in the Amazon by 2030

Ghanaian President Nana Akufo-Addo announced the launch of its “Resilient Ghana” plan, with initial financial support totaling $110 million from UAE, Canada, Singapore, the U.S., and other private sector aligned initiatives such as the LEAF Coalition. Resilient Ghana will include programs, partnerships, and investments across four priority areas: (1) scaling carbon markets, (2) sustainable agriculture and mining, (3) nature-positive timber and restoration, and (4) enabling conditions that support a just transition, strengthened governance and integrated land use planning.

O.N.E. Amazon, a new nature-based market mechanism was launched. The platform will issue investors digital security assets, representing the perceived value of one hectare of biome in the Amazon rainforest, backed by a 30-year preservation agreement over that land. A preservation agreement for 50 million hectares of rainforest has already been secured. Proceeds from the issuance of securities will go into the fund that will invest in energy transition and circular economy projects as well as local community land preservation projects.

President Emmanuel Macron of France confirmed funding for three forest finance packages including $100 million for Papua New Guinea, $60 million for the Democratic Republic of Congo and $50 million for the Republic of Congo to drive private finance of conservation and local development through verifiable carbon credit transactions.

The Norwegian Government announced a $100 million contribution to support Indonesia’s continued efforts in reducing emissions from deforestation and forest degradation through its FOLU Net Sink 2030 plan.

The Asian Development Bank, along with the OPEC Fund, Saudi Arabia, AFD, France, and the ASEAN Catalytic Green Finance Facility at the Green Climate Fund, announced the Nature Finance Hub, a new initiative committing to mobilize $1 billion from development partners, with the intention of mobilizing $2 billion in additional private finance capital by 2030 into nature-focused climate projects.

USAID announced $100 million in continued investments for the CGIAR for the Feed the Future initiative, to support climate-smart agriculture innovation efforts and advance climate resistant food systems.

U.S. Secretary of the Treasury Janet L. Yellen announced agreement on a $568 million loan to the Clean Technology Fund (CTF)—a multilateral trust fund that helps to deploy clean energy in developing countries.

UAE President Mohammed bin Zayed Al Nahyan announced the launch of a $30 billion private investment fund, ALTÉRRA, to accelerate the global transition to a low-carbon economy and build climate resilience. ALTÉRRA aims to mobilize $250 billion of private investment by 2030, with a focus on investment in developing economies and the global south.

The UAE committed an additional $200 million to support climate resilience in vulnerable countries in the form of Special Drawing Rights pledged to IMF’s Resilience and Sustainability Trust.

While this is not an exhaustive list of all the climate finance announcements and pledges made at COP28, it is an indication of the commitments shared.

Other resources to track climate finance commitments include:

NRDC COP28 Climate Funds Pledge Tracker

McKinsey: COP28 Climate Finance

COP28 Climate Finance