International Climate Finance

Climate finance is among the key negotiation streams at international climate conferences. Reaching the USD 100 billion climate finance target and agreeing the New Collective Quantified Goal on Climate Finance were both milestones for international climate finance. They also exposed significant shortcomings, in quantity and in quality, against the scale of the climate challenges we already face. International climate finance needs to be more ambitious, more inclusive and driven by actual needs, at the scale the problem requires.

The climate finance team at Perspectives follows climate finance negotiations under the UNFCCC, conducting research and providing consulting services.

Debt-for-Climate (DFC) swaps are a climate finance instrument designed to address the sovereign debt and climate crises together. By reducing debt and creating fiscal space for climate investment, they can mobilise badly needed climate finance for developing countries. We analyse what DFC swaps can do, and how to improve their scale, efficiency and alignment with national climate goals.

Climate change intensifies extreme weather such as heatwaves and flash floods, and the result is loss and damage (L&D) for vulnerable communities worldwide. The global average temperature has already risen by more than 1.1 degrees C above the pre-industrial period and the rate of increase is unbroken, so the severity and scope of climate impacts will almost certainly escalate in the coming years. L&D matters most to low-income countries and Small Island Developing States (SIDS), which are disproportionately affected while having contributed only marginally to the problem. They also often lack the resources to adapt, which leaves them more exposed to severe L&D. Any approach to L&D therefore has to cover mitigation as well as adaptation, including comprehensive risk management, if future losses are to be reduced.