Introduction

The contribution of countries to climate change and their capacity to prevent and cope with its consequences vary enormously. The Convention and the Protocol therefore foresee financial assistance from Parties with more resources to those less endowed and more vulnerable. Developed country Parties (Annex II Parties) shall provide financial resources to assist developing country Parties implement the Convention. To facilitate this, the Convention established a financial mechanism to provide funds to developing country Parties.

The Parties to the Convention assigned operation of the financial mechanism to theGlobal Environment Facility (GEF) on an on-going basis, subject to review every four years. The financial mechanism is accountable to the COP, which decides on its climate change policies, programme priorities and eligibility criteria for funding, based on advice from the SBI.

The Kyoto Protocol also recognizes, under its Article 11, the need for the financial mechanism to fund activities by developing country Parties.

In addition to providing guidance to the GEF, Parties have established three special funds: the Special Climate Change Fund (SCCF) and Least Developed Countries Fund (LDCF), under the Convention; and the Adaptation Fund (AF), under the Kyoto Protocol.

Funding to climate change actvities is also available through bilateral, regional and multilateral channels.

More information on funding

Financial needs assessments

Eleven countries have availed of technical assistance from the secretariat to conduct financial needs assessments as part of the National Economic, Environment and Development Study (NEEDS) for Climate Change Project that the secretariat launched in 2009.  The NEEDS for climate change project is in response to SBI 28 mandate for the secretariat, to provide, upon request, information to non-Annex I Parties on the assessment of financing needs to implement mitigation and adaptation measures.  Of the eleven countries, eight are in the process of finalizing their country reports while the remaining three countries, launched their inception workshop in February 2010.

An interim report was published and distributed at High Level side event held in Copenhagen, Denmark, on 17 December 2009. Senior officials attended the side event to provide an update of the country studies. H.E. Gloria Macapagal-Arroyo, President of the Republic of the Philippines, graced the event by giving the opening remarks. The interim report contains initial information gathered by participating countries.  It is expected that more information and an in-depth analysis will be provided in the final report which will be published in time for the SBI session in June 2010.

Investment and financial flows to address climate change: An update

The AWG-LCA 2 has requested the UNFCCC secretariat o prepare an update of the technical paper on investment and financial flows to address climate change, taking into account paragraph 1 of the Bali Action Plan.  The objective is to present analysis that would move forward the discussion on financing from broad investment and financial needs to options, tools and mechanisms for enhancing funding for mitigation, adaptation and technology cooperation for an effective response to climate change.

Investment and financial flows to address climate change: An update (FCCC/TP/2008/7)