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 in implementing the Convention. To facilitate this, the Convention established a financial mechanism to provide funds to developing country Parties.

The Convention, under its Article 11, states that the operation of the financial mechanism is entrusted to one or more existing international entities. Currently, the operation of the financial mechanism is partly entrusted to the Global 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 four special funds: the Special Climate Change Fund (SCCF), the Least Developed Countries Fund (LDCF), both managed by the GEF, and the Green Climate Fund (GCF) 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

Standing Committee on Finance

At COP 16 Parties decided to establish a Standing Committee on Finance to assist the COP in exercising its functions in relation to the financial mechanism of the Convention. More information here.

Long term Finance

Launched at COP17 and extended for one year at COP18, the work programme on long-term finance concluded its work at COP 19 in Warsaw. COP 19, in decision 3/CP.19, included activities on long-term climate finance for the period 2014-2020. These include biennial submissions by developed country Parties on their strategies and approaches for scaling up climate finance from 2014 to 2020, in-session workshops to facilitate deliberations on long-term climate finance and biennial high level ministerial dialogues on climate finance starting in 2014. More information here.

Green Climate Fund

At COP 17 Parties decided to designate the Green Climate Fund (GCF) as an operating entity of the financial mechanism of the Convention, in accordance with Article 11 of the Convention. More information here.

At its 28th session, the SBI gave the mandate to the secretariat, to provide, upon request, information on the assessment of financing needs of non-Annex I Parties to implement mitigation and adaptation measures. The National Economic, Environment and Development Study (NEEDS) for Climate Change Project was launched in response to this mandate, and eleven countries have availed themselves of technical assistance from the secretariat to conduct financial needs assessments as part of the project.

An interim report summarizing initial findings gathered by participating countries was prepared by the secretariat and presented at a high-level side event held in Copenhagen, Denmark, on 17 December 2009.

The final summary report of the NEEDS Project is expected to be published in 2012, once all participating countries submit their final reports. 

here

More on the NEEDS Project

Investment and financial flows to address climate change: An update

The AWG-LCA 2 has requested the UNFCCC secretariat to prepare an update (FCCC/TP/2008/7) 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 an 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.

More on investment and financial flows to address climate change.