As the globe continues to grapple with the challenges posed by climate change, the urgency for decisive action has never been greater. In an open letter addressed to the Coalition of Finance Ministers for Climate Action, Manuel Pulgar-Vidal, Global Lead Climate and Energy, COP20 President, and Former Minister of Environment for Peru, underlines the critical need for concerted efforts to restructure the financing of climate action. Ahead of the upcoming World Bank / International Monetary Fund Spring Meetings in Washington DC, Pulgar-Vidal presents key finance issues that demand immediate attention.
It is paramount to deliver on existing commitments, as developed countries had committed to jointly mobilize US$100 billion per year, starting in 2020, to address the needs of developing countries. This goal, while crucial for building trust and reinforcing a global architecture of climate finance, has thus far fallen short of delivery. The need to bridge existing financial gaps and ensure the fulfilment of commitments until 2025 remains a pressing concern.
Moreover, the doubling of finance for adaptation in developing countries and the financing of losses and damages are imperative. Vulnerable communities, particularly those at the frontline of climate change, rely on adaptation measures to mitigate the impact of environmental shifts. In this vein, the establishment of a fund dedicated to loss and damage during the 28th Conference of the Parties in Dubai marks a significant milestone, yet the initial pledges for replenishment are underwhelming.
Another critical point raised in the open letter is the necessity to avoid double counting with biodiversity resources. The Global Biodiversity Framework’s financial targets must be met separately from climate commitments, with a focus on maximising synergies between the two regimes while preventing any overlap.
Central to the discourse on climate action is the proposal for a New Collective Quantified Goal (NCQG), which will supersede the existing US$100 billion per year goal outlined in the Paris Agreement. This new goal, informed by the need to increase existing climate investments sixfold, demands the involvement and commitment of Ministries of Finance, especially those within the Coalition of Finance Ministers for Climate Action.
Finally, to achieve the goal of limiting the global temperature rise to 1.5℃ above the pre-industrial levels, it is imperative to align all financial flows, both public and private, with this objective. The active engagement of Ministries of Finance and the implementation of policy reforms to support the transition towards net-zero, nature-positive, and resilient economies are crucial steps in ensuring that the financial sector becomes a driving force for positive change.
As the world looks towards influential platforms such as the WB/IMF meetings, G7, and the G20, in addition to national-level efforts, the open letter serves as a resounding call to action for finance ministers to step up and play their part in combatting climate change. The urgency of this matter cannot be understated, and the time for decisive and ambitious action is now.