While delegations at COP26 acknowledged that the pledge by wealthy nations to provide $100bn a year by 2020 to help vulnerable nations deal with climate change has not been met, a robust process to develop a new climate finance goal is not expected to be set before 2024. In the meantime, a new report by the Global Center on Adaptation suggests that by 2050 climate adaptation needs could reach $500bn per year for developing countries. That is for a future where global temperature rise is limited to 2°C.
The estimate is much higher than the UN Environment Programme’s (UNEP) figure of $300bn a year by 2030, and it is light years away from the $30bn funds for climate adaptation and resilience that was raised in 2018, according to UNEP data. Most climate finance still goes to mitigation, not adaptation.
The report puts forward an analytical tool, the Green Bonds for Climate Resilience Capacity Assessment Framework, which aims to help public and corporate climate financiers recalibrate their capacities and scale-up climate adaptation and resilience financing efforts.
To grow the market for resilience finance, the authors suggest building momentum by engaging existing sovereign and private bond issuers, as well as new institutional investors, by showing them there is demand.
On the side of recipients, harmonising domestic and global definitions of climate finance is key to securing investors’ confidence, says the report. Such harmonisation could also help local entities express their needs and priorities in a more approachable way. Essentially, accelerated flows of climate adaptation finance are a critical step forward for improving energy systems across developing countries and guaranteeing a stable power supply, which is a fundamental part of the economy.