Topic: climate finance, COP-18 Doha

Japan’s fast-start finance (FSF) commitment is one of the largest amongst developed countries, but it is important to consider the contents of this commitment. Japan has played a significant role in global efforts to finance climate change activities in developing countries, and its FSF commitments account for almost half of the FSF that developed countries have pledged for 2010-2012. However, it is essential to better understand the broad range of instruments and activities that the government includes in its FSF, as different governments consider different types of finance to constitute FSF, so self-reported figures are not directly comparable between countries.

Building the capacity of developing countries to monitor climate finance received will ultimately require the modification, development, and adoption of tools, methods, and processes. This paper explores the challenges faced by Indonesia, the Philippines, and Vietnam in monitoring finance for climate change. It also attempts to understand capacity gaps and develop insights about what can be done to improve climate finance monitoring.

Targeting public finance to leverage private sector capital can help meet the several hundred billion dollars of annual low-carbon investment required in developing countries. This working paper serves as a primer, demonstrating how the public sector can employ different types of public financing instruments — whether loans, equity, or de-risking instruments — alongside policy and technical support to scale-up private sector investment in low-carbon markets.

The U.S. FSF contribution of $5.1B reflects a positive effort made in challenging political and economic circumstances, but there is more to be done. Congress and key agencies have increased funding for climate change objectives relative to the pre-FSF period, and have begun to integrate climate considerations into ongoing portfolios. The global economic recession and the resulting pressure to cut spending, however, combined with an active subset of policy-makers who oppose U.S. action on climate change, have impeded further increases to climate finance.

The UK has made a substantial effort to mobilise climate finance. Finance has been channelled through the Environmental Transformation Fund in 2010/11 and through the International Climate Fund (ICF) in 2011/12. GBP 1.06 billion had been spent and committed as of November 2011. It has also committed climate finance beyond the FSF period through the International Climate Fund (ICF), which will spend GBP 2.9 billion between April 2011 and March 2015.

This report seeks to ground the debate on climate finance in an objective analysis of ongoing efforts to finance mitigation and adaptation in developing countries.