Financing Climate Action and the COVID-19 Pandemic: An Analysis of 17 Developing Countries
This paper analyzes the impacts of the COVID-19 pandemic on climate finance and, consequently, on climate action implementation in 17 developing countries, drawing on available information from climate finance tracking tools, reports, climate needs assessments, and interviews with public officials representatives from Ministries of Environment, Finance and/or Planning.
To meet the Paris Agreement’s long-term goals, it is crucial that developed countries support developing countries in achieving their Nationally Determined Contributions (NDCs) and mobilizing the required climate finance.
For this paper, we analyzed the impacts of the COVID-19 pandemic on climate finance and climate action implementation in 17 developing countries, drawing on available information from climate-finance tracking tools, reports, and climate needs assessments.
Our analysis shows a decrease in climate finance flowing to developing countries. Most of this funding took the form of loans, and developing countries have reallocated or decreased their domestic climate flows because of the high costs of responding to the pandemic. As a result, climate-related projects have been delayed. Compounding the challenge, some developing countries have had to deal with major natural disasters amid the pandemic.
Improved transparency through climate-finance tracking tools could help countries more easily identify their conditional and unconditional climate needs and mobilize and deploy resources more effectively.
Climate-finance availability continues to fall short of the required amount of resources to implement developing countries’ NDCs and meet the Paris Agreement goals. The COVID-19 pandemic is widening this gap. Developed countries need to strengthen their commitment to close it by increasing climate finance.
- Over a third of the developing countries analyzed in this paper showed decreasing domestic climate finance prior to the pandemic, due to natural disasters and climate impacts on key sectors, and most climate budgets decreased amid the pandemic.
- International climate finance for climate action has decreased during the pandemic.
- Few developing countries have implemented tools for tracking domestic and/or international climate finance.
- It remains difficult to determine the climate-finance needed by developing countries due to a lack of baseline information.
- Developing countries should create and implement climate-finance tracking systems that are context-specific to help identify needs and mainstream climate action in government plan-ning and budgets, according to their respective national capabilities and circumstances.
- Developing countries should periodically report climate-finance support needed to achieve their conditional and unconditional NDCs and use standard methodologies for enhanced comparability.
- Bilateral and multilateral public financial institutions should increase concessional international climate finance.
- Governments, international financial institutions, and research organizations should conduct further research on the effectiveness of CBT systems to leverage domestic resources and crowd in international climate finance.
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