Climate finance: Supporting the global shift to climate-smart economies - Main contents

The transition towards climate-friendly economies is both a huge global challenge and a unique opportunity to refocus and revitalise growth. To achieve a successful outcome in Paris, the poorest and most vulnerable countries need to know that they will receive continued support from their global partners.

Climate finance: Supporting the global shift to climate-smart economies

By Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Miguel Arias Cañete, EU Commissioner for Climate Action and Energy and Neven Mimica, EU Commissioner for International Cooperation and Development

The 2009 Copenhagen climate summit failed to live up to expectations on many fronts. But it did see the rich world make an important commitment: to provide $100bn by 2020 to help developing countries combat and adapt to climate change.

Last Friday, in the margins of the IMF annual meetings in Lima, finance ministers will take stock of progress towards that goal. This is a crucial milestone on the road to the crucial UN conference on climate change starting in Paris on 30 November.

The transition towards climate-friendly economies is both a huge global challenge and a unique opportunity to refocus and revitalise growth

The transition towards climate-friendly economies is both a huge global challenge and a unique opportunity to refocus and revitalise growth. To achieve a successful outcome in Paris, the poorest and most vulnerable countries need to know that they will receive continued support from their global partners.

The European Union and its Member States are the largest providers of international climate finance, delivering €9.5 billion in 2013. The EU budget alone will more than double grants for climate action in developing countries by 2020 to €2 billion per year, with the European Investment Bank providing a further €2 billion per year.

Since the summer, we have seen further climate finance pledges from Europe.

Since the summer, we have seen further climate finance pledges from Europe. The UK will deliver £5.8 billion between 2016 and 2021; France will increase its annual climate finance to €5 billion by 2020; Germany will double its climate finance from 2014 levels to €4 billion of grants and €3 billion of loans a year by 2020.

This funding is already making a difference on the ground. An EU-funded programme is helping to integrate climate change into development policies in Latin America. In small island developing states and the poorest African countries, the EU is helping to reduce risks from climate-related disasters like cyclones, floods, and droughts. And €350 million from the EU budget will also support action to adapt to climate change in vulnerable countries through the Global Climate Change Alliance.

The world simply cannot fight climate change effectively without major emerging economies committing.

European Union countries have also contributed almost half of the current pledges (US$4.7 billion) to the Green Climate Fund (GCF). But we are also seeing an ever-increasing number of emerging economies contributing to the GCF. That is good news, because the changes in the world economy over the last two decades are increasingly blurring the distinction between developed and developing countries. The world simply cannot fight climate change effectively without major emerging economies committing. This is why we welcome the recent pledge from China of $3 billion to help developing countries tackle climate change.

Yet public funding alone will not be enough to meet the $100 billion challenge. Private investments also have a vital role to play. In some cases, just a small amount of public funding is required to trigger private investment, as we are seeing with investments in energy efficiency and renewable energy.

Our aim is to leverage as much private investment as possible by combining grants from the EU budget with loans and equity from public and private sources.

Thanks to leveraging by the EU’s regional investment facilities, since 2007 an initial €1 billion of grant funding have unlocked more than €25 billion in such investments in developing countries. Our aim is to leverage as much private investment as possible by combining grants from the EU budget with loans and equity from public and private sources.

All countries, whatever their income level, have a role to play in this global effort. All countries must integrate climate objectives into domestic policies and improve conditions for private investment in low-carbon economic development - such as phasing out fossil fuel subsidies. To achieve transformational change, we need to put a price on carbon. China’s plan to start its national emission trading system in 2017 shows how such incentives for low-carbon investment can be created.

And we know from our own experience that it works. What’s more, since 1990, EU emissions have fallen by 19% while our GDP has grown by 45%, proving that climate protection and economic growth can go hand in hand.

It makes good economic sense for all countries to invest in both limiting and adapting to climate change.

It makes good economic sense for all countries to invest in both limiting and adapting to climate change. We will all reap the benefits: better living standards, stronger economies and a safer and more sustainable world.

To achieve this, we need a robust agreement in Paris that provides the right signals to encourage investment in low-emission and climate-resilient infrastructure and technologies. This also needs to ensure that the investment effort is shared fairly, reflecting the economic and geopolitical realities of a changing world.

Paris is a rendezvous with responsibility that the world cannot afford to miss.

The European Commission will leave no stone unturned to help make that agreement a reality. For the sake of all of us we urge all our partners to do the same. Paris is a rendezvous with responsibility that the world cannot afford to miss.

Pierre Moscovici - Miguel Arias Cañete - Neven Mimica.