Significant financial resources will be needed to help developing countries deal adequately with climate change, both to reduce greenhouse gas emissions and to adapt to the consequences of climate change. The European Union is the largest contributor of climate finance to developing countries and the world's biggest aid donor, collectively providing more than half of global official development assistance (ODA). Climate change is being increasingly integrated into the EU's broader development strategy.
The EU’s Global Climate Change Alliance (GCCA) initiative provides technical and financial support to developing countries to integrate climate change into their development policies and budgets, and to implement projects that address climate change on the ground. The GCCA is also a platform for dialogue and exchange of experience.
At the climate conferences in Copenhagen (2009) and Cancún (2010), the EU and other developed countries pledged jointly to provide nearly $30 billion in 'fast start' finance over the years 2010-2012 to support immediate action on the ground, and in the longer term to mobilise $100 billion a year by 2020 from a variety of sources.
The EU and its Member States have committed to provide €7.2 billion in fast start finance over 2010-2012, almost one-third of the total pledged by developed countries, and is on track to meet this pledge. To date a total of €7.14 billion in fast start finance has been mobilised and this money is being spent on concrete climate actions in developing countries.
The EU will continue to provide climate finance to developing countries after 2012 and will in particular support the most vulnerable developing countries, including the small island developing states, the least developed countries and Africa, in adapting to the consequences of climate change.
For the medium to long term, developed countries have jointly pledged to mobilise climate finance of $100 billion a year by 2020 and the EU remains fully committed to this goal. This money should come from a wide variety of sources and depends on meaningful mitigation action and transparency on implementation by developing countries.
The EU considers that both public and private flows are indispensable elements of climate finance. Further efforts must be made to mobilise innovative sources of climate finance and private contributions. International climate finance should be used as a lever to incentivise climate-resilient and low-carbon investments, complementing domestic resources in developing countries.
A High-level Advisory Group on Climate Change Financing was established by UN Secretary-General Ban Ki-moon to study the potential sources of revenue, including alternative sources of finance. The Group presented its report in November 2010.
Building on this report, at the request of G20 Finance Ministers further work on mobilising climate finance was carried out by the World Bank, with other international institutions, and presented to the G20 group in October 2011.
It is expected that a significant amount of future international climate funding will be channelled through the newly established Green Climate Fund (GCF). The GCF's Board, which held its first meeting in August 2012, is preparing the operationalisation of the fund. South Korea will host the GCF.