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Climate finance: the EU delivering on its commitments

10.11.2015 - At the Copenhagen conference in 2009, developed countries committed to jointly mobilise USD 100 billion per year by 2020 from a wide variety of sources to help developing countries cope with the effects of climate change and the transition to a low-carbon development path. Ahead of the international climate change negotiations in Paris later this month, EU finance ministers reported in November a further scaling-up of Europe’s leading contribution to climate finance for developing countries.

1. The EU has delivered on climate finance

The EU and its Member States are the biggest contributors of climate finance to developing countries, providing EUR 14.5 billion in 2014 including grants from the budgets of the EU and its Member States and loans by public development banks. In addition, the European Investment Bank financed EUR 2 billion of climate projects in developing countries. Pledges from EU Member States also make up about half of the pledges so far received by the UN’s Green Climate Fund (USD 4.7 billion).

2. The EU remains committed to contributing its fair share of USD 100 billion

The EU remains committed to contributing its fair share to the international commitment of USD 100 billion in climate finance annually by 2020. In addition to the provision of public climate finance, the EU and its Member States are committed to scaling up private climate finance flows to developing countries.

3. Climate finance from the EU budget will more than double by 2020

At least 20% of the EU budget will be spent on climate action by 2020. This means that at least EUR 14 billion, an average of EUR 2 billion per year, of public grants will support activities in developing countries between 2014 and 2020. Compared to the average level in 2012-2013, funding for international climate action will more than double (see chart below).

4. Climate finance is a top priority for the European Investment Bank

In addition to funding from the EU budget, the "EU Bank" – the European Investment Bank (EIB) − provides climate finance to developing countries. It is in fact the world's biggest lender of climate finance overall. In developing countries the EIB invests about EUR 2 billion per year in climate change related projects. That is expected to rise as last month the EIB committed to increase the proportion of its climate finance activity to developing countries to 35% by 2020.

Around half of the projects financed so far by the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe, support renewable energy, energy efficiency and other investment that contribute to low-carbon growth. Examples include an innovative infrastructure fund investing in large energy-related projects across North-Western Europe with a focus on offshore wind, biomass and transmission; construction of an offshore windfarm located off the south-east coast of the UK; and a fund to increase the energy efficiency of 40,000 flats and houses across France by improving their insulation as well as renovating the heating and ventilation systems.

5. EU to scale up support for private investment in climate finance

Countries need to attract additional public and private financing to transition to a climate-friendly economy and drive sustainable economic growth. The EU's approach is to use public money to leverage private investment by combining grants from the EU budget with loans and equity from public and private sources, including its bilateral and multilateral development banks. Our regional investment facilities operate in the EU's neighbourhood region (e.g. the Mediterranean region), in Latin America, Africa and Asia. Since 2007, around EUR 1 billion of EU grants for climate projects in developing countries has led to a total investment of about EUR 25 billion in projects including renewable energy, energy efficiency, waste management and anti-deforestation.

Between 2014 and 2020, the EU will mobilise more investment for climate action through these facilities, with at least EUR 2 billion of grants that could lead to total investments of up to EUR 50 billion.

6. EU to scale up support for climate action on the ground

The Global Climate Change Alliance (GCCA), funded by the EU, supports 51 projects in 38 countries and is one of the world’s largest climate initiatives. The GCCA supports a wide range of climate action including the integration of climate considerations into all policy areas, action to cut emissions and adapt to current and future climatic conditions, reducing the risk of disaster, and reducing emissions from deforestation and forest degradation (REDD+) in the most vulnerable countries. Since 2008, GCCA commitments have been rising (EUR 316.5 million in 2014). Funding comes from the EU budget, the 10th European Development Fund, as well as Ireland, Sweden, Estonia, Cyprus and the Czech Republic.

7. EU to scale up support for the poorest and most vulnerable

The EU has recently launched a new phase of the Global Climate Change Alliance (GCCA+), with an expected commitment of around EUR 350 million for 2014-2020. This will support least developed countries (LDCs) and small island developing states (SIDS) in adapting to the impact of climate change and integrating climate change resilience in their overall development planning and implementation.

The EU will provide almost EUR 200 million for disaster risk reduction projects between 2014 and 2020. Reducing the loss and damage from climate-related events is mainstreamed in other development programmes. This will be provided on top of the EUR 180 million allocated to on-going programmes such as the Intra-Africa Caribbean Pacific programme (EUR 60 million) and programmes in Sub-Saharan Africa (EUR 80 million), the Caribbean (EUR 20 million) and the Pacific (EUR 20  million).

8. EU to scale up support for access to low-carbon energy

The EU’s development policy recognises energy as a key driver for sustainable and inclusive growth. The EU is committed to ensuring universal access to modern energy services and to doubling the rate of improvement in energy efficiency and the share of renewables in the global energy mix, by 2030.

In 2012-2013, more than EUR 600 million was allocated to sustainable energy including a EUR 50 million technical assistance facility for developing countries to modernise their energy systems, which aims to fund projects that will benefit more than three million rural people in Africa.

In the period 2014-2020, the EU will provide support of about EUR 3.6 billion for renewable energy, electrification and energy efficiency projects with about EUR 3.6 billion. This is expected to leverage between EUR 15-30 billion in loans and equity investment. The EU will also scale up mobilisation of private finance through a new EUR 270 million electrification financing initiative ElectriFI and other innovative financial instruments.

 

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