Global climate change, a challenge of unparalleled proportions, has risen to become an all-time problem. Increasing average temperatures, climatic disasters, and pollution are currently affecting the sustainability of ecosystems, people, and countries. As with most social processes, climate change has significant consequences for the whole world, but its greatest impacts are experienced by the postcolonial nations—emitters with outsized influence in the global carbon economy.

In this regard, climate finance has emerged as one of those key tools that can help redress this problem of skewed distribution between the bearers of burdens and creators of impacts. The provision of adequate and equitable climate finance is much more than proof of the international community’s responsibility sharing but also a prerequisite for the sustainability of future generations.

Climate finance is a critical tool for addressing the disproportionate impacts of climate change on developing nations while promoting global equity and sustainability.

Climate finance refers to the idea of the developed countries giving out monetary support to the developing nations in order to assist in reducing the effects of climate change and preparing for the effects. This support can assume different outlines, such as grants, loans, guarantees, or equity investments to support climate action by either facilitating emissions reductions or increasing climate change adaptation.

The financial expenditures towards combating climate change and its final, are viewed as a way of correcting past wrongs committed to the blacks, as well as other colored clients. Countries that have emitted the most greenhouse gases over the past century, especially those in the industrialized West, are required to aid developing countries in moving towards low-carbon economies, and in dealing with climate change impacts.

Although climate finance may be a relatively new idea, it had its origins in the 1992 United Nations Framework Convention on Climate Change (UNFCCC) Earth Summit held in Rio de Janeiro. But it surged when the Paris Climate Accord was signed in 2015, in which countries agreed to restrict the global temperature rise to well under 2.0°C, preferably to 1.5°C. The Paris Agreement also offered that developed nations will contribute $100 billion annually on climate finance to developing countries by the year 2020.

This funding, intended for both mitigation and adaptation, became the foundation of what remained of the global climate response. However, the $100 billion target is still a dream and many developing countries complain that the funds mobilized up to now have been inadequate, unpredictable, and, attached with conditionalities. Consequently, it has been an agenda point of protracted debate within international climate change negotiations.

Combined with the fact that financing of climate action is already tough, this means that the resources needed are very large. The Intergovernmental Panel on Climate Change of the United Nations Environment Program (UNEP) notes that the price tag of holding back climate change and coping with its effects will range between $3.7 and 5 trillion per year and the hundreds of billions of dollars gap in financing for developing countries.

Developed nations’ $100 billion annual climate finance pledge remains unmet, leaving vulnerable countries struggling to cope with climate impacts.

The sum required is quite way beyond the $100-billion fund that developed countries have promised to provide in the future, suggesting that the work ahead is going to be monumental. Moreover, most of the available funding has concentrated much on the activities in the reduction of emissions like funding on renewable sources of energy while little funding has gone to the activities that can go a long way in helping the already developing climate change impacts.

While mitigation financing is a priority for many developing countries, adaptation finance remains more pressing as many of the vulnerable countries are experiencing first-hand the impacts of climate change including frequent and severe incidences of sea level rise, droughts, floods, and other disasters among them small island states and Least Developed Countries (LDCs).

Climate finance has therefore been a challenge to mobilize mainly because of the highly elaborate systems of funding. Climate Finance is obtained from public as well as private funds, Multilateral funds, and Bilateral arrangements in equal measure. The structure of funding in this way can become highly fragmented and may result in extensive problems and long periods to spend the money.

In addition, there has been little accountability on the manner in which funds are disbursed and utilized leading to a decline in the level of trust of the bilateral donor and recipient relations. Some critics claim that the finance that developing countries receive is either inadequate, misplaced, or given out on strings anchor that are not consistent with the country’s development goals.

This has led to demands for better climate-related finance to be more equitable, accountable, and inclusionary for developing countries, particularly for the fronts of climate change impacts.

Adaptation funding is more urgent than ever as small island nations and Least Developed Countries face severe climate disasters firsthand.

Another major concern is the problem of the privatization of climate finance. Due to the centrality of the private sector in the process of leveraging up investment in climate solutions especially those of renewable energy and green infrastructure, there is apprehension that private capital markets will not always meet the needs of the poor and vulnerable countries.

Also, there is a threat that the private players will only fund projects that yield high returns most often as opposed to those projects that will have the greatest impacts of Reply Environmental and Social benefits in the long run.

For these reasons, most advocates encourage governments to apply blended finance plans in which public resources can act as a tool to unlock private capital. These models can go quite a long way in plugging the financing gap and the development of investment climate in carrying out climate projects mostly in developing nations.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.