What is International Climate Finance

Climate change

Climate change is a global problem and requires all countries to take effective, concerted, and collective action. In the early 1990s, countries joined the first international treaty, the United Nations Framework Convention on Climate Change (UNFCCC), as a framework for international cooperation to combat climate change. Under this treaty, it was recognized that not all countries are placed similarly in terms of their ‘capacity to prevent climate change and cope with its consequences’. Therefore, the agreement was that Parties with more financial resources (the Global North) would mobilize finance to assist the Global South to meet the costs of climate change.

Climate finance refers to “local, national or transnational financing, drawn from public, private and alternative sources of financing, that seeks to support mitigation and adaptation actions that will address climate change.” This definition makes clear that transnational or international financing to support mitigation and adaptation actions is an important aspect of climate finance. Also, the idea is international climate finance mobilized needs to be new and additional financial resources, i.e., climate-related funding efforts over and above existing development financing commitments by the Global North. In short, international climate finance refers to the financial resources provided by the Global North, and international institutions to support efforts by the Global South countries to mitigate and adapt to the impacts of climate change.