Climate Financing, between Ubiquity and Narrowness: Political Stakes of How It Is Defined

Patrick GUILLAUMONT * President, Foundation for Studies and Research on International Development (Ferdi); Professor Emeritus, University of Clermont Auvergne. Contact: patrick.guillaumont@ferdi.fr.

Sylviane GUILLAUMONT JEANNENEY ** Professor Emeritus, University of Clermont Auvergne; Scientific Counselor, Ferdi. Contact: sylviane.guillaumont@uca.fr.

To ensure that climate finance is additional to development financing and that it is allocated effectively and equitably, it is necessary to distinguish between whether it is aimed at mitigation or adaptation, but also to know whether it is a main or intermittent goal. If it is the former, it is generally accompanied by concessional conditions. Mitigation, which aims to preserve a global public good, must be allotted a specific global budget (not included in Overseas Development Assistance, ODA) and be allocated on a project by project basis by accredited institutions according to the criteria of effectiveness. Adaptation financing must in turn have a global budget no lower than that of mitigation; if it is concessional, it should be reserved for low-income countries and other countries contributing almost no CO₂ emissions and be allocated to them mainly according to their physical vulnerability to climate change. Funding to compensate for losses and damages (due to climate change) should mainly be included in the financing of adaptation. The rest should be handled by reinforcing the existing systems of response to shocks, climatic and otherwise. The funds corresponding to the separate budgets should be allocated in accordance with the distinct terms and conditionality of each budget.

“ Climate Financing”, an elegant and ambiguous expression, does not correspond to a clear concept. It is nevertheless frequently used, all the more so because there is no agreement on its meaning. If words have meaning, climate financing is any financing that has an impact on the climate or corrects its consequences. There is an initial, very common distinction between financing the mitigation of global warming and financing the adaptation of countries to this warming. Similar to but distinct from adaptation, another category has also emerged, the financing of “losses and damages” attributable to climate change, which is generally used to designate the compensation of shocks attributable to it after the damage has been done, unlike adaptation financing which aims to prevent the damage before it happens. However, a broad interpretation of…