Climate finance across emerging markets and developing economies (EMDEs) exceeded $1 trillion in 2023, although China accounted for a significant portion, at $685bn, a report from non-profit Climate Policy Initiative (CPI) found today.
Domestic sources made up 80pc of total finance flows, with households providing the largest share of private investment, CPI found. Households accounted for 25pc of climate finance across all EMDEs in 2023, CPI said. EMDEs require nearly $4 trillion/yr from now until 2030 to meet their climate goals, it added.
International climate finance made up the remaining 20pc of finance flows, with public sources dominating. International public climate finance to EMDEs reached $159bn in 2023, while private flows totalled $49bn — a rise of 87pc and 149pc, respectively, from 2018 levels, the report found.
The rise in public climate finance has been driven by donor governments and development finance institutions, CPI said. But these flows "may slow or even decline as major donors cut official development assistance and political priorities shift", it said. Several major donors have already made or plan to make cuts to their international aid programmes. "International private finance is increasingly important," CPI said.
Development banks will be key to mobilising more private finance, including through de-risking and guarantees. Concessional climate finance — offered at below-market rates — is typically provided by public institutions. "Across all EMDEs, non-concessional mitigation finance dominates," CPI said.
Climate finance tends to be a central topic at UN Cop climate summits. Cop 30 is scheduled for 10-21 November in Belem, Brazil, and will see the release of a "roadmap" designed to lay out a pathway to scaling up climate finance to developing nations to $1.3 trillion by 2035. The roadmap, which is likely to summarise different country contributions, is not binding and will not be negotiated.
At Cop 29 in November last year, almost 200 countries agreed that developed nations would deliver $300bn/yr by 2035 in climate finance to developing countries — although the pledge is not enforceable. The agreement is based on 1992 UN classification of developed and developing countries, which several countries argue is outdated.
