Archive | economics

The question of climate finance

You may have heard the term ‘climate finance’ somewhere or perhaps you’ve never heard of it.

Climate finance has long been included in the international agreements, protocols and conventions governing actions on global warming – the Paris Agreement, Kyoto Protocol, the United Nations Framework Convention on Climate Change (UNFCCC).

Wind turbines can be erected in many environments including islands and hills such as these

Climate finance can fund wind-powered energy projects in developing countries.

It’s basically for the richer, developed countries to help developing nations to gear-up in the latest technology and know-how to curb greenhouse gas emissions.

Along the way, developed countries signed on to mobilise US$100 billion a year by 2020 to help shift the globe to greater mitigation and adaptation. The Green Climate Fund and Global Environmental Facility are the two main climate finance organisations.


There is not one agreed, nor concise, definition of climate finance.
The UNFCCC does not define climate finance and in fact institutions, broadly speaking, have individual, independent definitions of climate finance.

The Conference of the Parties – most of the world’s nations in the United Nations Framework Convention or UNFCCC – have yet to endorse the UN’s very own Standing Committee on Finance’s definition, that climate finance is aimed at:

reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts.

The problem with climate finance

This lack of an operational, universal definition is the foundation of climate finance contention in international climate change negotiations. It is hindering progress on mobilising the US$100 billion by 2020 and fuelling the fires of climate politics along the way.

How can there be trust and confidence among the various players if there is so much freedom bestowed on developed countries in deciding how much to give and how to disburse their voluntary contributions under the UNFCCC?

During the Fast-Start Finance period from 2010-2012, developed countries were free to adopt their own criteria for whether funds were new and additional as required. How climate finance should be governed, whether it should be grants or loans, net or gross flows, are still points of debate.

It’s common sense

We all know, as a simple fact of money transactions, that money can’t come from an untraceable source without specific regulations and timeframes agreed between the donor or giver and the recipient.

Anything else generates corruption or illegal activity, an element of climate finance that has caused distrust among the developed nations in how some developing countries may have been handling their funds for mitigation, resulting in a push for transparency on implementation, capacity and institutional development in poorer nations.

Terrorism, statelessness

However, climate finance is not the only global issue that is suffering from a lack of action due to the inability of UN Member States to agree on a universal definition. There is not one universal definition of terrorism – a definition needed by law and policy in order to implement UN-related activities.

It has been recognised that having a global definition of terrorism means there can be an international strategy and mobilisation of bilateral and multilateral agreements. Schmid (2004) points out that an agreed, central definition of terrorism is more of a political problem than a legal or semantic one.

It makes one wonder whether rich-country negotiators deliberately disagree on definitions so as to not have a legal responsibility in the case of climate change?

When groups or individuals have different value systems and interests in a situation, the definition of one and the same situation has – given the legitimizing function of words – implications for the situation itself and its permanence (Schmid 2004 p.402).

An incoherent definition is also causing problems for the issue of statelessness – the UNHCR does not have a universally-accepted definition of statelessness, which is estimated to effect around 10 million people globally.

Schmid argues (2004) it is a typical UN problem not to have a common global definition. Or are such issues as climate finance, terrorism and statelessness, difficult to define on a global scale given their transboundary nature? Is the focus on a global, public or UN narrative part of the problem?


Australia, Canada, European Union, Japan, Norway, Switzerland, & United States of America, 2013 and 2014, Submissions on Fast-Start Finance, Finance Portal for Climate Change, UNFCCC, viewed October 2016

Buchner, B, Falconer, A, Herve-Mignucci, M & Trabacchi, C 2013, ‘The landscape of climate finance’, in Haites E (ed), International Climate Finance, Routledge, New York and Canada, pp.14-31.

Fridahl, M, & Linnér, B 2016, ‘Perspectives on the Green Climate Fund: Possible compromises on capitalization and balanced allocation’, Climate and Development, Linköpings University, p. 105.

Institute on Statelessness and Inclusion 2014, The World’s Stateless, Wolf Legal Publishers, The Netherlands, viewed October 2016,

International Development Finance Club, 2015, ‘IDFC Green Finance Mapping For 2014’, World Resources Institute and ECOYS, November 2015.

Jakob, M, Steckel, J, Flachsland, C, & Baumstark, L 2015, ‘Climate finance for developing country mitigation: blessing or curse?’, Climate and Development, vol/no.1.

Roberts, T, & Weikmans, R December 22 2015, The unfinished agenda of the Paris climate talks: Finance to the global south, blog post, The Brookings Institution, Washington DC USA, viewed October 2016,

Schmid, A 2004, ‘Terrorism – the Definitional Problem’, Case Western Reserve Journal Of International Law, vol.36, no. 2/3, pp. 103-147.

Setty, S 2011, ‘What’s In A Name? How Nations Define Terrorism Ten Years After 9/11’, University of Pennsylvania Law School, viewed October 2016,

UNFCCC Standing Committee on Finance 2014, Biennial Assessment and Overview of Climate Finance Flows Report, UNFCCC, Bonn Germany, viewed October 2016,

Westphal, M, Canfin, P, Ballesteros, A, & Morgan, J 2015, Getting to $100 Billion: Climate Finance Scenarios and Projections to 2020 (Working Paper), World Resources Institute, Washington USA, viewed October 2016,

Winkler, H, & Dubash, N 2016, ‘Who determines transformational change in development and climate finance?’, Climate Policy, vol. 16, no.6, pp. 783-791.

Yamineva, Y 2016, ‘Climate Finance in the Paris Outcome: Why Do Today What You Can Put Off Till Tomorrow?’, Review of European Comparative and International Environmental Law, vol. 25, no. 2, pp.174-185.