UN Climate Change Executive Secretary, Simon Stiell, has warned that meeting global climate finance targets will not be enough unless the way finance was delivered changes to break the debt-disaster trap facing developing countries.
Mr Stiell was speaking at the high-level ministerial dialogue on climate finance in Antalya, Türkiye, the last in a series of dialogues which will feed into COP32.
He thanked the COP31 Presidency and the co-Chairs for bringing countries together. He recalled that in Cancun, countries agreed on the $100 billion climate finance goal, and that much has been done since then.
New goals were set at COP29, he said: $300 billion per year with developed countries taking the lead and all actors working together to enable the scaling-up of financing for developing countries, from all sources, to $1.3 trillion a year, both by 2035.
“We have a pathway to get there: the Baku to Belem Roadmap – which must become reality,” Mr Stiell said.
But he warned that meeting a financial target does not always meet countries’ needs.
“To do that, we need to look at how finance is delivered,” he said.
He said many developing countries are trapped in a downward loop of debt, disaster and devastating capital costs.
“The threat of floods, fires, storms and droughts hangs over them – pushing up the price of borrowing even before disaster strikes,” he said.
“And when shocks hit, revenues fall, recovery costs soar, debt rises. That leaves less to invest in building climate resilience – to protect people and economies. And so, the spiral continues.
“Climate finance, he said, can help countries break free. But that demands moving from financing individual projects to supporting economic transformation.
So that climate finance builds a positive feedback loop: strengthening national institutions, which creates better investment conditions, which attracts more capital at less cost, which can be invested in resilience, and low-emissions development, which strengthens economies, attracting more investment.
Mr Stiell set out four ways to get there. First, delivery must respond to debt. Terms must meet countries where they are, reflecting their circumstances and debt sustainability. Finance must be affordable. But there is no catch-all approach, he said.
Private finance, loans and guarantees are essential to achieving collective goals. But grant-based and highly concessional finance will remain critical, particularly for Least Developed Countries, Small Island Developing States and other very vulnerable economies.
“We also need wider efforts to address debt. So that countries are not forced to choose between repayments and resilience,” he said.
Second, finance must be easier to access. Today, developing countries must hack through a thicket of complex requirements, and administrative tasks, to meet funding windows across fragmented programs and institutions.
“We need procedures simplified. Financial institutions coordinating. And administrative burdens eased,” Stiell said.
Third, climate finance must align with countries, not the other way around. Countries have domestic systems to finance development. They do it every day: national treasuries, local governments, development banks and financial institutions.
These should be strengthened, not bypassed. That means increasingly channeling finance through them, where possible, and using climate finance to bolster them: taking countries’ leads, to build capacity – helping to create institutions and systems, that can access finance, and deploy it effectively.
Meanwhile, he said, we must keep developing and transferring technologies that support resilient, low-emissions development.
Fourth, cooperation must align finance, technology and capacity-building around countries’ priorities.
This means turning plans and priorities into investments and projects, that strengthen resilience and change lives.
“We need deliberate coordination between countries, climate funds, development banks, financial institutions and investors. With every project building on the last,” Mr Stiell said.
“For example, early grant support can build institutional capacity and investment pipelines. Concessional finance and risk-sharing instruments can then help projects scale.”
“Our international process can support these efforts: providing a space to crowd-in finance around country priorities,” he added.
He said this must be a new chapter of climate finance, and these dialogues can help make that a reality. Since they were established in 2013, he said, the dialogues have driven progress. Now, they need to advance a new approach.
“Where every dollar invested in development builds a better future. For all countries,” he said.
