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Climate finance, disaster risk and environmental resilience

The Addis Agenda reaffirms decisions and agreements on climate finance made in the context of the United Nations Framework Convention on Climate Change (UNFCCC). It also calls for transparent methodologies in reporting climate finance. Related commitments on disaster risk and environmental resilience are also covered in a dedicated section on ecosystems.

Climate finance

At the 21st session of the Conference of the Parties (COP 21) in December 2015, Member States decided that developed countries intend to continue their existing collective mobilization goal through 2025 in the context of meaningful mitigation actions and transparency on implementation; and that prior to 2025, the Conference of the Parties shall set a new collective quantified goal from a floor of US $100 billion per year, taking into account the needs and priorities of developing countries. In this context, it is also critical that disaster risk reduction measures are incorporated into all development assistance programmes and infrastructure financing, in line with the Sendai Framework for Disaster Risk Reduction.

Effectiveness of climate finance

The Paris Agreement also recognized the need to promote the effectiveness of climate finance. A major consideration in this regard is the ability of developing countries to access climate finance. The 2016 Biennial Assessment and Overview of Climate Finance Flows of the UNFCCC Standing Committee on Finance identifies a number of problems in accessing climate finance, including operational and technical constraints, such as low capacity to design and develop programmes; limited capacity to integrate climate change into broader development priorities; and modalities for delivery and access. 

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Climate funds have historically been disbursed through UN agencies and multilateral development banks, rather than providing direct access to institutions in developing countries. Since 2010, the number of national implementing entities has grown significantly however, representing almost half of all implementing entities of multilateral dedicated climate funds in 2015 and 2016. The Adaptation Fund has pioneered direct access to its resources for institutions in developing countries. The Global Environment Facility also accredited institutions based in developing countries, and the Green Climate Fund also has accredited a significant number of implementing entities headquartered in developing countries. There have also been dedicated capacity building efforts to increase climate finance ‘readiness’ by climate funds and bilateral and multilateral donors.

Intended nationally determined contributions (INDCs) may provide a means to further strengthen ownership over climate finance in future. Many INDCs submitted by developing countries already lay out financing needs for emission reduction and adaptation scenarios and could serve as a framework to guide climate finance.

Transparent methodologies for reporting climate finance

COP 21 also addressed the need for transparent methodologies for reporting climate finance, as recognized in paragraph 60 of the Addis Agenda. It established an enhanced transparency framework for action and support, with a view to provide clarity on the support provided and received, and to provide a full overview of aggregate financial support. Under the auspices of UNFCCC, the Ad Hoc Working Group on the Paris Agreement is currently developing recommendations for modalities, procedures and guidelines for the transparency framework for action and support. It is aiming to conclude this work no later than 2018.

Green Climate Fund
The GCF is expected to become the primary channel of climate finance. It is fully operational since 2015. Forty three governments committed USD10.3 billion to the Green Climate Fund before the end of 2015. However, the withdrawal of the United States, which had committed USD 3 billion under the previous administration, but only transferred USD 1 billion, cuts this initial resource envelop by around 20 per cent. 
 
Since its inception and as of March 2018, the GCF has approved 76 projects and programmes, with $3.7 billion in funding commitments. The GCF has also taken steps to address concerns over the complexity of the climate finance landscape and difficulties in accessing its own funding. To enhance access, it has simplified approval processes for small projects, and accredited a rising number of direct national access entities. To ensure that its projects follow a country-driven approach, the GCF also works with designated national authorities that need to approve all projects. Finally, the GCF provides support for “readiness activities,” particularly for vulnerable countries. It is targeting to disburse USD 900 million in 2018, a significant scaling up of disbursements over previous years. 
 
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Since its inception and as of March 2018, the GCF has approved 76 projects and programmes, with $3.7 billion in funding commitments. The GCF has also taken steps to address concerns over the complexity of the climate finance landscape and difficulties in accessing its own funding. To enhance access, it has simplified approval processes for small projects, and accredited a rising number of direct national access entities. To ensure that its projects follow a country-driven approach, the GCF also works with designated national authorities that need to approve all projects. Finally, the GCF provides support for “readiness activities,” particularly for vulnerable countries. It is targeting to disburse USD 900 million in 2018, a significant scaling up of disbursements over previous years. 
 
To ensure that its projects follow a country-driven approach, the GCF also works with designated national authorities that need to approve all projects. Finally, the GCF provides support for “readiness activities,” particularly for vulnerable countries. Overall, the GCF has approved projects with $ 2.7 billion in funding commitments by November 2017.
Financing for disaster risk reduction and resilience

The Addis Agenda recognizes the risk to progress in sustainable development from natural hazards and other shocks. Economic losses from disasters such as earthquakes, tsunamis, cyclones and flooding are estimated to average US$250 to US$300 billion annually. Member States committed to develop and implement holistic disaster risk management at all levels in line with the Sendai Framework for Disaster Risk Reduction, and to consider climate and disaster resilience in development financing.