Unfinished Business: How to close the post-Paris adaptation finance gap | Oxfam

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Climate change is a brutal reality confronting millions of the world’s most vulnerable people. Their need for financial support to adapt to climate extremes is urgent and rising. International support for adaptation falls well short of what is needed. Latest estimates indicate that only 16 percent of international climate finance is currently dedicated to adaptation – a mere $4–6bn per year of which is public finance. Governments in Paris came close, but ultimately failed to agree quantified goals to ensure adaptation finance increases at anywhere close to the scale needed in future. If global cooperation on climate change is to be inclusive, durable and fair, it must leave no one behind. The adaptation finance gap must be addressed urgently with agreement at COP22 in Morocco on a roadmap for the $100bn commitment – one that includes quantified goals for adaptation finance, and progress on accounting and governance of finance flows. 
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  OXFAM BRIEFING NOTE 16 MAY 2016 www.oxfam.org  Augustina Danaa in Northern Ghana, where climate change is affecting people’s ability to grow food. Credit: Adam Patterson/Oxfam UNFINISHED BUSINESS How to close the post-Paris adaptation finance gap Climate change is a brutal reality confronting millions of the world’s most vulnerable people. Their need for financial support to adapt to climate extremes is urgent and rising.   International support for adaptation falls well short of what is needed. Latest estimates indicate that only 16 percent of international climate finance is currently dedicated to adaptation – a mere $4–6bn per year of which is public finance. Governments in Paris came close, but ultimately failed to agree quantified goals to ensure adaptation finance increases at anywhere close to the scale needed in future. If global cooperation on climate change is to be inclusive, durable and fair, it must leave no one behind. The adaptation finance gap must be addressed urgently with agreement at COP22 in Morocco on a roadmap for the $100bn commitment  – one that includes quantified goals for adaptation finance, and progress on accounting and governance of finance flows.   2 THE PARIS DEAL SHOULD LEAVE NO ONE BEHIND The world is in a much better place to tackle climate change following the global deal struck in Paris, which will be remembered as a rare moment when the world came together. 1  There is a lot to be pleased about in the outcome. More than 190 countries made pledges to cut emissions; a core mitigation architecture was agreed which could serve to raise ambition every five years (to avoid the 3ºC temperature rise that current pledges amount to); a long-term adaptation goal was agreed which sets an expectation on all countries to build climate resilience; the need to respond to loss and damage was formally anchored in the new climate change regime; and a goal of limiting the temperature rise to ‘well below’ 2°C – and to pursue efforts to limit it to 1.5°C – was established. But there were major disappointments too. In particular, the agreement left many questions on climate finance unanswered. It extended the Copenhagen commitment from developed countries to jointly mobilize $100bn per year by 2020 for climate action in developing countries by another five years through to 2025. And it strongly calls for those countries to increase their funds for adaptation beyond current levels. But it failed to include meaningful mechanisms to ensure that adaptation finance will increase sufficiently, or to address the massive neglect of adaptation compared to mitigation in international climate finance flows to date. For the 3.5 billion poorest people around the world who face increased risk of floods, droughts, hunger and disease, this was a significant blow. If global cooperation on climate change is to be inclusive, durable and fair, it must leave no one behind – particularly not those who are most vulnerable to its impacts and least able to cope. Finance is adaptation’s bottom line. For the spirit and momentum of the Paris agreement to endure, the unfinished business of closing the adaptation finance gap must be addressed urgently. THE STATUS OF ADAPTATION FINANCE POST-PARIS While the Paris Agreement marks progress on adaptation – establishing a qualitative long-term global goal and including adaptation under the transparency framework for the first time – governments failed to respond adequately to the huge adaptation finance gap. New financial contributions were made by a number of governments last year, as well as commitments in Paris to improve transparency and accounting of financial provision. But while the agreement urges countries to significantly increase their adaptation finance beyond current levels, no specific global target for adaptation finance was established to give vulnerable countries assurance on future availability of funds to allow them to reliably plan for adequate action. The agreement left many questions on climate finance unanswered. Crucially, it included no meaningful mechanisms to ensure adaptation finance will increase.  3 Table 1: Climate finance and adaptation in the Paris package  Agreed in Paris Pending matters Climate finance $100bn per year goal extended up to 2025. 2  New goal to be set for post-2025, with $100bn as a floor. 3  Developed parties are strongly urged to ‘scale up their level of financial support, with a concrete roadmap’ to achieve the $100bn goal by 2020. 4   Roadmap specifications : The commitment to a climate finance roadmap to enhance pre-2020 ambition 5  needs to be realized at COP22 and hence developed during 2016.   Agreeing what counts:  The Subsidiary Body for Scientific and Technological Advice (SBSTA) will develop the modalities for the accounting of climate finance provided and mobilized – to be adopted at CMA1 (COP serving as Meeting of Parties to Paris Agreement). 6   Further transparency : The Standing Committee on Finance (SCF) was tasked with enhancing monitoring, reporting and verification (MRV) tools and producing a second biennial assessment of climate finance flows in time for COP22. 7   New pledges Developed countries (above 2014 levels by 2020): $11bn from developed countries directly. 8  $10bn from multilateral development banks. 9   South-South flows (no timescales): Over $3.2bn in South-South flows, including China’s $3.1bn pledge. 10   Specifying accounting criteria of new pledges: Unclear how much will go to adaptation, as most pledges did not state figures (specific commitments related to adaptation are needed). Some countries’ pledges are mostly loans. Estimates of projected mobilized private finance are optimistic. Need to establish quality and accounting criteria for all new contributions, including South-South climate cooperation flows.  Adaptation finance Developed Parties are strongly urged to ‘significantly increase adaptation finance commitments from current levels’. 11   Achieve a balance between adaptation and mitigation. 12  Mention of ‘the need for public and grant-based resources for adaptation’. 13  The need to establish quantified goals for adaptation finance (both pre- and post-2020) to address the enduring imbalance and ensure scaled-up support. Qualitative adaptation goal Long-term global goal aimed at ‘enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change’. 14  Parties will have to submit adaptation communications outlining planning processes and actions. 15   Adaptation included in the transparency framework and the five-yearly global stocktake of progress. 16  Up-scaling and adjusting adaptation finance to respond to long-term adaptation needs. The Adaptation Committee, the Least Developed Countries Expert Group, and the SCF need to inform on the implementation of their mandate 17  to develop methodologies, and make recommendations on: - Taking steps to facilitate the mobilization of support for adaptation in developing countries in line with anticipated temperature increases. 18  - Reviewing the adequacy and effectiveness of adaptation support. 19    $21bn annuallevel   increaseby 2020 $62bn a year in 2014, basedon OECDreport $2-3bn annual level increase by 2020 $7-9bn annual level increase by 2020 $11-14bn per year in 2014 $4-6bn  per year in 2014 Announcements by developed countries and multilateral development banks in 2015 indicate an annual level increase of $21bn by 2020. 20  Where no announcements were made, we have assumed that the finance levels of 2014 will be the same in 2020. The OECD estimate of climate finance in 2014 is $62bn. This is based on an assessment of bilateral and multilateral public finance to developing countries, as well as private investments in developing countries mobilized by developed countries. 21 Health warning:  The OECD estimate of 2014 levels is given at face value based on donor-driven methodologies, which have drawn criticism, including by Oxfam. Notably, it includes export credits, private finance, and non-concessional loans at face value (rather than only counting the actual net support). It also includes the whole cost of some projects where climate change is one of multiple objectives. For these reasons, Oxfam’s assessment is that $62bn is likely to overestimate the actual support delivered to developing countries in 2014. Oxfam estimates public climate finance at between $18-23bn per year by 2020. This includes only grant and grant-equivalent climate-specific public finance support. Estimates are based on OECD 2014 data on mitigation and adaptation finance and 2015 announcements from developed countries and multilateral development banks. 22  Where no announcements were made, we assumed that the finance levels of 2014 will be the same in 2020. Oxfam estimates public adaptation finance at between $6-9bn per year by 2020. This includes only grant and grant-equivalent adaptation-specific public finance support. Estimates are based on OECD 2014 data on adaptation finance and 2015 announcements from developed countries and multilateral development banks. 23  Where no announcements were made, we assumed that the finance levels of 2014 will be the same in 2020. It shows that adaptation finance falls well short of what is needed. PUBLIC ADAPTATION GRANTS(OXFAM ESTIMATE) $6-9bn a year by 2020 PUBLIC CLIMATE FINANCE (OXFAM ESTIMATE) $18-23bn a year by 2020 $0bn$100bn CLIMATE FINANCE(DONOR NUMBERS) $83bn a year by 2020 Figure   : 2020 climate finance projections  20  2 1 22 23
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