Climate finance at a crossroads: it is high time to use the global solution for global problems

Abstract

The failure of the USD 100-billion climate finance pledge under the United Nations Framework Convention on Climate Change (UNFCCC) could be attributed to a series of reasons: the inconsistent rules, the ambiguity of accountability issues, the political and economic motivations of donor countries, the weak governance capability of developing countries, etc. In addition to the predicament of climate finance commitments made by industrialized nations, South-South cooperation is becoming an important supplemental approach and is acknowledged by the Paris Agreement as an essential means of support. Through studying a broad set of literature on climate finance governance, the study aims to provide a clear picture of the current muddle in climate finance and China’s new role in the architecture. We do this by first looking into the disjointed system of reporting and accounting standards for climate finance as well as what causes the international climate finance gap. On the one hand, the self-interests and geopolitical concerns of donor countries led to considerable challenges to distributive justice in climate finance allocation. On the other hand, climate finance from rich countries has yet to make a substantial dent in enhancing developing countries’ resilience to climate change. Finally, we argue that China-led climate-related development assistance and South-South cooperation on climate change has a tremendous potential for vulnerable countries to realize their climate action priorities and address the climate injustice.