More and better ways of funding needed as the region faces growing climate-related pressures at a time when many of its economies are industrialising.The failure by developed countries to deliver on an earlier goal to provide US$100 billion annually in climate finance by 2020 has eroded trust in overall negotiations.
To achieve cost-effective clean energy transitions and limit global warming to 1.5 deg C above pre-industrial levels, a key guard rail under the 2015 United Nations Paris Agreement, countries need incentives and support from international financial institutions. This includes common standards for measuring needs, as well as platforms for sharing best practices in implementing solutions.
The failure by developed countries to deliver on an earlier goal to provide US$100 billion annually in climate finance by 2020 has eroded trust in overall negotiations. The 2024 COP29 climate talks are an opportunity to patch this deficit by structuring the new climate finance goal in a way that incentivises financiers to meet the scale and complexity of the challenges at hand.
To address this gap, we conducted a deep dive into Asia’s climate finance-related challenges and opportunities in the context of global financial architecture reform. Taking stock of existing flows and specific needs could build consensus around actionable steps for moving forward on reform efforts from an Asian perspective.
Capacity building and support could be provided to developing countries to produce high-quality, reliable and comparable data. If designed in a bottom-up way, this mechanism could create a “race to the top” dynamic by incentivising countries to increase their climate ambition in exchange for more financing.
Additional reforms could address concerns about availability and accessibility of finance. Regional multilateral development banks such as the Asian Development Bank and the Asian Infrastructure Investment Bank are playing an increasingly important role as “climate banks.”