Due to the different repercussions of climate change worldwide, one of the main concerns in recent years has been global warming, especially as a result of several studies that point out that human activities (related to the emission of greenhouse gases) are a factor that aggravates this problem.
Current problems caused by climate change
Currently, it has been observed that weather patterns have become more unpredictable due to climate change, which hinders certain activities in areas with scarce resources, generating a global problem that has encouraged different governments to establish agreements to help countries affected by climate change, in addition to combating the emission of greenhouse gases that cause this global problem. One of these agreements is climate finance.
How did climate finance come about?
Climate finance emerged as an international agreement whose objective was to solve the needs (generated due to climate change) in some areas of the planet, providing the necessary financial resources to combat climate change and its adverse effects.
What is climate finance?
The concept of climate finance was first used in 1992 during the United Nations Framework Convention on Climate Change (UNFCCC), in which it was established that developed countries would provide financial resources to developing countries.
According to this view, “large-scale” investments are needed to address climate change, which cannot be made by the poorest countries, which tend to be the most affected by climate change. At this point, the poorest countries have lower emissions of these gases, especially in comparison with the more developed countries.
In addition to the UNFCCC, through the Paris Agreement and the Kyoto Protocol, members with more financial resources were required to contribute to climate finance by providing resources to the most vulnerable parties; this would give them the necessary financial resources to adapt to the adverse effects and reduce the negative impact of a changing climate and unpredictable weather patterns.
Origin and financing methods
Climate finance can come from various sources, including governments, international financial institutions, associations, corporations, private companies, and non-governmental organizations (NGOs).
Some climate finance mechanisms include the Green Climate Fund, the Adaptation Fund, the Global Environment Facility, private investments through venture capital funds, specialized financial tools, and green bonds. The following is a brief explanation of the most prominent mechanisms:
Green Climate Fund (GCF). Financial mechanism of the United Nations Framework Convention on Climate Change.
Global Environment Facility (GEF). A grouping of funds dedicated to addressing biodiversity loss, climate change, and land and ocean pollution.
Adaptation Fund: An international fund that finances different projects and programs to help developing countries adapt to the adverse effects of climate change.
Green bonds: Bonds that aim to finance (or refinance) eligible green projects must comply with the Green Bond Principles (GBP).
Renewable energies
Through climate finance, the most affected countries (developing countries) can adapt to and cope with the adverse effects of climate change. They also have the necessary financial support to implement the transitions, enabling them to adopt renewable energies and reduce future greenhouse gas emissions.
What do you think about this topic? Do you want to learn more about climate finance?
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