The combined consolidated amount of financial contributions from the European Union and its Member States to help developing countries tackle climate change in 2018 was €21.7 billion, and it is with this figure that the EU will travel to COP25, proud to be the leading contributor to international climate finance (see EUROPE 12362/14).
European Finance Ministers confirmed this on Friday 8 November in their unanimous conclusions, which complement the EU’s negotiating mandate for COP25, adopted by the Environment Council on 4 October.
The EU Council emphasises that its contribution has more than doubled since 2013 and that the EU and its Member States retain their standing as the world’s largest contributor, including to the first replenishment of the Green Climate Fund. On this occasion, it urged other developed countries to accelerate the mobilisation of the resources required to reach the $100 billion per year collectively pledged from 2020 to 2025 to support developing countries’ adaptation and mitigation efforts.
It stresses the need for all parties to accelerate the mobilisation of the public and private resources required to achieve this objective, as confirmed in the Paris Agreement
Aware that a new collective objective will be set in 2025, the major funders say they are ready to start discussions on this subject in November 2020.
The EU Council underlines the urgent need for ambitious implementation of the Paris Climate Agreement and stresses the synergies between the Universal Agenda for Sustainable Development, the Addis Ababa Programme of Action on Financing for Development and the Paris Agreement.
It welcomes private sector initiatives on sustainable finance and carbon neutrality and the ongoing work in the EU on taxonomy for sustainable finance.
It stresses that carbon pricing and the phasing out of environmentally damaging and economically inefficient subsidies are crucial for promoting the reorientation of financial flows towards sustainable and climate-neutral investments, to support a just transition to climate neutrality and to promote innovative climate-friendly solutions.
As such, it says it supports: - carbon pricing initiatives, including those that contribute to capacity development in developing countries; - the use of internal carbon pricing by companies and financial institutions, including multilateral and private banks; - initiatives promoting the phasing out of environmentally harmful and economically inefficient subsidies and the gradual reduction of public and private funding for high-emission and environmentally harmful projects and assets.
End of financing for fossil fuels, especially solid fuels. Concerning the phasing out of loans for fossil fuel projects by multilateral development banks, including the EIB, the final text contains a reference to the need to take into account the countries’ “energy security”.
This reference to energy security did not appear in a version of the draft conclusions dated 5 November (see EUROPE 12365/3). This addition was requested by Poland and Hungary. It reflects the existence of divisions between Member States: some want the EU to have a high level of ambition in eliminating EIB lending for fossil fuels, while others, such as Poland and Hungary, are holding back because of their high dependence on fossil fuels.
The conclusions specify that the elimination of fossil fuels should focus on solid fossil fuels. This position was again supported by Poland, which does not wish to limit EIB financing of natural gas projects.
Like the Environment Council, the Ecofin Council has committed to cooperating with all parties at COP25 to develop robust rules for global carbon markets (Article 6 of the Paris Agreement).
NGOs are disappointed. NGOs point out that €21.7 billion represents only a marginal increase from €20.4 billion in 2017 and €20.2 billion in 2016 (see EUROPE 11885/12).
“EU funding for climate change is increasing far too slowly to meet the growing needs of the world’s poorest people. In addition, most of the money is diverted from existing development assistance, and adaptation remains seriously underfunded”, said Wendel Trio, Director of CAN Europe (Climate Action Network). (Original version in French by Aminata Niang and Damien Genicot)