Strengthening the role and exploring the effectiveness of new climate finance target

Abstract

To address global climate change, developed countries have committed at the 29th session of the Conference of the Parties (COP29) to provide $300 billion annually in climate finance by 2035 to support mitigation and adaptation actions in developing countries. However, the effectiveness of this target remains unclear. This paper, based on the Policy Analysis of Greenhouse Effect - Ice, Climate, and Economics (PAGE-ICE) model, introduces a climate finance module to evaluate the implementation of new climate finance targets under different collection and dispensation principles. It further explores the impact of regional governance capacity and the classification of donor and recipient countries on global climate and economic outcomes. The results show that if climate finance lasts until 2035, the global temperature rise will decrease by 0.13 °C to 0.14 °C in 2050. Extending the financing period to 2050 will further reduce the temperature rise by approximately 0.02 °C and increase the economic benefits of each country as a percentage of GDP by 0.09% to 1.25%. Regarding the dispensation principles, the Carbon Intensity-Adaptation Need (CIAN) principle results in the greatest emission reductions, while the Carbon Reduction Contribution-Adaptation Need (CRCAN) principle facilitates a more equitable distribution of economic benefits among recipient countries. In terms of collection principles, the Responsibility-Capacity Integrated (RCI) principle is a more acceptable burden-sharing option for donor countries compared to other existing principles. Furthermore, weaker governance capacity reduces the effectiveness of climate finance. While shifting China from a recipient to a donor may alleviate pressure on traditional donor countries, it could weaken the overall mitigation effectiveness.

Keywords

Climate finance / mitigation and adaptation / collection and dispensation principles / governance capacity / integrated assessment models

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