17.4 Climate finance and technology transfer

Climate finance is crucial for tackling global warming. It funds efforts to reduce emissions and adapt to climate impacts. Developing nations especially need this support to transition to cleaner economies and build resilience against climate threats.

Technology transfer is key to climate action. It helps developing countries access clean tech and know-how, enabling them to leapfrog carbon-intensive development. Sharing expertise between nations accelerates the adoption of climate-friendly solutions worldwide.

Climate Finance

Concept of climate finance

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• Mobilizes and allocates financial resources to support climate change mitigation and adaptation initiatives
  • Mitigation efforts reduce greenhouse gas emissions and limit the extent of climate change (renewable energy, energy efficiency)
  • Adaptation efforts build resilience and reduce vulnerability to the impacts of climate change (climate-resilient infrastructure, early warning systems)
• Enables countries, particularly developing nations, to transition to low-carbon and climate-resilient economies
  • Funds implementation of climate-friendly technologies, infrastructure, and practices (solar panels, electric vehicles)
  • Supports capacity building, research, and development related to climate change (training programs, research grants)

Sources of climate funding

• Public funding sources
  • Multilateral development banks (World Bank, Asian Development Bank)
  • Bilateral aid agencies (USAID, JICA)
  • Dedicated climate funds (Green Climate Fund, Adaptation Fund)
  • National budgets and tax revenues
• Private funding sources
  • Institutional investors (pension funds, insurance companies)
  • Commercial banks and financial institutions
  • Corporations and businesses
  • Philanthropic organizations and foundations (Rockefeller Foundation, Bill and Melinda Gates Foundation)
• Mechanisms for channeling climate finance
  • Grants and concessional loans
  • Market-based instruments (carbon pricing, emissions trading schemes)
  • Green bonds and climate-themed investment funds
  • Blended finance combining public and private funding (public-private partnerships)

Technology Transfer

Technology transfer for climate action

• Shares knowledge, expertise, and technologies between countries to support climate change mitigation and adaptation efforts
• Enables developing countries to access clean technologies and know-how
  1. Reduce greenhouse gas emissions and dependence on fossil fuels
  2. Improve energy efficiency and adopt renewable energy sources (solar, wind, hydropower)
  3. Build resilience to the impacts of climate change (drought-resistant crops, flood control measures)
• Allows developing countries to leapfrog carbon-intensive development pathways and pursue sustainable economic growth
• Collaboration and partnerships between developed and developing countries accelerate dissemination and uptake of climate-friendly technologies (technology transfer agreements, joint research projects)

Scaling climate finance and technology

• Barriers to scaling up climate finance and technology transfer
  • Insufficient public and private funding to meet growing needs of developing countries
  • Limited institutional capacity and technical expertise in developing countries to absorb and effectively utilize climate finance
  • Intellectual property rights and high costs of acquiring and adapting clean technologies
  • Political and economic instability in some developing countries deterring investment
• Opportunities for scaling up climate finance and technology transfer
  • Increasing public funding commitments from developed countries and multilateral institutions
  • Mobilizing private sector investment through innovative financing mechanisms and risk-sharing instruments (green bonds, guarantees)
  • Strengthening institutional frameworks and capacity building in developing countries to facilitate effective use of climate finance
  • Promoting technology cooperation and knowledge sharing through international platforms and partnerships (UNFCCC Technology Mechanism)
  • Aligning climate finance with national development priorities and plans to ensure country ownership and sustainability