Under Article 4.3 of the UN Framework Convention on Climate Change (UNFCCC) developed countries committed to provide funding for the “agreed full incremental costs” of climate
change in developing countries, meaning the additional costs of transforming business-asusual fossil-fuel dependent economic growth strategies into a low-emission climate-resilient development path. The Convention, the Kyoto Protocol and follow-up agreements and decisions by the Conference of the Parties (COP) have laid out some of the key principles relevant to the financial interaction between developing and developed countries. Other important principles, which can be instructive for a climate finance governance framework, stem from Parties’ existing human rights obligations or a larger body of environmental law outside of the UNFCCC (such as the Rio Declaration).
This Brief looks at the three sequential phases relating to the mobilization, the administration and governance, and the disbursement of climate change funding. Taken together, they offer a minimum guiding framework for climate finance, based on the principles and criteria briefly examined here.