Brussels, 1 October 2021
Dear Finance Minister,
CAN Europe recommendations on ECOFIN Council Conclusions on Climate Finance
On Tuesday 5 October 2021 you will adopt Council Conclusions on climate finance at Economic and Financial Affairs Council. The EU and each of its Member States should get behind a political outcome at COP26 that advances a fair approach to 1.5°C (Fair for 1.5°C). Finance is a key component of this. Delivery on the $100 billion climate finance goal, new finance commitments and fair negotiation outcomes on finance are needed to unlock global action to keep 1.5°C within reach, to support developing countries deliver their climate plans and adapt to increasing impacts, and to progress the negotiations. With women and low income communities in developing countries hardest hit by climate impacts, finance must also be targeted and responsive to their needs.
Recent IPCC reports and the UNFCCC NDC Synthesis report have outlined the urgency for action. Climate finance commitments should aim to address the clear emissions, adaptation and finance gaps to limiting temperature rise, adapting, and addressing losses and damages, and put an end to financing that undermines Paris Agreement goals. Taking timely action on finance and investments now will reduce economic and non-economic costs from the increasing impacts of climate change, reduce the risk of stranded assets and economic shocks, and support sustainable development: benefits of early action clearly outweigh the costs of inaction.
Moreover developing countries are facing debt distress which has been exacerbated by the COVID-19 and the climate crises. Strong action on debt is necessary to enable a global green recovery. The EU should aim to support the achievement of the $100 billion in a manner that is sensitive to this, commit to substantially increase grant financing and commit to only using highly concessional loans, as well as take action on debt relief.
To address these issues we would like to call on the EU and its Member States to:
- Support a clear and reliable climate finance delivery plan underpinned by commitments including from the EU and its Member States which ensures delivery of at least USD 600bn of climate finance over the 2020-2025 period, with at least 50% going to adaptation; the plan must spell out a clear commitment to reaching $50 billion for adaptation finance annually; and ensure that finance is delivered exclusively on concessional terms, with a majority provided as grants
- To rebuild trust EU Member States should commit to further increases in climate finance to ensure they deliver their fair share by 2025, setting out increases in finance that are new and additional, including a timebound commitment to achieve at least 50% adaptation finance, and with improvements to gender-responsiveness
- On loss and damage, the EU should advance a timely and full operationalisation of the Santiago Network through a COP decision on loss and damage and in the framework of the UNFCCC, and support a mandate to pursue work on sources for new and additional finance
- Learning lessons on the $100 billion goal to inform deliberations on the new post-2025 climate finance goal, the EU should support a proper assessment of how to reflect, and respond to, the different needs, including in scope and nature, by setting up specific sub-goals of adaptation, mitigation, and loss and damage finance
- EU Member States and public financial institutions should immediately rule out any new direct and indirect international public finance, to coal, oil and gas projects across the entire value chain (extraction, transport, distribution and power generation and associated infrastructure), including through export credit agencies.
More details of CAN Europe’s specific recommendations are provided in an annex to this letter.
We also call on the EU to explicitly welcome and support the recent V20 Climate Vulnerables’ Finance Summit outcomes, and to support the COP 26: A Five Point Plan for Solidarity, Prosperity and Fairness.
We hope that you can take these recommendations into consideration,
Director, CAN Europe