The need for new and additional international public climate finance has been underlined by the Intergovernmental Panel on Climate Change (IPCC) 6th Assessment Report. There are major opportunities to shape bold policy responses in 2023, including through the UNFCCC transitional committee on loss and damage funding arrangements which is tasked to provide recommendations on innovative sources of finance, and the Summit for a New Global Financial Pact in June, with one of four major themes: innovative solutions to provide additional resources in support of countries vulnerable to climate change. Negotiations are also ongoing on the new UNFCCC climate finance goal to support developing countries after 2025, where developed countries should take a lead in contributing and mobilising finance. At the same time alongside debt cancellation by external creditors, climate vulnerable countries can benefit from implementing well-designed new taxes, and accompanying policies and measures, to increase their domestic resource bases.
Climate justice and equity principles should guide the selection, design and implementation of policy options for generating sources of new and additional climate finance. These are necessary for correcting injustices and inequities, but also to increase public acceptance of, and facilitate global political economy towards agreements.
Many climate vulnerable countries have recently championed calls for new forms of revenue generation focusing on polluting industries, debt relief and others. The EU Member States, European Commission and European countries, a number of which supported progress on loss and damage finance through voluntary pledges ahead of COP27, have signalled the need for fossil fuel, aviation and maritime taxation to fund it. By strengthening coalition-building with climate vulnerable countries on these issues and implementing policies domestically they can start to get significantly more public grants-based finance flowing.
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