Developing countries will need to secure $1 trillion a year in external financing for climate action by the end of the decade, a report released on Tuesday said according to Reuters. The report, commissioned by the current and previous climate summit hosts, Egypt and Britain, said that developing countries would need to work with investors, rich countries and development banks to secure this external financing and match it with their own funds to fight climate change.
The report outlines the need for funding to cut emissions, boost resilience, deal with damage from climate change and restore nature and land. It was released ahead of the talks on climate change finance at the COP27 summit in Egypt.
The report said, “The world needs a breakthrough and a new roadmap on climate finance that can mobilise the $1 trillion in external finance that will be needed by 2030 for emerging markets and developing countries other than China.”
It said the total annual investment requirement of developing countries would hit $2.4 trillion by 2030, with half coming from external financing and the rest from public and private sources in those countries. The report added that the current investment stands at around $500 million.
One of the authors of the report Vera Songwe said, “Unlocking substantial climate finance is the key to solving today’s development challenges.”
The report said that while annual flows from development banks should triple, the biggest increase should come from the private sector, both domestic and foreign. Concessional loans, which offer more favourable terms than markets, should also be stepped up.
“This means countries must have access to affordable, sustainable low-cost financing from the multilateral development banks to help crowd in investments from the private sector and philanthropy,” the report said.
The report also calls to double the grants and low-interest loans from the governments of developed countries from $30 billion annually today to $60 billion by 2025.
On Wednesday, delegates at the COP27 in Egypt are expected to focus on financing issues.