Effective climate finance needs equal rules in donor and recipient countries – DIW researchers

One of the main objectives of this year’s UN Climate summit in Glasgow (COP26) should be reworking the details of international climate finance and include more links to reciprocal efforts in industrialised donor countries, researchers from the German Institute for Economic Research (DIW) say in a new report. “In future, reciprocity of climate contributions should be at the heart of climate finance,” the DIW says. "If donor countries commit to domestic climate policy efforts at the same time as supporting developing countries, a dynamic of mutual reinforcement of climate protection measures can be created," co-author Heiner von Lüpke said. "In addition, this can prevent climate financing from becoming a mere transfer mechanism with which industrialised countries unilaterally impose climate protection as a condition on developing and emerging economies." Focusing on the example of the steel sector, the authors found that when supporting the switch to climate-friendly steel production in emerging economies, they should link this support to similar rules in their own countries.

This year’s UN climate change conference on 1-12 November in Glasgow is the first climate conference since governments were expected to submit more ambitious climate action plans for 2030 known as the nationally determined contributions (NDCs). Developed countries have committed to provide 100 billion U.S. dollars per year in climate finance to developing countries by 2020. However, the COVID-19 pandemic has drastically altered the context for international climate action and finance, and it is unlikely the target was met last year.