Search

The Paris Agreement's nationally driven structure puts the spotlight on financing strategies at the national level. The role of national funding vehicles in mobilizing climate finance, however, has not received extensive attention. This paper remedies this gap by introducing a novel dataset of national climate funds established in developing countries. The database creates an inventory of national financing vehicles and tracks their major attributes, including scope, legal form, and the host, among others. We show that 39 countries have established national climate funds. These funds seek to access and mobilize finance from various sources, domestic and international. Most of these funds have broad mandates to tackle climate change, while a smaller share has a more targeted, sectoral focus. Funding sources vary from taxes to international aid. The funds offer a limited range of financial instruments, primarily awarding grants. The funds also differ in how integrated they are with overarching climate plans and strategies. We also find that most developing countries use existing budget lines to target finance towards climate change objectives. Only five countries track public expenditure on the basis of dedicated budget codes. This paper contributes to the literature by providing an empirical basis to pursue questions regarding the role and effectiveness of national climate funds. For policymakers, the limited range of instruments at the disposal of many of these national climate funds also suggests a need to ensure that the national climate funds have the design features they need to support the implementation of national policy goals. Key policy insights Systematic data on public climate finance are scarce. Most governments do not use climate change codes to track their expenditures related to climate change. Policymakers should adopt practices that will help instil transparency in public expenditure on climate change. Policymakers have to revisit the design features of national climate funds such as legal form and areas of operation as the wider operating context changes. Funds accredited with multilateral climate funds are underutilized by fund contributors. The Green Climate Fund's direct access modality offers one major avenue to foster synergies between national climate funds and multilateral climate funds. Policymakers have the opportunity to harvest lessons from existing funds and calibrate climate policies accordingly, especially as countries contemplate setting revenue-generating carbon prices. [ABSTRACT FROM AUTHOR]

Enhancing the Nationally Determined Contributions (NDCs) is an important exercise to achieve the long-term goals of the Paris Agreement. The Paris Agreement also recognizes that support to developing countries in this regard will help them to aim for higher climate ambition. The role of international support programmes in the NDC enhancement process is crucial but is not often covered in scientific research. Consequently, the factors driving a country's decision to apply for NDC-related assistance have also not yet been fully explored. Acknowledging the research gap, this paper framed and tested multiple hypotheses to evaluate the impact of potential factors on the likelihood of a country applying for assistance to enhance its NDCs. For this, a logistic regression method was employed. Data from the two initiatives coordinating the technical and financial assistance worldwide, namely the Climate Action Enhancement Package (CAEP) and Climate Promise, were reviewed for this purpose. The CAEP program is financially supported by Denmark, Germany, Netherlands, Norway, Sweden and the UK. This study identifies the level of socio-economic development and the population's exposure to air pollution as key factors which influence the likelihood of applying for assistance under CAEP and Climate Promise in developing countries. Further, the presence of democratic aspects in the form of governance may also influence this choice. Finally, this study discusses the results and associated policy implications for countries receiving assistance to enhance their NDCs. Developing countries with relatively low socio-economic development are more likely to apply for assistance to enhance their NDCs. The assistance is designed to help them to build capacities to develop and implement future climate policies. Air pollution and climate change issues are interconnected. Exposure to air pollution is a potential indicator that can influence the NDC enhancement process in developing countries. The assistance for enhancing NDCs will lead to NDC targets that are well-informed and are aligned with national and sub-national development priorities with realistic prospects of implementation. Climate vulnerability and net trade do not influence the decision-making process to apply for NDC enhancement assistance. [ABSTRACT FROM AUTHOR]