The authors argue that the climate finance system around the current target to mobilize USD 100 billion per year to support developing countries has been fraught with difficulties, and that it would be ineffective to simply increase the climate finance target without addressing these difficulties. Therefore, they identify and discuss five priority elements for negotiations: the relation to Article 2.1(c) of the Paris Agreement; the adaptation-mitigation balance; financial instruments; mobilising private finance; and “new and additional” finance.

To increase transparency, accountability and trust in climate finance under the UNFCCC and to simultaneously allow for the mobilization of finance at scale, the authors suggest setting a sub-target for grants. In combination with additional (sub)target(s), this could define an overall post-2025 climate finance target that is better suited to serve the challenging dual role of mobilizing finance at scale and transferring resources to developing countries.

Key policy insights

Ambiguous definitions of climate finance and the USD 100 billion target allow for multiple interpretations, reducing transparency and trust between countries in this central issue to the UN climate negotiations.

Climate finance targets appear to be interpreted in a dual and sometimes contrasting way: mobilizing investment at scale and transferring resources from developed to developing countries. Emphasizing the existence of this duality may help to find common grounds for a post 2025 climate finance target.

Private finance mobilization, the relation to Art. 2.1(c) and other priority elements identified in this Perspective article require careful consideration. Increasing the climate finance target may prove ineffective without further clarity on these issues.

More detailed assessments of needs and priorities of developing countries and the relation between needs, costs and required support would help the work towards the post-2025 target and the effectiveness of climate finance provision.

The authors suggest a sub-target for grants to increase accountability and trust and ensure a transparent transfer of resources from the developed countries and to target the needs of the most vulnerable developing countries.

Negotiations on the post-2025 climate finance target present a good opportunity to consider additional relevant aspects, including access to and prioritization of finance as well as loss and damage.