Raising ambition and accelerating delivery of climate finance

Third Report of the Independent High-Level Expert Group on Climate Finance

The Independent High Level Expert Group (IHLEG) on Climate Finance has been supporting the deliberations on the climate finance agenda under successive COP Presidencies since COP26. This independent group was tasked to help develop and put forward policy options and recommendations to encourage and enable the public and private investment and finance necessary for delivery of the commitments, ambition, initiatives and targets of the UNFCCC Paris Agreement, reinforced by the Glasgow Climate Pact, the Sharm el-Sheikh agenda, and the COP28 Global Climate Finance Framework. This is the third report of the Group.

The report updates the IHLEG’s previous estimates of investment requirements for climate action and sets out the action agenda to deliver the necessary finance for investment in emerging markets and developing countries (EMDCs) other than China.

The report covers the investment imperative for climate action and the opportunities this presents; pathways to scaling up climate finance to achieve the Paris Agreement goals; how to accelerate delivery, from unlocking investment at scale to managing debt to further mobilising the multilateral development banks and beyond; and the importance of tracking and monitoring delivery. Refining the approach used by the IHLEG previously, this report provides updated estimates of investment needs of what is required for delivery on the Paris Agreement across five crucial areas:

• Clean energy transition
• Adaptation and resilience
• Loss and damage
• Natural capital
• Just transition

Key findings

• Investments in all areas of climate action must increase across all economies: US$6.5 trillion is needed on average per year by 2030 to meet climate targets in advanced economies, China, and EMDCs other than China.
• The largest increase in investment is required in EMDCs other than China: these regions currently have low investment levels, significant development needs, and are projected to contribute over 50% of global emissions by 2030.
• Investment needs are most clearly defined in the energy transition sector: while other areas have more uncertainty, sufficient data exists to provide directional estimates that can guide financing pathways across regions.
• Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability. The less the world achieves now, the more we will need to invest later.

See also: The State of Delivery: Progress Report of the Global Climate Finance Agenda