page_title: Climate finance
section_title: Flows of climate finance
hierarchical_section_title: Climate finance / Flows of climate finance
caption_attribution_description: English: Flow diagram
context_page_description: Climate finance is “finance that aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts”, as defined by the United Nations Framework Convention on Climate Change Standing Committee on Finance. The term has been used in a narrow sense to refer to transfers of public resources from developed to developing countries, in light of their UN Climate Convention obligations to provide "new and additional financial resources", and in a wider sense to refer to all financial flows relating to climate change mitigation and adaptation.
  The 21st session of the Conference of Parties to the UNFCCC introduced a new era for climate finance, policies, and markets. The Paris Agreement adopted there defined a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2 °C above preindustrial levels. It includes climate financing channeled by national, regional and international entities for climate change mitigation and adaptation projects and programs.
context_section_description: A number of initiatives are underway to monitor and track flows of international climate finance. Analysts at Climate Policy Initiative have tracked public and private sector climate finance flows from a variety of sources on a yearly basis since 2011. In 2015, they estimated that climate finance reached $437 billion. This work has fed into the United Nations Framework Convention on Climate Change Biennial Assessment and Overview of Climate Finance Flows  and the IPCC Fifth Assessment Report chapter on climate finance. This and other research suggests a need for more efficient monitoring of climate finance flows. In particular, they suggest that funds can do better at synchronizing their reporting of data, being consistent in the way that they report their figures, and providing detailed information on the implementation of projects and programmes over time.
  The estimates of the climate finance gap - that is, the shortfall in investment - vary according to the geographies, sectors and activities included, timescale and phasing, target and the underlying assumptions. The 2010 the World Development Report preliminary estimates of financing needs for mitigation and adaptation activities in developing countries range from USD 140-175 billion per year for mitigation over the next 20 years with associated financing needs of USD 265-565 billion and USD30 – 100 billion a year over the period 2010 - 2050 for adaptation.
  The International Energy Agency’s 2011 World Energy Outlook (WEO) estimates that in order to meet growing demand for energy through 2035, USD 16.9 trillion in new investment for new power generation is projected, with renewable energy (RE) comprising 60% of the total. The capital required to meet projected energy demand through 2030 amounts to $1.1 trillion per year on average, distributed (almost evenly) between the large emerging economies (China, India, Brazil, etc.) and including the remaining developing countries. It is believed that over the next 15 years, the world will require about $90 trillion in new infrastructure – most of it in developing and middle-income countries. The IEA estimates that limiting the rise in global temperature to below 2 Celsius by the end of the century will require an average of $3.5 trillion a year in energy sector investments until 2050.
  It has been estimated that only 0.12% of all funding for climate-related research is spent on the social science of climate change mitigation. Vastly more funding is spent on natural science studies of climate change and considerable sums are also spent on studies of impact of and adaptation to climate change. It has been argued that this is a misallocation of resources, as the most urgent puzzle at the current juncture is to work out how to change human behavior to mitigate climate change, whereas the natural science of climate change is already well established and there will be decades and centuries to handle adaptation.
caption: Financial flows for climate change mitigation and adaptation in developing countries
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