A dynamic climate finance allocation mechanism reflecting the Paris Agreement

Abstract

Reaching the goal of the Paris Agreement requires substantial investment. The developed country parties have agreed to provide USD$100 billion in climate finance annually from 2020 to 2025. Ongoing negotiations on post-2025 commitments are likely to exceed that sum and include a broader scope of parties. However, there is no guidance regarding the allocation of contributions. Here, we develop a dynamic mechanism based on two conventional pillars of a burden sharing mechanism: emission responsibility and ability to pay. The mechanism adds dynamic components that reflect the Paris principle to 'ratchet-up' ambition; it rewards countries with ambitious mitigation targets and relieves countries with a high degree of climate vulnerability. Including developed country parties only, we find that ten countries should bear 85% of climate finance contributions (65% if all parties to the Paris Agreement are included). In both scopes, increasing climate ambition is rewarded. If the EU increased its emission reduction target from 40% to 55% by 2030, member states could reduce their climate finance contributions by up to 3.3%. The proposed mechanism allows for an inclusion of sub-, supra-or non-state actors. For example, we find a contribution of USD$3.3 billion annually for conventionally excluded emissions from international aviation and shipping.

A Breakdown of Developed Countries’ Public Climate Finance Contributions Towards the $100 Billion Goal

“…▪ ETH Zurich's static and dynamic climate finance allocation mechanisms: Other effort-sharing analyses rely solely on historic and contemporary data, but researchers at ETH Zurich developed an approach that also incorporates forward-looking data (Egli and Stünzi 2019). They began by calculating a static allocation mechanism based on a country's share of GDP ( 2017) and cumulative GHGs (1990GHGs ( -2014, similar to the approaches taken by other organizations.…”

“…Although there are some variances, which can be significant for smaller countries, there is a significant degree of alignment for the major economies. Egli and Stünzi (2019), Kowalzig (2019), and WRI (2018).…”

“…Positive amounts denote countries that were already providing more than their indicative share under a particular effort sharing approach for the given scenario, negative amounts in red denote countries below their share under a particular effort sharing approach for the given scenario (see Table 34 and Figures 14 and 15). Sources: WRI authors, calculated based on approaches used by Colenbrander et al (2021), Egli and Stünzi (2019), Kowalzig (2019), andWRI (2018). The 2018 climate finance data are calculated based on developed countries' fourth Biennial Reports to the UNFCCC (UNFCCC 2020), OECD (2021a), and MDB shareholder data.…”

“…Grant shares are from Carty et al (2020).Population data are from World Bank (2021).are from World Bank (2021). Sources: Calculated based on approaches used by Colenbrander et al (2021), Egli and Stünzi (2019), Kowalzig (2019), andWRI (2018). The 2018 climate finance data are calculated based on developed countries' fourth Biennial Reports to the UNFCCC (UNFCCC 2020), OECD (2021a), and MDB shareholder data.…”

Customized Approach to Greenhouse Gas Emissions Calculations in Railway Freight Transport

“…Logistics with low emissions have become a preferred aim in all transport modes, especially in the EU [19,20]. The EU is on the correct path to achieve its GHG emissions reduction goal for 2020 and yet has submitted a plan to further reduce emissions by at least 55% in 2030 [21][22][23]. Chen et al [24] discussed and analysed the energy consumption and carbon emissions of roads and railways in China's transport sector, and they modelled scenarios of that sector's energy consumption and carbon emissions until 2025.…”