CPI publishes its “Global Climate Finance Outlook 2023”
Climate Policy Initiative (CPI), an analysis and advisory organization with deep expertise in finance and policy, published it 2023 edition report on climate finance with data for the biennial 2021/2022. This report provides an overview of climate finance flows from sources and intermediaries (both private and public) to uses and sectors, through a broad portfolio of financial instruments (balance sheet financing, project-level market rate debt, grants, among others).
Average annual climate finance flows reached almost 1.3 trillion dollars in 2021/2022, nearly doubling compared to 2019/2020 levels, but yet accounting for only about 1% of global GDP. The annual climate finance needed through 2030 increases steadily to 9 trillion dollars, and then rises to over 10 trillion dollars each year from 2031 to 2050. This means that climate finance must escalate by at least five-fold annually, as quickly as possible, to avoid the worst impacts of climate change.
Latin America and the Caribbean totalized 52 billion dollars of climate flows in 2021/2022, representing a 4% share on world’s flows, with a balanced split in terms of public-private sources and also in domestic-international climate finance flows. Latin American countries are particularly well-positioned for South-South partnerships on climate change, given that nine countries have part of the Amazon rainforest within their borders and could pursue cross-border land management and knowledge exchange for mitigation and adaptation-related forestry project.
The authors conclude that to mobilize capital at the scale required, there is a need to increase both the quantity of climate finance and to improve its quality by focusing on using resources more efficiently and effectively. To this end, CPI proposes the following four priorities to build on emerging opportunities: i) transforming the financial system; ii) bridging climate and development needs; iii) mobilizing domestic capital; and iv) acting to improve data.