Financing Low-Carbon and Climate Resilient Development: Do countries integrate Article 2.1(c) of the Paris Agreement in their long-term strategies?

Abstract

Article 4.19 of the Paris Agreement states that all parties should strive to formulate and communicate their ‘long-term low-emissions development strategies’ (LT-LEDS, or LTS for short) that are ‘mindful’ of Article 2 (UNFCCC, 2015). Long-term strategies (LTS) are an important tool for understanding possible pathways towards long-term emissions goals and their implications for cutting emissions. The scale of systemic change, low-carbon investment, technological innovation, sustainability transitions and societal transformations necessary for decarbonising economies, makes it a complex process. High-quality LTS can guide decision-making in policy, investment and society, and provide a comprehensive foundation of evidence for broader public debate (Jotzo et al., 2021). Key to a successful strategy is finance. The Paris Agreement identifies two types of finance to implement mitigation actions. First, developed countries have pledged to support developing countries with mitigation and adaptation in a balanced way. A goal of US$ 100 billion per year was set for this purpose, and it was agreed that prior to 2025 a new collective quantified goal from a floor of US$ 100 billion per year shall be set (UNFCCC, 2015). Second, and more importantly, in the context of the enormous investments needed to limit global warming to 1.5°C above industrial levels, the aim is ‘[m]aking finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development’ (UNFCCC, 2015). This is agreed in Article 2.1(c) of the Paris Agreement, meaning LTS need to be ‘mindful’ of this financial aim. LTS can be an important tool and steering document for decision makers to ensure the needed systemic change towards climate-consistent economies. This report analyses all 32 LTS that have been submitted to the UNFCCC up to August 2021 (see Annex I) on the aspect of finance. It particularly analyses the extent to which finance is an integral part of countries’ LTS and whether Art. 2.1(c) is addressed.