Climate Finance Fundamentals 1: The Principles and Criteria of Public Climate Finance - A Normative Framework

Under Article 4.3 of the United Nations Framework Convention on Climate Change (UNFCCC), developed countries committed to provide funding for the “agreed full incremental costs” of climate change in developing countries, meaning the additional costs of transforming business-as-usual, fossil fuel dependent economic growth strategies into low-emission climate-resilient development pathways (UNFCCC, 1992a: Art. 4.3). The Convention, the Kyoto Protocol and other follow-up agreements and decisions by the Conference of the Parties (COP) have laid out some of the key principles relevant to the financial interaction between developed and developing countries. Other important principles, which can be instructive for a climate finance governance framework, stem from Parties’ existing human rights obligations or a larger body of environmental law outside of the UNFCCC (such as the Rio Declaration and follow-up outcomes). The precise meaning of these principles remains a matter of interpretation and discussion; however, collectively they can nevertheless serve as normative guidance for a coherent framework by which to assess and compare funding mechanisms and commitments, including those made in the 2015 Paris Agreement and as part of its implementation.

This brief looks at relevant principles and criteria applicable to the mobilisation and provision, the administration and governance, and the disbursement and implementation of climate change funding. Taken together, they offer a guiding framework for climate finance.