Money is always the problem solver of many things, but it is also the trouble maker.

Inevitably, the process of drafting an agreement that will be acceptable for 196 parties faces the same problem.

The climate finance issue very critical as the wealthy countries are supposed to provide sufficient funding for the poorer countries to overcome loss and damage caused by climate change and also to develop economies with lower carbon emission. The developing countries did not cause this problem as they only contribute a small share of the greenhouse gases (GHG) which incur the climate change crisis. So rationally, the developed nations should pay for the price of adaptation and mitigation.

Four main arguments under this issue are the amount of post-2020 finance to be mobilized, the financial contributors, the loss and damage and the distribution of climate funds between mitigation and adaptation.

Amount of post-2020 Finance should be mobilized
Many developing countries’ Intended Nationally Determined Contribution (INDC) requested financial support to achieve certain amount of emission reduction. The developed countries are urged to scale up their financial contribution, referring the $100 billion per year contribution as the “floor”, by 2020 to unlock the emission cutting goals of the developing countries. The amount of climate finance to be mobilized will be a strong indicator for many stakeholders, including the investors because it will show the prospect and potnetial of the green industry in the future.

Who will be paying the bill?
Arguments arose on the question of who will be obligated to contribute to the fund and pay for climate change. Is it only the developed countries contributing or both the developed and developing countries? Is it on voluntary basis or with legal restriction? Developed countries want the emerging developing economies who do not have historical responsibility for emission to contribute to the fund while many of the developing countries like India are still struggling in domestic poverty issue. Therefore, the Common but Differentiated Responsibility (CBDR) principle plays an important role in climate finance too. If the principle is taken into account, the bill will be paid by the developed countries. Read more about CBDR here.

Loss & Damage
Climate change is already happening now; many vulnerable countries are now drowning in the impacts of climate change. There are certain consequences that have been done could not be reversed or cured, such as the typhoons in Philippines. Permanent damages are wound that need constant medication and cannot be cure thoroughly. In order to get funds to alleviate the loss that countries have already faced, the Least Developed Countries (LDC) and other most vulnerable countries are fighting to make sure that the developed countries are going to compensate them.

Distribution of climate funds between adaptation and mitigation
Many developing countries also demand the distribution of funds between mitigation and adaptation to be balance because they are the frontline community that are more vulnerable towards the climate change. In order to reduce the potential risk of facing loss and damages, they need more funds for adaptation to prevent disastrous effects from jeopardizing them. The developed countries are very mitigation-focused and this caused the distribution of finance between adaptation and mitigation to be one of the hot topics in COP21.

Written by: Elaine See