The climate crisis is a pressing reality, and climate finance is a crucial component in mitigating and adapting to its impacts. However, the funding allocated for this cause is still vastly insufficient. As of 2019/2020, total global climate finance reached USD 653 billion, far below the estimated need of at least USD 4.3 trillion in annual finance flows by 2030 to avoid the worst impacts of climate change (CPI, 2022). This shortfall is especially evident in developing and emerging economies, which receive less than a quarter of the total global climate investment despite being the countries that are and will continue to be disproportionately affected by the climate crisis (CPI, 2021).

Climate finance distribution remains largely concentrated in developed regions, leaving emerging and frontier economies, which are the most vulnerable to climate impacts, underrepresented (CPI, 2021). Presently, mitigation finance, primarily aimed at renewable energy projects, overshadows adaptation finance, which constitutes a meagre 7% of the total global climate investment (CPI, 2021). Moreover, current climate finance mechanisms, predominantly financed through public debt, highlight the necessity for a greater private sector involvement to diversify investment sources, supplement, and stretch limited public funds (CPI, 2021).

Developing countries are committing to increasingly ambitious climate action. As of June 2023, 154 developing countries have communicated new or updated Nationally Determined Contributions (NDCs) to the United Nations Framework Convention on Climate Change (UNFCCC), demonstrating their readiness to move from planning to implementation (NDC Partnership, 2023). Already, countries are building their national capacities to turn plans into actionable mitigation and adaptation targets, strengthening enabling environments to attract financing and consolidating priorities into centralized project pipelines (NDC Partnership, 2023). Yet existing climate finance is insufficient to meet these needs and support NDC implementation (NDC Partnership, 2023).

In response to these prevailing challenges, a promising solution arises in the form of GAIA - a proposed USD 1.5 billion blended financing platform projected to reach nearly USD 20 million direct and indirect beneficiaries across 25 developing and emerging countries. GAIA is more than just a blended financing platform; it's a fusion of multiple public and private sector organizations, including three of the most prominent global philanthropies, FinDev Canada, MUFG, and a consortium of United Nations’ agencies and platform-based initiatives, informed by countries’ stated needs surfaced through the NDC Partnership.

Read the full article about closing the climate finance gap by Christopher Marks, Paulo Martelli, Jyotsna (Jo) Puri, Hon. Ryan R. Straughn, and Stacy Swann at NDC Partnership.