Question Period Note: International Climate Finance Commitments

International Climate Finance Commitments

• Climate change is a global challenge that requires a global solution.
• As part of our commitment to the Paris Agreement, Canada will invest $5.3 billion in climate finance for developing countries over the next 5 years, doubling our previous contribution, and increasing support for adaptation and biodiversity.
• This funding will help developing countries transition to low-carbon, sustainable and resilient economies.
• Canada recognizes that urgent action is needed to address the interconnected crises of climate change and biodiversity loss, which disproportionally affect the poorest and most vulnerable.
• This is why our new commitment will include projects that leverage nature-based solutions to climate change and support the transition to clean energy and the phasing-out of coal.
• Our commitment is also mobilizing private investments, strengthening cooperative approaches, and positioning Canada as a leader in multilateral institutions.

• Climate change poses a fundamental threat to the planet and to communities around the world. The impacts of climate change are being increasingly felt around the globe, particularly in developing countries who are most severely hit and least equipped to respond to the consequences. Climate change has inextricable links to poverty reduction, global security, financial stability and humanitarian issues. The World Bank estimates that without action climate change impact could push an additional 100 million people into poverty by 2030.
• As part of the 2009 Copenhagen Accord under the United Nations Framework Convention on Climate Change (UNFCCC), developed countries committed to jointly mobilize US$100 billion annually, from public and private sources, by 2020 to support climate action in developing countries. This commitment is reaffirmed in the Paris Agreement, which also commits Parties to set a new collective quantifiable goal from a floor of US$100 billion per year by 2025.
Current State of Play
• In 2021, Canada announced it will double its international climate finance commitment to $5.3 billion (FY2021-22 to FY2025-26) to help developing countries transition to low-carbon, sustainable and resilient economies. Through this commitment, Canada will increase its support for adaptation, as well as nature and nature-based solutions. Canada will also increase its provision of grants to 40%, up from 30% previously. This funding is fulfilling Canada’s climate finance commitment under the Paris Agreement and is a key area of international leadership. It also builds on Canada’s previous $2.65-billion commitment (FY2015-16 to FY2020-21), and $1.2 billion Fast-Start Finance (FY2010-11 and FY2012-13).
• Canada’s funding is supporting a wide range of climate initiatives to help developing countries, in particular the poorest and most vulnerable, including Small Island Developing States (SIDS) and coastal communities. Canada’s support is delivered through a variety of multilateral and bilateral channels including the Green Climate Fund (GCF), the centrepiece mechanism for climate finance under the UNFCCC. Canada’s support is targeting sectors such as clean technology and renewable energy, climate-smart agriculture and forest management, and risk insurance and capacity building.
• Initiatives supported aim to reduce greenhouse gas emissions, support adaptation action, particularly for the poorest and most vulnerable countries, and mobilize new private sector capital for global climate action.
• Canada’s approach includes partnering with Multilateral Development Banks to leverage private sector financing by removing barriers to private investment in developing countries. This includes using targeted amounts of concessional finance (i.e. below market rate) to demonstrate the commercial viability of projects and unlock future private investments in similar initiatives.
• Canada’s climate finance commitment aligns with Canada’s Feminist International Assistance Policy (FIAP), which guides Canada’ overall approach on international assistance. Environment and climate action is a core action area of the FIAP.
$100-billion Delivery Plan
• In July 2021, UK COP26 President-Designate Alok Sharma asked Canada and Germany to develop a “Climate Finance Delivery Plan” on the US$100-billion goal, demonstrating how and when the US$100B will be met from 2021 through to 2025. Developing countries view the US$100-billion goal as essential for enhancing climate ambition and meeting the goals of the Paris Agreement. Overall, the US$100-billion goal is a symbol of trust between developed and developing countries, underpinning climate cooperation and action, and pivotal to successful climate change outcomes.
Complementary Measures
• International flows to support the transition towards a sustainable and climate-resilient growth can be facilitated through the implementation of effective domestic policy environments.

• For example, carbon pricing is a key tool to drive the market to innovate and reduce carbon pollution. Canada has joined in November 2015 the Carbon Pricing Leadership Coalition, a voluntary initiative launched in 2014 by the World Bank that supports and encourages the successful implementation of carbon pricing. As part of its $2.65B climate finance commitment, Canada is also contributing to the Transformative Carbon Asset Facility (TCAF) and intends to contribute to the Partnership for Market Implementation (PMI) in order to help create the conditions that will support the expansion of carbon pricing in developing countries.
• Building on its domestic leadership on coal phase-out, Canada co-founded the Powering Past Coal Alliance (PPCA) with the United Kingdom in 2017, the world’s first and only government-led initiative focused on accelerating clean growth and climate protection through the rapid phase-out of unabated coal power (i.e., coal power generated without operational carbon capture and storage). In close collaboration with its broad membership – which includes national and sub-national governments, businesses and organizations— the PPCA plays a pivotal role in driving global ambition on energy transition needed to meet the temperature goal of the Paris Agreement.

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