The US administration has outlined how it intends to further efforts to increase climate financing while bringing an end to international financing for fossil fuels.
The International Climate Finance Plan, published during last week’s Leaders Summit on Climate, is the first of its kind and was developed as part of the requirements of an Executive Order signed by President Biden.
It aims to provide a strategic vision of international climate finance and “signal to other governments, international institutions, and stakeholders that the United States intends to work closely with them to deploy climate finance more efficiently and with highest impact”.
The Biden administration also pledged to double the annual $2.8 billion in direct climate financing provided to developing countries during the Obama administration. In comparison, the EU and its member states contributed €23.2 billion of public climate finance to developing countries in 2019.
The new US climate finance plan will scale up international finance for climate mitigation with the goal of aligning capital flows with the Paris Agreement pathway. It specifies how the US will define, measure, and report on international climate finance, ensuring that climate-related reporting is transparent.
Most significantly, the plan aims to “end international official financing for carbon-intensive fossil fuel based energy.” As an initial part of this effort, the US Treasury will partner with other countries and US government departments to “modify disciplines on official export financing provided by OECD export credit agencies” in order to redirect financing away from carbon-intensive activities.
Climate advocacy groups gave the US climate finance plan a tentative welcome, while warning that the details of its implementation remain to be seen. The US Natural Resources Defense Council called the document a “clear signal the United States will move away from financing coal, oil and gas projects overseas,” but also warned that it “needs to be followed with the necessary guidelines, policies, and strategies.”
However European climate think tank E3G was less generous, saying the plan did not offer particular leadership on financing a sustainable recovery and criticising it for focusing on de-risking investments rather than on mobilising finance.
The new plan has a 2025 time horizon, but will be reviewed in 2023 to take stock of progress and assess whether greater ambition is needed.
This page was last updated April 29, 2021
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