Trinomics consultants Hans Bolscher and Elske Veenstra have given their perspective on the pledge of $100 billion climate finance from developed countries to developing countries in the Dutch magazine Nieuwsbrief Milieu en Economie. The agreement at the COP21 in Paris has brought new hope, but many questions on the $100 billion pledge are still outstanding: how do we define climate finance? How do we calculate the financial flows? The answers to these questions leave many grey areas, which have a big impact on the final figures that are reported as climate finance.

At the moment, apples and oranges are added up without any internationally determined methodology. For instance, efficiency investments for coal-fired power plants are seen by the USA and Japan as climate mitigation, while the EU does not account any investment in coal as climate finance. Methods for calculating different financial flows are not determined, which could lead to export credit insurance instruments claiming the whole investment as “mobilised private climate finance”, even when it is only partly insured and no actual public money is spent.

As long as clear answers are lacking, the pledge of $100 billion is in danger of becoming an empty shell. Therefore, it is crucial that methods on what counts as climate finance are internationally harmonised. Finally, the focus on the $100 billion should not diverge the attention from the ultimate goal of climate finance: combatting climate change.

You can find the article here (in Dutch).