The impacts of climate change are being felt more acutely with each passing year, as we witness rising global temperatures, severe flooding, and increasingly frequent extreme weather events. For countries in the Global South, these impacts are particularly devastating, often wiping out homes, livelihoods, and even entire communities.
Climate finance is a critical issue in global discussions about how to address climate change, and it is one of the central topics at COP29. But what exactly is climate finance, why does it matter and how can it support those most affected by climate change?
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Defining climate finance
Climate finance is funding provided to help communities respond to climate change.
It includes money for mitigation, which involves reducing greenhouse gas emissions, and adaptation, which helps communities adapt to the effects of climate change. There’s also a focus on funding for loss and damage, referring to the destruction that climate change causes. This includes the loss of homes, livelihoods and entire ecosystems.
Learn about this in more detailWhere does money for climate finance come from?
Both public and private sources of finance contribute to this pool. However, public finance—funds provided by governments—is especially important. Private finance, often driven by profit, tends to target projects that offer a financial return, such as renewable energy development. But it often overlooks the needs of vulnerable communities, especially those requiring urgent support. This is why public finance remains vital. It can be directed toward addressing the immediate needs of poorer countries, particularly those in the Global South, including infrastructure improvements, agriculture and ensuring access to clean water.
Since the adoption of the Paris Agreement and the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), developed countries have been under pressure to provide financial resources to help poorer communities combat the effects of climate change. However, despite many promises, the flow of climate finance has been inconsistent and often falls short of the urgent needs facing the Global South. This failure has become a critical point of debate at climate summits like COP29, as developing communities call on wealthier nations to fulfill their promises.
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Why public finance is essential
Private finance does play a role in tackling climate change. Private investors and businesses are funding various initiatives to transition the world to a low-carbon economy, such as building wind farms, solar panels, and other renewable energy sources. But these investments tend to focus on profitable ventures. For example, financing renewable energy projects that offer high returns can leave behind critical sectors like climate adaptation, which are harder to fund but essential for the survival of millions in the Global South. Without public finance, the funding gap for crucial areas like climate change adaptation and loss and damage will only widen.
Public finance is raised through government resources and can be more effectively channelled toward essential projects that benefit at-risk communities. For example, wealthier countries like the UK and the US can raise money for climate action by taxing the wealthiest individuals and businesses. Holding large corporations, particularly fossil fuel giants, accountable for their role in causing climate change is another way to increase public climate finance. With these changes implemented, public finance can directly support the most vulnerable communities without pushing them further into debt.
Many past climate conferences have focused on how to best utilise public and private funds to reach climate goals. Yet, financial institutions, including development banks, tend to prioritise the private sector, putting poorer nations at risk of being left behind. The private sector often uses loans rather than grants, which can drive countries already struggling with poverty deeper into debt. As we head into COP29, prioritising public finance has never been more urgent. Christian Aid continues to advocate for grant-based finance, ensuring the most vulnerable countries receive the support they need without facing further financial pressure.
Discover how you can advocate for climate finance by exploring our Loss and Damage resources.
Supporting the Global South
Communities in the Global South are disproportionately impacted by climate change, despite contributing the least to global emissions. In regions such as Africa, South Asia, and Latin America, the effects of rising global temperatures are deeply felt. Farmers face prolonged droughts and flooding, damaging crops and threatening food security. Coastal communities are contending with rising sea levels, displacing families and destroying homes. And in many places, extreme weather events such as hurricanes, typhoons, and cyclones are becoming more frequent and intense. Without proper access to climate finance, these countries will struggle to adapt and recover from these challenges.
Mercy's story
Mercy Njeri has lived in Mai Mahiu with her family for two years, raising chickens and selling eggs to make a living. Her small stone-built home has a separate room where her two adult sons live.
On the night of April 29, Mercy was woken by a call warning her of floodwaters heading towards their village. She quickly gathered her family, and they escaped to higher ground as water swept through the area, demolishing homes.
When the family returned the next evening, they found their sons' room destroyed and their home filled with mud halfway up the walls. Mercy’s chickens and their litter of puppies were gone, with only the adult dogs surviving.
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It was around 3.00am…we were sleeping. The neighbour uphill from us got a call from her son telling her to leave and to tell the people in the village to do so as well; he said floods were coming, and where he was, they had already been flooded. She started banging the gates while screaming, and we were all coming out just as we were; we carried our families only and nothing else. We were all standing there when the water came, and it came with a lot of pressure, and we watched as it was sweeping houses away.
Despite the devastation, the main structure of the house remained standing, so they decided to stay and clean up rather than relocate, which they couldn’t afford.
For a month, the family worked tirelessly to clear the mud by hand, making their home livable again. Mercy received 10,000 KSH (around £58) in emergency aid from ADS, Christian Aid’s partner. She prioritized buying food, paying her 17-year-old’s school fees, and hopes to use the remainder to restart her income after losing her chickens.
Her family continues to persevere, with her husband taking any available jobs in town to make ends meet. Despite the challenges, Mercy remains hopeful about rebuilding her livelihood.
Climate finance helps countries in the Global South by focusing on three main areas:
- Adaptation: This includes strengthening infrastructure, such as building flood-resistant homes, improving agricultural systems to deal with shifting weather patterns, and securing access to water in drought-prone areas.
- Mitigation: This involves cutting down emissions, often by supporting the transition to renewable energy sources like wind, solar, and hydropower. It also includes improving energy efficiency in industries and homes.
- Loss and damage: Countries already suffering from severe climate impacts need financial support to rebuild their communities. Loss and damage funding allows vulnerable nations to recover from extreme weather events like storms, floods, and droughts.
Learn how climate change impacts real lives by reading these loss and damage testimonials from affected communities.
The $100 billion target: a broken promise?
One of the major commitments from developed nations was made in 2009, when wealthier countries promised to deliver $100 billion per year in climate finance by 2020. This money was intended to help developing countries respond to the impacts of climate change, fund mitigation and adaptation projects, and support the transition to low-carbon economies. However, this promise has not been fully realised, and the $100 billion goal was only reached late and largely in the form of loans, not grants. This is a critical issue because it increases the debt burden on the countries least responsible for causing climate change.
This failure to meet the $100 billion target under the Paris Agreement and the UNFCCC has created a growing sense of injustice. Developed countries, which are historically responsible for the majority of greenhouse gas emissions, have not fulfilled their promises to help poorer nations cope with the consequences of those emissions. As COP29 approaches, there’s growing pressure on wealthier countries to finally deliver on their commitments and ensure that climate finance is provided in a way that benefits the most vulnerable, without adding to their financial hardships.
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Explore how climate change disproportionately affects marginalized communities and learn how you can take action today.
Key priorities for COP29 include:
- An ambitious climate finance target: The new goal should reflect the real needs of developing countries, with a focus on public finance over private finance. Christian Aid is advocating for clear, measurable targets that ensure developed nations are held accountable for their climate finance promises.
- Loss and damage funding: The establishment of the Loss and Damage Fund is a critical step, but it needs to be backed up by significant financial commitments. This fund should be supported by public finance, rather than loans or private sector investments, to ensure that the most vulnerable communities can recover from climate-related disasters.
- Debt cancellation: Many countries in the Global South are already burdened by unsustainable levels of debt. Loans provided as part of climate finance only add to this burden. Christian Aid is calling for debt cancellation, so that vulnerable nations can focus on addressing climate change impacts rather than repaying loans.
- Reforming development banks: Multilateral development banks, such as the World Bank, have a significant role to play in mobilising climate finance. However, their policies often prioritise private sector investments, which can exacerbate the debt problems facing developing countries. COP29 is an opportunity to push for reforms that ensure these banks are more transparent and accountable, and that they prioritise climate action in a way that benefits the most vulnerable.
- Improving access to finance: Too many vulnerable communities face barriers that prevent them from accessing climate finance. Discussions at COP29 should include commitments to build local capacity and ensure that funding reaches those who need it most.
COP29 and beyond: setting new targets
As COP29 approaches, the call for increased and more accessible climate finance has never been more urgent. The climate crisis is a matter of equity and justice, particularly for those in the Global South who are already facing the devastating impacts of climate change. Meeting the challenges posed by climate change will require a united effort from wealthy nations to fulfil their commitments, increase public finance, and ensure that funding is allocated in a way that truly supports vulnerable communities.
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