Climate-vulnerable countries face climate financing costs for mitigation, adaptation and resilience amounting to US$490 billion annually by 2030, according to a new report by the Climate Vulnerable Forum and the Vulnerable 20 Group of Finance Ministers (CVF-V20) and the Bridgetown Initiative.
The report, released recentlyat The Norwegian Agency for Development Cooperation (Norad) conference, identifies ten ‘super levers’ that could help mobilise an additional US$210 billion a year to enable this group of 70 vulnerable nations to build physical and economic resilience and meet climate-related investment needs by 2030.
The report comes at a critical moment as the New Collective Quantified Goal of $300 billion per year, agreed at COP 29 in Baku, falls drastically short of the estimated $2.4 trillion annual climate finance needed for developing countries by 2030. It demonstrates that the 70 V20 nations, which represent a fifth of the global population and are disproportionately vulnerable to climate-related shocks, do not have the luxury of time to wait for action.
V20 nations are already taking the initiative by advancing Climate Prosperity Plans (CPPs) as national strategies to realise economic prosperity and growth alongside emissions mitigation in climate-vulnerable nations. This new report offers a much-needed blueprint of priority actions for financial actors to support this transformation by focusing on targeted levers that can deliver substantial amounts of climate finance for the most vulnerable countries for investment and adaptation.
The ten ‘super levers’ outlined in the report will create multiplier effects mobilising hundreds of billions of dollars of desperately-needed financial resources to countries on the frontlines of the climate crisis. These interconnected system-wide interventions aim to help unlock an additional $210 billion of affordable climate finance annually to V20 countries and avoid annual economic losses of up to $100 billion.
Ten Super Levers:
- Strengthening Country Platforms by funding country-led economic strategies such as ‘Climate Prosperity Plans’ and ‘Just Energy Transition Partnerships’ which coordinate investments, build project pipelines, and target adaptation spending across all sectors.
- Scaling and Standardising Carbon Markets by implementing high-integrity carbon pricing in ways that help protect and enhance nature. This includes a robust Article 6 mechanism and G20 countries purchasing international credits to raise carbon market funds for vulnerable countries.
- Rechannelling Special Drawing Rights (SDRs) through redirecting $100 billion from G20 countries’ IMF SDRs to deliver concessional finance for V20 nations’ needs.
- Implementing Solidarity Levies from high polluting sectors, such as shipping and aviation, to generate $50-100 billion annually of predictable resources for climate finance.
- Repurposing Harmful Subsidies to redirect fossil fuel subsidies toward climate- and nature-positive investments and clean energy.
- Reforming Capital Adequacy Requirements in banking regulations (like Basel III) could lower the cost of capital for clean infrastructure projects in emerging markets, reducing a major barrier to investment.
- Setting Private Capital Mobilisation Mandates for multilateral development banks (MDBs) so they can scale their role as catalysts for large-scale private investment.
- Expanding Local Currency Solutions to help lower sovereign currency risk exposure and reduce the cost of capital.
- Increasing Affordability of Sovereign Disaster Insurance by subsidising insurance premiums, scaling risk pools and ensuring cost-effective insurance products are available to minimise disaster recovery times, reduce losses and ultimately improve resilience.
- Integrating Climate & Nature into Macroeconomic Frameworks could incentivise investments that protect natural capital and increase resilience rather than allowing the continued destruction of nature for short-term profit.
Exhibit 1: Ten super levers to catalyse finance for climate-vulnerable countries
Visit the ‘CVF-V20 website’ to download the full report, which was developed by the CVF-V20 with the support of the Government of Norway, Systemiq and its Blended Finance Taskforce.
President Mohamed Nasheed, Secretary General of the Climate Vulnerable Forum, said: “Vulnerable countries are crippled by debt and high costs of capital, with more spent on interest payments than on health and education in many countries. This leaves no room for investing in adaptation and resilience even though this is vital to help communities recover more quickly in a world pummelled by climate change.
Reducing national debt burdens and generating fiscal space for countries will be hugely important to delivering on global climate goals via large-scale clean investments. The solutions set out in this report offer actionable priorities available today”.
Pepukaye Bardouille, Director of Bridgetown Initiative and Special Adviser on Climate Resilience, Barbados Prime Minister’s Office, said: “As stands, we are failing to fulfil the growth potential and avoid the worst impacts of the climate crisis and nature loss in the most climate-vulnerable countries. On balance, $50bn in capital flowed out of V20 countries in 2024, despite green investment being one of the most effective ways to support prosperity and enhance resilience. To keep emissions targets within reach, financial incentives must be aligned to drive the rapid reductions needed in fossil fuels and deforestation. We also need co-ordinated action to provide affordable debt and inject new private capital into critical investments that support development, as outlined in this report”.