Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North

The document argues that current climate finance flows are insufficient to meet Paris Agreement goals, with a significant gap in EMDEs and LDCs due to high capital costs and strained public finances. It proposes that G7 countries accelerate finance through blended finance, debt-for-climate swaps, and MDB reforms. Specific recommendations include establishing a global risk mitigation facility, coordinating green industrial policies to avoid protectionism, and implementing universal disaster index insurance to reduce vulnerability in emerging economies.

• To meet the 1.5C global warming target, an estimated $4.3 trillion is required annually by 2030, representing a compound annual growth rate of 21%.
• Climate adaptation financing needs are estimated between $160 billion and $340 billion by 2030, potentially rising to $565 billion by 2050, with significant gaps particularly in LDCs and EMDEs.
• High cost of capital, driven by perceived risks in EMDEs, diverts international investment toward advanced economies and China, hindering the ability of developing nations to meet climate needs.
• The G7 could establish a global risk mitigation facility backed by callable capital and guarantees to manage credit risk and reduce the cost of capital for projects in developing countries.
• Debt-for-climate (DFC) swaps are identified as a key lever to create headroom for green investment in the 41 countries currently at high risk of debt distress.
• Green industrial subsidies in high-income countries, such as the US Inflation Reduction Act, risk creating a 'race to the bottom' and protectionism unless coordinated through mechanisms like a 'climate peace clause'.
• Universal disaster index insurance can reduce poverty and vulnerability in emerging economies if G7 countries provide technology transfer for precise impact measurement and ODA for start-up funding.

APA

Khanna, N., Sonesson, C., Sengupta, S., & Suryadarma, D. (2023). Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf

Chicago

Khanna, Neha, Casper Sonesson, Shayak Sengupta, and Daniel Suryadarma. Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf.

Wikipedia

{{cite report |last1=Khanna |first1=Neha |last2=Sonesson |first2=Casper |last3=Sengupta |first3=Shayak |last4=Suryadarma |first4=Daniel |title=Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North |publisher=Climate Policy Initiative |date=May 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{khanna2023toward, author = {Khanna, Neha and Sonesson, Casper and Sengupta, Shayak and Suryadarma, Daniel}, title = {{Toward Accelerating Climate Finance: Forging a New Partnership between the Global South and the Global North}}, institution = {Climate Policy Initiative}, year = {2023}, month = may, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/06/T7JP_TF1_Toward-Accelerating-Climate-Finance-Forging-a-New-Partnership-between-the-Global-South-and-the-Global-North.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }