Our directory of things of interest

University Directory

The G7 take on climate finance

  • Written by  Smita Nakhooda and Charlene Watson
  • Published in Opinions
Leaders of the G7 countries during negotiations in Bonn, Germany Leaders of the G7 countries during negotiations in Bonn, Germany Bundesregierung/Kugler
12 Jun
While those in Bonn seem optimistic about the negotiating sessions that form the mid-point towards the Paris climate deal in December, governments must ramp up commitments to long-term finance to inject real energy into the process

German Chancellor Angela Merkel’s call for the G7 climate negotiations in Bonn to get serious on the $100billion to support climate action in developing countries comes at a welcome time.

The $100billion refers to the commitments that industrialised countries made to mobilise each year under the United Nations Framework Convention on Climate Change (UNFCCC). This is not all about development assistance, it also includes a mix of other public and private finance, although what exactly counts as climate finance remains contentious.

Instead of begrudgingly creeping towards meeting their commitments, countries should embrace climate finance as a good investment. It is increasingly clear that low-carbon economic development is compatible with more equitable growth and poverty eradication. Climate finance can also avoid locking developing countries into a future of dead-end, fossil fuel-dependent assets.

Mobilising such resources may present a challenge for countries in the throes of austerity at home, but if we want continued global prosperity – not to mention an end to poverty – we have to find the money.

The solution isn't just to raise new money, but to phase out high-carbon investments

Deliberations on long-term finance at Bonn did not tackle the question of reaching the $100billion target – discussions were about scaling up and accessing adaptation finance – but they implicitly helped to make this point. Adaptation finance builds resilience to climate change, but it can also build resilience to other non-climate related shocks.

The Caribbean Catastrophe Risk Facility, for example, offers insurance solutions that go beyond climate risk, and provides vulnerable countries with risk management tools that impact wider production, investment and consumption decisions. These solutions, as part of greater investments in resilience and disaster risk reduction, are attracting growing attention.

The G7 communiqué commits to extend access to direct or indirect insurance cover against climate-related hazards for up to 400 million people, and support further development of early warning systems. It isn’t yet clear how these goals might be achieved as part of wider efforts to strengthen resilience and manage disaster risk.

merkelAngela Merkel presents at the G7 in Bonn, Germany (Image: Bundesregierung/Steins)

As the host of the G7 Summit, Germany has sent an important signal on long-term finance in the lead up to the Paris negotiations. We now need to see a wider role for finance in implementing a new climate agreement. Estimates of how much money will be needed to get to a low-carbon, climate-resilient global economy are much, much higher – in the trillions.

The solution isn’t just to raise new money, but to phase out high-carbon investments. The renewed commitment to phase out fossil fuels and reform export credits to support climate action are welcome steps to this end. The commitment to expanding support for vulnerable countries in managing climate-related disaster risk is another step forward.

In practice, the $100billion figure is largely political, representing a commitment to solving a problem for which developed countries are mostly responsible. The communiqué affirms the $100billion goal and the central role of the Green Climate Fund in this context. But finding a practical way to meet this goal by Paris will be crucial. The G7 must now spell out how they will reach the target to inject much-needed trust and faith in a vital, but fragile process.

Smita Nakhooda is a Research Fellow and Charlene Watson is a Research Officer of the Climate and Environment programme at the Overseas Development Institute (ODI), where this article was originally posted.

Related items

Geographical Week

Get the best of Geographical delivered straight to your inbox every Friday.

Subscribe to Geographical!


Aberystwyth University University of Greenwich The University of Winchester




Travel the Unknown


Like longer reads? Try our in-depth dossiers that provide a comprehensive view of each topic

  • The Human Game – Tackling football’s ‘slave trade’
    Few would argue with football’s position as the world’s number one sport. But as Mark Rowe discovers, this global popularity is masking a sinister...
    Essential oil?
    Palm oil is omnipresent in global consumption. But in many circles it is considered the scourge of the natural world, for the deforestation and habita...
    National Clean Air Day
    For National Clean Air Day, Geographical brings together stories about air pollution and the kind of solutions needed to tackle it ...
    The green dragon awakens
    China has achieved remarkable economic success following the principle of developing first and cleaning up later. But now the country with the world's...
    Mexico City: boom town
    Twenty years ago, Mexico City was considered the ultimate urban disaster. But, recent political and economic reforms have transformed it into a hub of...


NEVER MISS A STORY - Follow Geographical on Social

Want to stay up to date with breaking Geographical stories? Join the thousands following us on Twitter, Facebook and Instagram and stay informed about the world.

More articles in OPINIONS...


Is the world going through another transfer of power? Julian…


It’s time to stop relying on traditional commercial methods when…


Lack of pollination of commercial crops is an issue of…


Where does aid go from here? Pablo Yanguas calls for…


Would North Korea give up its nuclear weapons? Would an…


It’s time to tackle the hidden superbug menace in India’s…


Earlier this month, an international sustainability conference brought together 400…


On the Southern edge of the remote Kongsfjorden (King’s Fjord)…


Exploring outdoors and in different places is important throughout our…


Something has gone badly wrong with our planet’s oceans. If…


Taking a wider look at Brexit from a geography standpoint


The blockade of imports into Qatar by its Gulf neighbours…


Is it time for a new and radical approach to alleviating…


Plastic-free aisles in our local supermarkets may just be key…


As reports of tourists being fed dog meat in Bali…


The idea of rewilding boar into the UK’s landscapes is…


2017 is the Chinese year of the chicken. This year, the…


Despite the many claims of authenticity, modern filmmaking is still…


With medical (and especially dental) tourism on the rise, Vitali…


More drugs than you might think are derived from, or…