The Paris Package: Setting the Finance Agenda for Climate Action

Finance for climate action is like the elephant in the classic story: blind people are feeling it in different parts, losing sight of the whole. Development, climate, and finance experts must now remove their blindfold. In Paris in December this year, the 21st Conference of Parties (COP 21) should issue a Communiqué on finance that will address the question of how lifeline needs of the poor can be met whilst taking action on climate change. The communiqué must strive to make the ambitions of New York sensitive to the aspirations of New Delhi. This brief recommends a 'Paris Package' that makes funds accessible for both climate action and development.

The year 2015 is crucial for global agreements that establish the trajectories and paradigms of development. The Millennium Development Goals (MDGs) are set to be replaced Twith the Sustainable Development Goals (SDGs) at the UN General Assembly in September and negotiations on a new global treaty on climate change will take place in Paris in December. The global climate and development processes intersect; therefore, the question of financing—how much, how and for what—should logically also intersect.

However, the Addis Ababa Action Agenda adopted at the UN Financing for Development (FFD) conference in July failed to yield concrete new proposals for additional funding that can be swiftly implemented to meet the world's multiple challenges. Instead, the agenda once again stressed the need for countries to achieve the target of 0.7 percent of Gross National Income for Official Development Assistance (ODA) and noted with concern the failure of many countries to do so till date.

The failure of Addis means that finance has now become the proverbial elephant in the room. Just like in the classic fable on the blind people and the elephant, experts on development, climate and finance approach the elephant from their own perspectives by touching and feeling only its partial contours. None of them is able to comprehend the overall landscape of challenges and opportunities. Development experts are scared that climate finance will detract from available resources. Climate experts, meanwhile, obsess about finance going to “bad things like fossil fuels”. And finance experts worry that institutional interventions will lead to outcomes that are suboptimal from a market point of view.

This brief is an attempt to remove the blindfold and lift the veil of disciplinary ignorance.