Our Programmes



Sign up to our newsletter.

Follow ODI

Update from Bonn climate talks: country contributions must go further on finance

Written by Merylyn Hedger, Smita Nakhooda


​Climate talks are underway in Bonn this week, as we reach the halfway point in a critical year for climate change that culminates in the UN climate negotiations in Paris this December.

Much attention here is focused on the emerging Intended Nationally Determined Contributions (INDCs), in which countries declare what action they are willing to take to reduce emissions. INDCs are really meant to show if the global community can keep warming to within two degrees and may hold the key to a successful Paris deal.

The first INDCs have been presented by Andorra, Canada, Gabon, Latvia (for the EU), Liechtenstein, Norway, Mexico, Russia, Switzerland and the USA for the Bonn talks. Coming after months – even years – of negotiations, these represent a big milestone.

Parties have the opportunity to go further now on finance strategies, which would build trust and confidence. This may be vital to getting a deal in Paris.

Putting money on the table is essential if the Paris plan is to be realised at the national level. Even if public money is made available, the level of change required by all countries won’t be easy to deliver. Part of the solution is to look at incentives for institutions to act on climate change.

Developed countries need to explain how their commitments will be actioned to build trust. Historically, climate pledges have not always been delivered by rich countries. The challenges of delivering policy change at the national level aren’t always fully considered.

Even when steps are taken to rework national financing frameworks, it can take time to realise their goals. The UK, for example, established a Green Investment Bank to help accelerate its transition to a greener, stronger economy. First proposed in 2009, it wasn’t until this year that the Bank received full borrowing powers to deliver on its original mandate.

If developing countries could come forward with credible strategies for implementing their INDCs, detailing their need for international support, this could help break the impasse on international negotiations on climate finance.

Mexico, for example, has taken a first step by outlining what it can do with domestic resources, while noting that it could go further with additional finances. Mexico’s INDC includes an ‘unconditional reduction’ and a bigger ‘conditional reduction’ in emissions subject to a global agreement on a carbon price, access to low-cost finance, and technology transfer.

Gabon also carefully explains the financial strategy underpinning its policies and asks for financing partners.

Articulation of the specific needs for climate programmes in developing countries could increase pressure on donor countries to deliver. Information on developing countries’ domestic climate finance, as revealed in studies by ODI and UNDP, should be made available to inform the process.

INDCs are not intended to be lengthy, data-heavy documents – there are many reports sitting around which provide more comprehensive information. But a basic checklist of finance and national spending strategies and processes could provide a more coherent framework to build confidence.

In their INDCs, developed countries should lay out how they are going to reform their financial institutions and regulations to support climate action and remove perverse incentives that perpetuate ‘business as usual’. At the same time, developing countries should assess the financing gaps between the resources they have available and the ambitions of their climate change strategies.

To be more accurate and drive momentum, INDCs for all countries should:

  • Detail potential changes to fiscal incentives and regulatory frameworks;
  • Describe the institutional changes envisaged to transform to a low carbon, climate resilient economy;
  • Analyse challenges and risks.

Developed countries have shied away from including finance in their INDCs and this is not helping momentum. There is an opportunity to commit to action that will green the global financial system. Developing countries can use their INDCs to make a credible case for more climate finance. This does not always require long lists of needs. It is time to move forward, faster, on finance.