involve the IPCC in defining climate finance

The United Nations climate bus is heading to Baku, Azerbaijan, for the UN climate conference COP29, which starts on 11 November. With global temperatures hovering close to 1.5 °C higher than pre-industrial levels, the big question hanging over Baku is whether rising temperatures will prompt the international community to take more-urgent action to mitigate global warming and tackle its effects. This COP is being called the ‘Finance COP’ because a big increase in funding is a top agenda item.

Meaningful action against global warming needs a lot more money than what is available now. But representatives of countries will fly into Baku locked in a stalemate over who should pay, and how much. One of the biggest questions of all is, what precisely should be included in climate finance? One action in particular could make a big difference: climate diplomats could formally request that the Intergovernmental Panel on Climate Change (IPCC) issue a special report on climate finance. They need to do this before binding decisions are made.

Why the timing of climate assessments matters

Next year, countries must update their climate action plans (known as Nationally Determined Contributions, or NDCs), so that their ambition matches what is needed to keep temperatures from reaching dangerous levels. Currently, some of the most common actions include installing more solar- and wind-energy plants and protecting forests and other ecosystems.

But the speed and scale of these developments are nothing like what researchers say are needed to prevent average global temperature rises from exceeding the 1.5 °C target set at COP21 in Paris in 2015. Even if all of the current NDCs are honoured, the world is still looking at temperatures rising to 2.1–2.8 °C above pre-industrial levels by 2100. In a scenario in which warming is kept under 1.5 °C, greenhouse-gas emissions need to be 43% lower than 2019 levels by 2030, according to the IPCC.

Achieving the above presupposes that eye-wateringly large sums of money can be found to cover the costs of the sustainability transition. Low- and middle-income countries (LMICs) will need to increase their annual investments to around US$2.4 trillion by 2030, according to one widely quoted report from an international group of climate finance researchers that was published for COP28 last year (see go.nature.com/4fgwt1i). That’s around 20 times the climate finance ($116 billion) that went to LMICs in 2022, according to data from the Organisation for Economic Co-operation and Development (OECD) published in May.

But there’s no consensus on these figures, nor indeed on other questions. Who will pay the extra sums and by when? How much should be grants, versus loans? How much should be set aside for climate mitigation, such as funding technologies that help prevent global warming? How much for adaptation measures such as flood defences? Climate negotiators have been meeting all year ahead of COP29, but there’s little agreement on what is being called a new collective quantified goal on climate finance.

Biases in ‘sustainable finance’ metrics could hinder lending to those that need it most

High-income countries want LMICs to assume more responsibility for climate finance, whereas LMICs want the opposite — receiving a greater share of grants as opposed to loans — to account for the fact that some of the most vulnerable countries are those that are least responsible for climate change.

Matters are worsened by there not being an agreed definition for the constituent components of climate finance — something that Chapter 15 of the IPCC’s sixth assessment report on climate finance recognizes (see go.nature.com/4el1luq). Some say that climate finance should not include funding for things that, strictly speaking, are not wholly about climate change. For example, if money is used to pay for a housing development that is powered by renewable energy, there isn’t a consensus on how much of the total cost should be classified as climate finance. Too high a figure risks overstating the amount of money classified as climate finance.

That’s why Nature is suggesting that the IPCC should be called on to advise. It is the one organization that everyone should trust to establish a base of evidence to help answer questions that are struggling to find consensus. A group of countries would need to make a specific request to the IPCC secretariat, based in Geneva, Switzerland, for a special report on climate finance. The IPCC would then issue a call for evidence. This would trigger funders and researchers to convene, to commission and carry out research that would be included in the special report.

Return on investment

The IPCC has played such a part before at key moments in climate policymaking. An IPCC special report was requested after the Paris climate agreement to assess the evidence on the impacts of 1.5 versus 2 °C of warming, as well as the menu of proposed pathways to get to 1.5 °C (J. E. Livingston & M. Rummukainen Environ. Sci. & Policy. 112, 10–16; 2020). It’s a tried and tested way to provide the international community with the knowledge and data needed to make wise decisions. It took around two years between commissioning the report and publishing it, which is why countries need to get their request in early.

Climate finance is not small money: even $2.4 trillion is about the gross domestic product of Italy. But in the end, such sums need to be seen as investments that will yield a return, rather than as a cost. It’s understandable that there are a range of views, and the IPCC is not the body to decide how much is feasible and on what terms — responsibility for such decisions falls to country representatives. But the IPCC can assist negotiators by helping to answer their questions on the basis of the latest literature — while also updating that literature.

Amid all the arguments, no one can doubt that a step-change will be needed in climate finance if temperature increases are to be held within safe limits. The IPCC cannot be the decision-maker, but it can advise. Countries should lose no time in asking it to do so.