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Consultations on Canada’s post-2025–2026 international climate and nature finance commitment

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Global context

According to the Intergovernmental Panel on Climate Change, climate change is one of the greatest challenges facing humanity today. It affects every country and is already having devastating impacts on people, ecosystems and economies around the world. Its catastrophic impacts are already evident in severe flooding, droughts, hurricanes and other extreme weather. People in developing countries who have done the least to contribute to the problem are often the most vulnerable to its impacts. Furthermore, biodiversity, which is the foundation of all life on Earth, is declining at a rate faster than at any time in human history.

Higher levels of debt and the lingering effects of the pandemic have made it more difficult for governments and households in developing countries to make the investments needed for the clean energy transition or to make the investments needed to adapt to climate change impacts.

The financing needed to support the necessary climate and nature actions in developing countries is immense. Estimates suggest that up to US$6.3 trillion is needed annually to meet the goals of the Paris Agreement (Climate Policy Initiative, 2023). The adaptation finance gap alone stands between US$194 million and US$366 million per year (United Nations Environment Programme Adaptation Gap Report, 2023). As of 2021, financing needs identified in the Nationally Determined Contributions of 78 countries amount to around US$5.8 trillion until 2030, or about US$600 billion per year, according to an analysis by the United Nations Framework Convention on Climate Change. For biodiversity, the current financing gap to meet the goals and targets of the Kunming-Montreal Global Biodiversity Framework is estimated to be US$700 billion per year.

Public funds alone are not enough to meet global demands to address climate change and biodiversity loss. According to the latest assessment report by the Intergovernmental Panel on Climate Change, current financial flows for climate change mitigation need to increase between three and six times to meet average annual needs between 2020 and 2030, if we are to limit global warming to 2°C or below. This is why Canada has used innovative finance strategies such as blended finance. This type of financing helps reduce investment risk, giving private actors an incentive to contribute financing to climate solutions.

In this context, we need a full range of solutions to limit further climate changes and address the impacts of changes already happening. Finding coherent and efficient responses to limit global warming to 2°C or below and to avoid the most catastrophic impacts of climate change will require contributions from everyone – governments, businesses, philanthropies and communities. We also need to support those countries and communities most vulnerable to climate change to adapt to its effects.

In 2015, Canada and 194 other countries adopted the Paris Agreement to strengthen the global response to climate change. The Paris Agreement commits that developed countries lead on mobilizing climate finance for developing countries. Developed countries have come together to provide US$100 billion per year in climate finance from 2020 to 2025. This financing comes from various sources, including public and private. Canada, along with Germany, has played a leading role in mobilizing climate finance contributors toward meeting with US$100 billion goal, leading to recognition at COP28 in November 2023 that the goal was likely met in 2022.

At the 15th Conference of the Parties to the Convention on Biological Diversity in December 2022 in Montreal, Canada worked closely with 195 Parties and other partners to adopt the historic Kunming-Montreal Global Biodiversity Framework, designed to outline a global agenda to transform humanity’s relationship with nature by 2030 and fulfill the shared vision of living in harmony with nature by 2050. This will be done in part by conserving 30% of the world’s lands, waters, and oceans by 2030 while ensuring that at least 30% of its degraded ecosystems are under restoration.

Background on Canada’s climate and nature finance

For 2021–2026, Canada doubled its previous international climate finance commitment to $5.3 billion over five years. This funding supports developing countries around the world to combat climate change and address biodiversity loss. Canada had already provided $1.2 billion from 2010 to 2013 and $2.65 billion from 2015 to 2021.

Canada’s current $5.3 billion international climate finance commitment focuses on four areas:

  1. clean energy transition and coal phase-out
  2. climate-smart agriculture and food systems
  3. nature-based solutions and biodiversity
  4. climate governance

Within this commitment, Canada increased the proportion of grants from 30% to 40% in response to calls from developing countries to provide more concessional funding, particularly as concerns for country indebtedness were increasing, and to finance more programming by civil society organizations. We also increased the proportion of funding for adaptation to a minimum of 40% to help developing countries build resilience to climate change impacts. Recent studies show that investments in climate adaptation can yield results that dramatically outweigh the upfront costs. A study by the Global Commission on Adaptation found that every $1 invested in five key adaptation areas could yield $2-10 in total net benefits.

At least 20% of our climate finance is targeted for projects that have nature-based climate solutions (like planting trees and restoring wetlands) and projects that contribute biodiversity co-benefits.  Furthermore, as a demonstration of our commitment to implement the Kunming-Montreal Global Biodiversity Framework, Canada announced an additional $350 million to support developing countries to carry out this landmark agreement and to address the other drivers of biodiversity loss beyond climate change (e.g., land- and sea-use change, the overexploitation of species, invasive alien species, and pollution). To keep helping to fight climate change and biodiversity loss, Canada hosted the Seventh Assembly of the Global Environment Facility in August 2023. Together with our partners, we launched the Global Biodiversity Framework Fund.

In line with Canada’s Feminist International Assistance Policy, at least 80% of climate finance projects integrate gender equality considerations. This reflects the reality that while women and girls are more vulnerable to climate impacts, they are also powerful agents of change.

Canada is proud to be on track to meeting these targets.

As a reflection of Canada’s reconciliation processes and the lived reality of Indigenous Peoples worldwide, Canada recognizes the essential role of Indigenous leadership and knowledge in addressing climate change. Up to $15 million of the current commitment is set aside to support partnerships between Indigenous Peoples in Canada and in developing countries. Together they will advance the climate action of Indigenous Peoples abroad.

For more information on Canada’s 2015–2021 and 2021–2026 climate finance commitments, and Canada’s 2023–2026 International Biodiversity Program, consult Canada’s International Climate Finance and the International Biodiversity Program.

Purpose

Climate change and biodiversity loss do not respect borders. Not only do they represent existential threats in their own right, but they are also catalysts for instability, conflict, food insecurity, and pandemics. Developing countries, particularly the poorest and most vulnerable, are the hardest hit and the least able to cope with the consequences of these crises. Transformational financial investments are needed to help communities around the world better address climate change and biodiversity loss and adapt to their harmful consequences. International climate finance plays a key role in achieving this. Input received through this inclusive consultation and engagement process will inform the Government of Canada’s next international climate and nature finance commitment. This process will be open from May 10 to June 30, 2024.

Who can participate

Everyone is welcome to participate in this process.

The Government of Canada commits to reconciliation through the United Nations Declaration on the Rights of Indigenous Peoples Act. We recognize that Indigenous values, knowledge, and experience are very important. Therefore, we will engage and cooperate with Indigenous representatives.

We will also engage with Provincial and Territorial representatives, and other stakeholders.

How to participate

Contact us

To request further information, or if you have any questions, please send an email to ClimateActionClimatique@international.gc.ca.

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