Climate action funding goes into three buckets:
Loss and damage
Two years ago, at COP27, world leaders agreed for the first time to establish a loss and injury fund.
This money is to help developing countries to recover from the effects of climate change which have already suffered.
For example, in the last 12 months alone developing countries have experienced severe climate-related problems – from floods in Myanmar to ongoing drought in East Africa.
It took decades for the fund to be established because developed countries were wary of making payments into compensation and accepting climate change debt on these terms.
Developing countries would like the new financial policy to have narrower goals where money is set aside for losses and damages and to adapt to climate change – which has historically received a third of mitigation funding.
To reduce
This is money to help developing countries move away from fossil fuels and other polluting activities. This is where most of the money has been given so far because it can often be profitable.
Many countries still have coal-fired power stations that are nearing the end of their lives. They need support to switch to clean energy, such as solar farms.
Adaptability
This is money to help developing countries prepare for the negative effects of climate change.
It is different from loss and damage as it focuses on the future.
Requirements vary depending on where the country is in the world, but can include:
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