Canada must rethink how it contributes to international climate finance |
The Canadian government recently renewed its international climate finance commitments with the spring economic update in April. Given recent major cuts to development aid in Canada and internationally, this news brought relief to climate researchers and advocates.
Canada’s climate finance aims to support climate action in lower-income countries. The five-year funding package includes $3 billion to Global Affairs and just under $168 million to Environment and Climate Change Canada.
It also proposes $2 billion in capital to Canada’s development bank, FinDev Canada. An additional $732 million is committed to FinDev over three years starting in 2028 for concessional finance — below market rate finance provided by major financial institutions or governments. Canadian climate finance programs often aim to mobilize additional private finance through the use of these public funds.
Headlines after COP conferences often highlight big climate finance pledges. But behind the large numbers lies a complicated mix of financial instruments. Many of these instruments require Global South countries to repay government and private sector investors with interest.
Different types of funding shape what projects are possible, who benefits from any successes and who bears the burden of any failures.
What is climate finance?
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