Working Paper

Analysis of Financial Components of Intended Nationally Determined Contributions (INDCs) - Lessons for future NDCs-

2016-11

This paper tries to capture the main characteristics of financial components of Intended Nationally Determined Contributions (INDCs), in order to deepen understanding of developing countries’ financial needs. Such analysis will help developed countries and other countries consider provisions of financial support to developing countries. For this purpose, this paper examines 151 countries, which that submitted INDCs to the UNFCCC until July 2016 among the Non-Annex II countries. This paper covers 87 % of the Non-Annex II countries.

Out of the 151 countries covered, 129 countries (86%) of developing countries mention a request for international support. While, 70 countries (46%) refers to domestic financial mobilization. Additionally, 126 countries (84%) state that their INDC targets or actions are conditional upon international financial support. With regard to the extent to which INDCs show how countries are using financial sources they request, 61 countries (45%) do not mention this matter. In terms of sector, 103 countries (68%) request support for the mitigation and adaptation sector in their INDCs. 80 out of the 151 countries quantify how much finance they need and/or request for their INDC implementation. However, when it comes to specific methodologies for such quantification, out of these 80 countries, only 29 show the sources they cite or used for their estimation.

The total cumulated financial needs express in the INDCs of the relevant 80 countries will come to USD 5,475.13 billion by 2030. Out of the 80 countries quantifying financial needs, 54 countries allocate those financial needs to mitigation and/or adaptation, while 26 countries do not allocate them to any specific sector. Among the total amount of financial needs of USD 5,475.1 billion, USD 2,667.5 billion are allocated to mitigation and USD 619.9 billion to adaptation (adding up to USD 3,287.4 billion for both sectors). This leaves a gap of USD 2,188 billion of financial needs that are not allocated to a specific sector.

Based on the analysis, this paper makes some recommendations to developing and developed countries. Recommendations to developing countries specify methodologies to estimate the cost of mitigation/adaptation and ways of using the requested finance. Recommendations to developed countries and other countries highlight the importance of providing support for INDCs. For both, it is very important to develop a common methodology of INDC finance, especially for costing.

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22 pages