Global climate finance commitments

Under the Paris Agreement, all States Parties have a responsibility to ensure their financial flows are compatible with a stable climate future, i.e., less than 1.5 degrees of warming and certainly not above 2 degrees. In addition, Article 9 of the Paris Agreement requires Developed Country Parties to provide funding (Climate Finance) to developing countries to support their ability to address climate change action and implement the Paris Agreement. Particular focus is put on the most vulnerable and with the least capacity, such as Small Island Developing States (SIDS) and Least Developed Countries (LDCs).

For the14 Pacific SIDS, access to climate finance is critically important to ensure they can adapt as best possible, minimise, avert, or address the loss and damage associated with climate change, and transition to a low-carbon economy into the future by reducing their emissions in a 1.5-degree compatible manner.

Funding shortfalls for Pacific SIDS

Despite their urgent need, Pacific SIDS have received, on average each year, less than 0.03% of the global climate finance promise of 100 billion per annum.  This is estimated at less than 7% of what they need annually to build resilience and meet their renewable energy targets in their NDCs. This gap reveals a critical challenge: the current systems for distributing these funds don't meet SIDS' specific needs or stateside capacities. 

This is due to structural aspects of how climate change finance is disbursed and the rules governing project eligibility costs. For example, a renewable energy project in the Pacific will reduce less CO2 per dollar than one in a larger country due to transaction costs. Transaction and management costs are also factors because of capacity constraints and distances between islands.

Capacity constraints in Pacific SIDS

Pacific Island nations face capacity constraints, especially in human resources. Developing and submitting funding projects is complex and time-consuming, and many countries need more staff to meet all donor requirements. Another challenge is the dispersed geography of the Pacific. Donors expect detailed climate change and socio-economic data, but travelling to remote islands to collect this information is difficult and expensive. This remoteness means projects in the Pacific are often costlier for the same benefits compared to those in continental regions like Africa or Asia. Hence, it is crucial to facilitate access to climate finance for the Pacific region, ensuring that small island nations' unique challenges and vulnerabilities are adequately addressed. 

Unique challenges for Pacific Overseas Countries and Territories (OCTs)

SIDS and  Overseas Countries and Territories (OCTs) often have distinct needs, capacities, and legal frameworks. Access to climate finance for Pacific Territories is less documented, as these Territories generally fall under the jurisdiction of their metropolitan State. This creates challenges in coordinating regional climate change initiatives. 

Regional agencies like the Pacific Community (SPC) and the Secretariat of the Pacific Regional Environment Programme (SPREP) work to close this gap by combining multilateral climate finance, which is only available to Pacific SIDS, with bilateral official development assistance (ODA) to include OCTs in regional programs. 

However, managing the differing requirements of multiple donors within a single project adds complexity and administrative burden. Greater efforts are needed to foster flexible funding mechanisms that address the unique challenges of both Pacific SIDS and OCTs, ensuring fair access to climate finance and resources.