An Agreement To Agree? Did The COP21 Paris Agreement Answer Key Finance Questions?

The COP21 Paris Agreement is not legally binding yet but does offer an outline of the path ahead. It has set ambitious targets to combat climate change and, whilst the precise route to meeting these targets isn't yet certain, in order to achieve the Agreement's objectives it is clear that significant finance will be needed in a range of areas, including technology investment, disaster planning and insurance.

In our recent post, we highlighted that the total of intended nationally determined contributions (INDCs) submitted was less than half of that required to meet the 2ºC reduction target for mitigating climate change.

The Paris Agreement, signed by all 195 parties, stated a target of 2°C but with the addition of a supplementary target of 1.5°C. Whilst the INDCs don't meet either target, a lower target does suggest a political appetite to support and finance increased investment in combating climate change.

Loss and Damage

The Agreement included an article dealing with the issue of loss and damage from climate change and this is a positive step. It adopted the Warsaw International Mechanism for Loss and Damage, and stressed that the signatories to the Agreement must work towards supporting measures to mitigate and adapt to risk through, amongst other strategies, greater investment in preparedness for the effects of climate change and insurance solutions.

Finance for developing countries

The Agreement targets financing of $100 billion per year to developing countries to adapt to, and mitigate the effects of, climate change. Whilst undoubtedly a positive ambition, there is significant uncertainty as to when and how this money is going to be provided.

Not yet legally binding

The...