1.2. CLIMATE AND BIODIVERSITY FINANCIAL TARGETS
1.2.1. Background
The NDICI-Global Europe, Pre-Accession Assistance (IPA III) and Ukraine Facility regulations, as well as the regulation for the Reform and Growth Facility for the Western Balkans, and the Decision on the Overseas Association including Greenland (DOAG), include targets for climate and biodiversity finance for the period 2021-2027. Climate and biodiversity targets are complementary and not mutually exclusive. Where possible, the same programme/action should help to achieve several objectives.
1.2.2. Climate targets
After achieving the USD 100 billion climate finance goal in 2022, the new collective quantified goal (NCQG) to be adopted in Azerbaijan during UNFCCC COP29, will add another layer of political discussion to the reform of the international financial architecture. The NCQG is a new global climate finance goal that the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) shall set from a floor of USD 100 billion per year, prior to 2025. This new goal will be set in the context of meaningful mitigation actions and transparency on implementation, considering the needs and priorities of developing countries.
For the EU it is important that not only other developed countries contribute to public climate finance, but also other countries that have the capacity to do so. In addition to public finance, we also need to work on how to increase the role of the private sector and innovative sources in climate finance to achieve the Paris Agreement.
The Global Gateway investment agenda can boost climate finance flows and create opportunities through transformative, large-scale projects for partners’ transition in line with the Sustainable Development Goals.
Recital (49) of the NDICI-Global Europe Regulation states that actions under the NDICI-Global Europe are expected to contribute 30 % of its overall financial envelope to climate objectives.
In addition, in her State of the European Union (SOTEU) address in September 2021, President von der Leyen announced an additional EUR 4 billion for climate finance until 2027.
Climate benchmarks have been proposed for some bilateral, regional and thematic programme.
Recital 25 of the IPA III Regulation indicates that actions under IPA III are expected to contribute 18 % of the overall IPA III financial envelope to climate objectives, with the objective of increasing to 20 % by 2027.
Recital 31 and Art. 28.9 of the Ukraine Facility Regulation indicates that the Facility should contribute, to the extent possible in a war-torn country, at least 20 % of the overall amount corresponding to sup- port under the Ukraine Investment Framework and to investments under the Ukraine Plan to climate change mitigation and adaptation, environmental protection, including biodiversity conservation, and to the green transition. There are no differentiated targets for climate action.
Recital 25 of the ‛Reform and Growth Facility for the Western Balkans’ Regulation indicates that the Facility should contribute to the achievement of the overall target of 30 % of Union budget expenditure supporting climate objectives. At least 37 % of the non-repayable financial support channelled through the Western Balkans Investment Framework (WBIF) should account to climate objectives (Art. 19.4).
Recital 24 of the Council Decision on the Overseas Association, including Greenland (DOAG) states that actions under this programme are expected to contribute 25 % of their overall financial envelope to climate objectives.
1.2.3. Biodiversity targets
The Global Biodiversity Framework sets ambitious financial targets. They address financing from all sources: domestic and international, public and private. Global biodiversity finance from all sources must reach USD 200 billion per year by 2030. As part of the agreement, international biodiversity finance must increase to USD 20 billion a year by 2025, and USD 30 billion by 2030. The agreement calls for the alignment of financial flows and investments with biodiversity objectives. Public and private financial flows must stop destroying nature and must, as far as possible, become nature positive. The targets also provide for the identification, elimination, phasing-out or reform of subsidies that are harmful for biodiversity by at least USD 500 billion per year by 2030.
Recital 49 of the NDICI-Global Europe Regulation, Recital 25 of the IPA III Regulation, Recital 25 of the ‛Reform and Growth Facility for the Western Balkans’ Regulation and Recital 24 of DOAG state that actions under these instruments should contribute to the ambition of providing 7.5 % of annual spending under the MFF to biodiversity objectives in 2024 and 10 % in 2026 and 2027. There is no biodiversity-specific target under the Ukraine Facility Regulation (see section on climate targets above).
In addition, in her State of the EU address in September 2021, President von der Leyen announced that the EU would double its external funding for biodiversity, in particular for the most vulnerable countries(1). This implies that EUR 7 billion of EU external assistance (2021-2027) should contribute to biodiversity.
1.2.4. Tracking EU support
Annual funding allocated to climate action, combating desertification and biodiversity is subject to an annual tracking system based on the OECD DAC methodology(2) using of the Rio markers(3), without excluding the use of more precise methodologies where these are available. Aid to environment and support to disaster risk reduction are measured based on the corresponding OECD policy markers.
Each marker has three possible scores: score 2 where an action contributes to the theme as ‘a principal objective’, score 1 to ‘a significant objective’ and score 0 when the theme is ‛not targeted’.
The Commission translates the marker scores into financial contributions as follows: 100 % of the action’s budget is considered to contribute to the relevant environment or Rio theme if it is scored as ‘principal objective’ and 40 % if scored as ‘significant objective’. No contributions are reported if the marker is scored as ‘not targeted’.
Details on the use of the Rio markers, including definitions, eligibility criteria and guidance for the application of the markers can be found in Annex 2.
A new methodology to track financial contributions will be in place for the next MFF (2028-2034) based on Commission-wide coefficients, which will be linked to the Rio markers.
(2) As per Article 41.8 of the NDICI-Global Europe Regulation.The Copernicus Atmosphere Monitoring Service (CAMS) provides consistent and quality-controlled information related to air pollution and health, solar energy, greenhouse gases and climate forcing, across the world.
(3) There are four Rio markers: Biodiversity, Combating Desertification, Climate Change Mitigation and Climate Change Adaptation.