The Advisory Group on Climate Finance (AGF) was set up in February 2010 to identify an additional US$100 billion in climate finance. Its recent report (Report of the Secretary-General's High-level Advisory Group on Climate Change Financing) concluded that finding the extra money was “challenging but feasible”. The AGF report offers many opportunities for Small Island Developing States (SIDS) to facilitate their climate compatible development – development that minimises the harm caused by climate impacts while maximising the human development opportunities presented by a low emissions, more resilient future.However, turning the AGF recommendations into tangible flows of new finance will require political leadership at a senior level. This report aims to alert senior policy-makers to the importance of the AGF recommendations and the opportunities (and challenges) they create for SIDS.Key messages include:
the climate-investment requirements of the SIDS will primarily need to be met through grants from public sources, although private sources can complement these.
the report’s emphasis on raising revenues in a way that creates incentives for developed countries to reduce their emissions is welcome, but introduces risks concerning the reliability of revenues. These risks can be relieved by robust, credible commitments by developed countries to reduce their emissions.
SIDS may be concerned that the levies on international transport, which the AGF report emphasises, could impede their development. But the report also recognises the importance of compensation for any negative effects.
SIDS will want to ensure that climate finance is disbursed according to need and not according to existing aid patterns.