The Distribution of Climate Finance among Annex-II Countries Shouvik Chakraborty

Developing nations face the significant challenge of reconciling their efforts in climate change mitigation with the urgent need for financial resources to adapt to climate-related disasters, achieve sustainable development, and stabilize their economies with the financial requirements spanning various sectors.

Estimates provided by international organizations suggest that annual global climate finance needs may range from $4.2 – $5.7 trillion. The share allocated to developing countries is estimated to constitute approximately $1.9 – $2.0 trillion annually who are unlikely to meet these financial demands independently. Consequently, around $1 trillion must be sourced from advanced economies (the Annex II countries).

This paper introduces a methodology grounded in the principles of CBDR-RC. It facilitates a structured distribution of financing responsibilities among Annex II nations and incorporates the notion of historical responsibility, quantified as carbon debt, while also measuring capability through a balanced consideration of the wealth and GDP of the Annex II countries. The analysis reveals that the USA has to contribute nearly half of the total financial obligations among the Annex II countries, with the rest to be apportioned among other nations within this group.

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