04 October 2022

Climate finance: Council adopted conclusions ahead of COP27

REITERATES the strong commitment of the European Union and its Member States to lead by example in ambitiously contributing to the implementation of all of the goals of the Paris Agreement and implementing the Glasgow Climate Pact.

The Council of the European Union,

1.  UNDERSCORES that the EU's European Green Deal constitutes a clear and comprehensive framework to contribute to these objectives, in line with the Paris Agreement and limiting the temperature increase to 1.5°C, underpinned by a wide set of policies to address climate change and environmental degradation, a dedicated Sustainable Europe Investment Plan, and financial resources. These include the EU's 2021-2027 Multiannual Financial Framework, including external policy instruments, and the temporary recovery instrument, NextGenerationEU (NGEU), which have to allocate at least 30% of the EU budget and NGEU expenditure to support climate objectives, all paving the way towards the objectives enshrined in the European Climate Law and the Fit-for-55 package, to reach climate neutrality in the Union by 2050 at the latest, and reduce net greenhouse gas emissions, by at least 55% by 2030, from 1990 levels.
2. RECALLS that following the military aggression of Russia against Ukraine, the Commission, upon request of the European Council of 24 and 25 March 2022, presented a REPowerEU plan to respond to the need to rapidly reduce the European Union's dependence on Russian fossil fuels, to accelerate the green energy transition in the EU, and to support EU's efforts in enhancing its climate ambitions.
3. RECALLS the urgency expressed in the findings of the 2022 reports of the Intergovernmental Panel on Climate Change (IPCC). STRESSES the need to raise ambition and accelerate action in line with the Paris Agreement and its long-term goals and in this context, RECALLS that Article 2 of the Paris Agreement seeks to strengthen the global response to the threat of climate change, including by making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. STRESSES that making finance flows consistent with this pathway requires a global effort. UNDERSCORES the urgency of stepping up efforts in this regard and the need for all governments to set regulatory and policy frameworks and provide appropriate incentives to attract the public and private investments needed to counter the challenges related to climate change that all countries face. NOTES that in recent years, a growing number of international initiatives have been put in place to mobilise the financial and private sectors to address the climate challenge. ENCOURAGES all Parties of the Paris Agreement to enhance transparent and robust reporting on private finance mobilised for climate action. CALLS UPON private actors to align their financial flows with the goals of the Paris Agreement. NOTES with concern the scale of private finance currently still supporting non-Paris aligned activities especially in the fossil fuel sector, and the harmful incentives still in place. RECALLS the decision agreed in Glasgow to accelerate efforts towards the phase down of unabated coal power and phase out of inefficient fossil fuel subsidies.
4. ACKNOWLEDGES the urgency of creating a dedicated space to discuss Article 2.1(c) of the Paris Agreement at COP 27 in Sharm-el-Sheikh to enable Parties, the private sector and other stakeholders to discuss their understanding of the goal and how to achieve it, in order to enable countries to realise their climate mitigation and adaptation goals and other Sustainable Development Goals.
5. HIGHLIGHTS the importance of, and progress on, EU initiatives on Sustainable Finance and on climate mainstreaming in the EU budget. WELCOMES the relevant proposals put forward in the European Commission's Strategy for Financing the Transition to a Sustainable Economy, which aim at making finance flows consistent with the goals of the Paris Agreement, and the work of the G20 and Financial Stability Board in this regard. UNDERSCORES the use of the "do-no-significant harm" principle in strengthening the sustainability of finance. HIGHLIGHTS the importance of the stability of the global financial system and its climate resilience and therefore EMPHASISES the importance of transparency on sustainability aspects of finance, and mitigation of, climate related risks in the financial system.
6. UNDERSCORES the EU's initiatives to promote sustainable finance internationally, and WELCOMES the work of the International Sustainability Standards Board to develop a global baseline of sustainability disclosures, without constraining the ambition of regional or national approaches. Also UNDERLINES the importance of the ongoing work of partners in the International Platform on Sustainable Finance.
7. WELCOMES the growing number of domestic and regional sustainable finance frameworks and instruments as a necessary step to channel private and philanthropic capital to where it is most needed to implement the Paris Agreement. RECOGNISES the persistent challenge for partner countries to mobilise sustainable finance at scale and affordable costs. In that regard, HIGHLIGHTS the EU's and Member States' ongoing and increasing efforts to provide technical assistance on a bilateral and regional basis to develop credible and suitable sustainable finance frameworks and to scale up sustainability-related financial instruments. WELCOMES the recently set-up High Level Expert Group on scaling up sustainable finance in low and middle income countries to identify private finance for the implementation of the external dimension of the Green Deal and a green, just and resilient recovery in partner countries.
8. STRESSES the importance of greater cooperation with third countries and international organisations. In this context, WELCOMES the G7 statement announcing the aim to establish a Climate Club, as an intergovernmental forum of high ambition to support the effective implementation of the Paris Agreement by accelerating climate action, increasing ambition to reduce emissions, and promoting just energy transition. UNDERSCORES the ongoing work in the EU to implement ambitious emission reductions, including through the EU Emissions Trading System and the introduction of a Carbon Border Adjustment Mechanism to tackle carbon leakage and STRESSES that carbon pricing and phasing out environmentally harmful fossil fuel subsidies are key components of an enabling environment to shift financial flows towards climate-neutral, climate-resilient and sustainable investments.
9. RECOGNISES the importance of mainstreaming climate considerations into economic policy. Thereby WELCOMES the broadening engagement and membership of the Coalition of Finance Ministers for Climate Action and REITERATES the important role of the Coalition and its Helsinki principles....
10. more at ECOFIN
    

© Council of the European Union