Financing least developed countries’ climate strategies: taking the long view

COP26 must urge all countries to continue to submit and implement long-term climate strategies – but least developed countries will need long-term financing to match.

Camilla More's picture
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4 November 2021

Camilla More is a researcher in IIED’s Climate Change research group

Two people sail a canoe around stilt houses.

Ganvie community in the salt Lake Nokoué, Benin, one of the two least developed countries that submitted their long-term strategies (Photo: Melissa Cooperman/IFPRI via FlickrCC BY-NC 2.0)

The Paris Agreement calls for immediate action to avoid catastrophic climate breakdown. But to achieve the treaty’s long-term goals, including to stabilise greenhouse gas levels, countries need to plan ahead.

As the agreement sets out, “All Parties should strive to formulate and communicate long-term low greenhouse gas emission development strategies”. These are known as long-term strategies (LTS).

LTS are crucial for high emitting countries that urgently need to demonstrate plans for a rapid and just transition away from fossil fuels. But these strategies can also benefit least developed countries (LDCs) with negligible emissions – by supporting their governments to align policies across all sectors with their long-term climate planning processes.

LTS are national plans, developed at national level and based on individual priorities for addressing climate change.

Given adapting to climate impacts is a priority for LDCs, their LTS will not only cover mitigation activities, such as improving energy efficiency and increasing the production of renewable energy while improving access for all citizens.

But they can also include ways to enhance their adaptive capacity, strengthen resilience, and reduce vulnerability to climate change, including climate-proofing infrastructure and improving early warning systems for extreme weather events.

So far, just two LDCs, Benin and Nepal, have submitted an LTS. But recognising the value of LTS, other LDCs are beginning to develop their own, including Bhutan and The Gambia.

Long-term strategies:  a roadmap for finance flows

As well as identifying ways to integrate adaptation into their long-term climate planning, LDCs’ LTS can also help indicate how much financial support is needed to support these activities, now and in the future, to support planning for the mobilisation and scaling up of long-term climate finance including the most appropriate sources.

This roadmap can help assure funders that finance provided will be channelled towards meaningful interventions that are part of long-term national plans, which ultimately contribute towards achieving the global ambition of the Paris Agreement.  

But these long-terms plans must be matched with long-term finance; LDCs need more predictable and sustainable funding.

What type of funding is needed?

A recent IIED webinar explored whether finance provided to LDCs to develop and implement their LTS is meeting their needs. The discussion brought together speakers from The Gambia to share their experience of developing an LTS, including the financing challenges and opportunities, along with representatives from research institutes and development banks.

The event highlighted that the majority of climate finance is provided as loans, rather than grants that do not require repayment or incur interest. This is a major impediment since The Gambia, and many LDCs, are debt distressed.

Already grappling with unmanageable levels of debt, there is no space for these countries to take on more. Unless public climate finance delivered as grants is significantly scaled up, LDCs will have limited resources to implement long-term strategies for climate action.

Private finance may have a role to play, but investors are typically more interested in funding mitigation actions; investing in renewables, for example, can deliver significant returns on investment. Returns on actions for adapting to climate change and building resilience are far less tangible and trickier to pin down, particularly as loss and damage from climate change is fast outpacing LDCs’ capacity to deal with it.

Ultimately, public, grant-based climate finance will be critical in realising the goals of the Paris Agreement.

Long-term strategies at COP26

With only a handful of LDCs having begun the process of developing LTS for addressing climate change, ongoing dialogue around the opportunities that LTS present may help more LDCs develop and submit their own LTS. Dialogue may include sharing experiences of bringing stakeholders together in the development process, and ways to secure national buy-in.

The LDC climate negotiating group is hosting a side event on LTS at COP26 on 5 November.

The event will provide space for LDC representatives to share experiences and lessons learned in preparing LTS, discuss the challenges with preparation and implementation, and highlight the need for support for LDCs to prepare and implement their LTS. It will include the imperative for the COP26 outcome to call on Parties to continue developing and submitting LTS, and commit to providing finance, particularly to LDCs, for developing and implementing their own.

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