Through the Eyes of Experts: SCF Reports

On the sidelines of the 31st session of the Conference of the Parties to the UNFCCC (COP31), the UNFCCC Standing Committee on Finance (SCF) will present two technical reports on the current global distribution of climate finance flows and on progress toward the goal of jointly mobilizing $100 billion per year to support developing countries. Ekaterina Vasilenko, a SCF’s member from the Russian Federation, and Inga Kononovich, an ICLRC’s Researcher in Climate Change Policy, shared their perspectives on the SCF technical reports.

Commentary by Ekaterina Vasilenko

The technical reports are the culmination of two years’ collaborative work by the SCF, the UNFCCC Secretariat, and a technical team of experts. During this period, the SCF developed annotated outlines for each report, and the texts and their summaries went through multiple rounds of discussion among SCF members. Countries and other stakeholders were also invited to submit proposals regarding the content of the reports. 

However, despite this well-established and technically oriented process, the preparation of the reports frequently gave rise to disagreements driven by countries’ political interests and unresolved methodological issues.

For instance, following COP30, the SCF was mandated to utilize all available and relevant sources of information to prepare the technical reports.¹ When discussing this new mandate, SCF members from developing countries and Russia pointed out that the Organisation for Economic Co-operation and Development (OECD) currently serves as the primary source of data on climate finance volumes, yet its methodologies lack transparency and have not been agreed upon by all UNFCCC member states. Furthermore, a number of organizations whose publications are frequently cited as alternative or supplementary data sources rely on OECD data for their own analytics as well.

The definition of “climate finance” and the interpretation of Article 2, paragraph 1(c) of the Paris Agreement — concerning the alignment of “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” remain distinct issues. Even though the SCF uses its own operational definition of climate finance for its reports,² and safeguards regarding the implementation of Article 2, paragraph 1(c) of the Paris Agreement were agreed upon at COP 30,³ SCF members continually sought a balance throughout the drafting process regarding specific climate finance approaches and instruments. For example, harmful subsidies and fossil fuel subsidies were frequently framed as hypothetical and/or foregone revenues that could have been redirected to support mitigation or adaptation measures. Some countries also proposed treating revenues generated under CORSIA and the International Maritime Organization’s carbon pricing mechanisms as additional sources of climate finance. Following the final deliberations, the texts were updated with clauses emphasizing the lack of consensus among nations regarding such climate policy instruments.

Commentary by Inga Kononovich

The SCF technical reports are traditionally the primary source of information and serve as the baseline for climate finance negotiation tracks, providing core conclusions and figures. This year, the provisional agenda for the 8th session of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA 8)⁴ features several new, critically important workstreams alongside the traditional climate finance items dedicated to guiding the bodies of the Financial Mechanism.

One of these is the Work Programme on Article 9, paragraph 1, of the Paris Agreement, which will focus on developed countries’ obligations to provide climate finance, as well as the composition of that finance and the channels through which it is delivered. Both SCF reports highlight the lack of a single, agreed accounting system and uniform methodologies for tracking climate finance. This leads to significant distortions when calculating actual financial flows, including in the context of developed countries meeting the goal of jointly mobilizing $100 billion per year. Subsequently, in the absence of a harmonized stance on this issue, similar methodological challenges could surface when accounting for finance flows toward the New Collective Quantified Goal (NCQG), the first report on which the SCF plans to publish in 2028. The challenges of monitoring climate finance are further illustrated by the fact that 79 countries have established or are implementing systems to track domestic financial flows, yet only 34 of them have provided publicly available data that allow for comparisons across countries.

Additionally, the new SCF reports integrate data from the initial Biennial Transparency Reports (BTR) for the first time.⁵ The SCF officially compared the data submitted by 133 countries in their BTRs and identified a number of issues in global climate finance accounting by nations that hinder a realistic assessment of flows. Among these are the valuation of funds at face value, the use of “cross-cutting support” markers for financial flows, and discrepancies in the exchange rates and reporting timeframes used by donor countries.

Another new item⁶ on the provisional agenda of CMA 8 is the tripling of adaptation finance by 2035. This new benchmark, set under the Muturão decision,⁷ creates methodological uncertainty due to the absence of a specified baseline year, making it difficult to assess progress towards achieving the stated goal.

A key finding running like a red thread through both SCF reports is the deep imbalance between funding for adaptation projects and mitigation projects. Adaptation still accounts for less than one-third of all climate flows, while the actual needs of developing countries exceed current inflows many times over. Furthermore, difficulties persist in evaluating adaptation projects. Unlike mitigation project financing, where a ton of CO₂-equivalent remains the universal metric, there is still no single agreed-upon unit to measure the effectiveness of adaptation projects. This allows developed countries to arbitrarily assess the performance of the funds they allocate (for instance, by valuing funds at face value or overusing “cross-cutting support” labels for financial flows) and to pass transaction costs onto the beneficiaries.