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Canada’s climate finance for developing countries

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For additional information on Canada’s international climate finance, please visit Environment and Climate Change Canada’s (ECCC) Canada’s international climate finance page.

Climate change in developing countries

Climate change and biodiversity loss do not respect borders. Not only do they represent existential threats in their own right, but they are also catalysts for instability, conflict, starvation, and pandemics.

According to the World Health Organization, climate change is affecting human lives and health in multiple ways. Climate change threatens the essential ingredients of good health – clean air, safe drinking water, nutritious food supply, and safe shelter – and has the potential to undermine decades of progress in global health. Climate change, including extreme events and incremental changes, affects every country and can have devastating effects on communities and individuals. Between 2030 and 2050, climate change impacts, such as unpredictable rainfall or increases in temperatures, are expected to cause some 250,000 additional deaths per year from malnutrition, malaria, diarrhea and heat stress alone. Developing countries are the most impacted by climate change and the least able to afford its consequences.

Our global efforts to reduce the effects of climate change

In 2021, as the global community called for increased climate ambition, Canada stepped up and announced a doubling of its international climate finance, from $2.65 billion (2015−2021) to $5.3 billion (2021−2026). To further strengthen its ability to help developing countries transition to low-carbon, climate-resilient, nature-positive, and inclusive sustainable development, Canada also announced that it will:

This new framework of climate finance was informed by a comprehensive set of consultations held with 530 people representing over 300 organizations across 20 countries. Based on the input from these consultations, Canada’s climate finance will target four thematic areas of focus: Clean Energy Transition and Coal Phase Out; Nature-based Solutions and Biodiversity; Climate-smart Agriculture and Food Systems; and, Climate Governance.

In the lead-up to the COP26, Canada, alongside Germany, co-led the delivery plan for meeting the collective goal of mobilizing at least US$100 billion per year through 2025 to support climate action in developing countries. Canada also joined 21 other countries in signing the Statement on International Public Support for the Clean Energy Transition and will further prioritize support for clean technology and end new direct public support for the international unabated fossil fuel sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with the 1.5 degree Celsius warming limit and the goals of the Paris Agreement. Canada will continue to work with its domestic and international partners to address climate change, while ensuring sustainable, resilient, and inclusive global economic development.

For more information on Canada’s engagement at COP26, please consult ECCC’s Announcements page and the Climate Finance Delivery Plan: Meeting the US$100 Billion Goal.

Canada’s 2021-2026 commitment to climate finance builds on its long time support for climate action in developing countries.

Canada initially provided $1.2 billion in Canada’s Fast-Start Financing (2010-2013) to help over 50 developing countries mitigate the causes and adapt to the adverse effects of climate change. Funding targeted clean energy, adaptation support, forests and agriculture and other cross-cutting programming. This commitment supported the goal established at the 15th United Nations’ Climate Change Conference of the Parties (COP15) in 2009 to jointly mobilize US$100 billion in climate finance annually by 2020, from both private and public sources. More specifically, Fast-Start Financing helped mobilize private investments in low and lower-middle income countries and small island developing states; strengthened food security and promoted sustainable growth in eight African countries; supported adaptation projects in six least developed countries, and supported the reduction of emissions of short-lived climate pollutants and advanced weather systems to help build climate resilience in developing countries.

In 2015, on the margins of COP21, the Canadian government recommitted to global climate action through Canada’s $2.65 Billion International Climate Finance Commitment to help developing countries tackle climate change. The programs and projects supported under this commitment are expected to reduce or prevent greenhouse gas (GHG) emissions by over 223 megatonnes – the equivalent of removing nearly 62 million cars from the roads for one year – and help more than 8 million people adapt to the effects of climate change. Canada’s investments have also mobilized important climate finance contributions from the private sector as continued support for the joint goal to mobilize US$100 billion in climate finance annually. This commitment has supported the 2030 Agenda for Sustainable Development and its accompanying 17 Goals, as well as The Paris Agreement.

Canada has proven to be a trusted partner that supports ambitious climate action to reduce global GHG emissions and help developing countries transition to low-carbon economies, while also helping the poorest and most vulnerable communities build resilience to the effects of climate change. Canada has shown that prioritizing climate action and gender equality efforts produces a ripple effect, supporting the most urgent Sustainable Development Goals as well as the commitments made in the Paris Agreement. Programming under Canada’s $5.3 billion commitment to climate finance will build on the successes from Canada’s extensive experience of previous programming.

Further information on the results of Canada’s previous programming can be found on ECCC’s Canada’s international climate finance page.

Canada’s feminist approach to environment and climate action

Canada’s Feminist International Assistance Policy puts gender equality and the empowerment of women and girls at the heart of our international assistance efforts. This policy views women and girls as powerful agents of change to advance action on climate change, biodiversity loss and environmental degradation, pollution and other environmental concerns. This is reflected by the Action Area Policy: Environment and Climate Action, recognizing that environment and climate action will be most effective when women and girls play an active role in designing and developing strategic responses to climate change and environmental issues.

Canada’s feminist approach to environment and climate action focuses on:

An objective of the $5.3 billion climate finance commitment is to Advance feminist climate action that supports the poorest and most vulnerable. Canada recognizes that often the most marginalized and vulnerable people, including women, girls and others, are disproportionately affected by climate change and biodiversity loss, but that they also have an essential role to play in mitigation and adaptation.

Through its climate finance programming, Canada will seek to apply a rights-based, gender-responsive and intersectional approach that leverages the experience and knowledge of all stakeholders, including those of marginalized and vulnerable groups. This includes, but is not limited to, Indigenous Peoples, local grassroots organizations, women’s rights organizations, and local communities. Canada will seek to amplify marginalized voices and promote opportunities for increased leadership and decision-making.

Nature-positive climate finance

Under the June 2021 G7 2030 Nature Compact, Canada joined other G7 countries in committing to tackle climate change and biodiversity loss in an integrated manner, contributing to the achievement of the Sustainable Development Goals and a green, inclusive, and resilient recovery from the global COVID-19 pandemic.

All Canadian international assistance is reviewed through an environmental integration process that identifies risks and opportunities related to the environment, climate change, and the management of natural resources. Its purpose is to ensure that international assistance does not harm the environment or erode development gains. In addition to this process, Canada’s $5.3 billion climate finance commitment will apply a nature-positive screen to all project proposals to support programming that will deliver a positive contribution to environmental outcomes, including climate, biodiversity, pollution control, and the circular economy, as appropriate. Furthermore, Canada will aim to achieve biodiversity co-benefits across all of its climate finance program’s thematic areas.

See Canada’s Climate Finance Eligibility Criteria below for more information.

Partnerships to combat climate change in developing countries

Canada continues to collaborate with a range of bilateral and multilateral partners, including developing country governments, non-governmental organizations in Canada and around the world, multilateral organizations, and dedicated climate funds and financial mechanisms, such as the Green Climate Fund and the Global Environment Facility. Canada has also established funds at a number of multilateral development banks that are mobilizing private sector investment for climate change.

As part of Canada’s doubling of its previous climate commitment from $2.65 billion to $5.3 billion and its objective to leverage the climate action expertise and commitment of organizations in Canada, $315 million has been allocated for Partnering for Climate to fund projects from civil society, Indigenous Peoples and other organizations in Canada that will support climate change adaptation in Sub-Saharan Africa and other parts of the world.

A total of $300 million in funding will support projects that use nature-based solutions to help countries, communities and people in Sub-Saharan Africa – a particularly climate-vulnerable region –to become more resilient to the impacts of climate change.  This funding includes at least $20 million to help advance women’s rights and climate change adaptation.

A further $15 million in funding will support Indigenous Peoples Partnering for Climate.

2021-2026 climate finance funding mechanisms

Canada’s international climate finance is delivered through a mix of funding mechanisms that respond to the unique needs of different development contexts. The $5.3 billion climate finance commitment consists of 40% grants and contributions, and 60% Unconditionally Repayable Contributions (URCs), an innovative finance instrument akin to Concessional Loans.

URCs are contributions that must be repaid according to the specific repayment terms negotiated with the partner, and are used to incentivize much-needed private sector investments in low-carbon activities, primarily in middle-income and lower-middle-income countries. URCs have proven to be an effective means of aligning programming with the Organisation for Economic Co-operation and Development’s OECD DAC Blended Finance Principles and Canada’s Feminist International Assistance Policy, while having a measurable impact on poverty reduction and the advancement of climate action.

Please consult A Canadian Approach to Innovative Financing for Sustainable Development for more information.

How to access funding

Eligibility criteria

All projects that receive support from Canada’s international climate finance program must demonstrate that they meet the following eligibility criteria:

  1. The project must demonstrate climate change (adaptation and/or mitigation) as the project’s principal objective (CC2 policy marker coding).
  2. The project must respect Official Development Assistance (ODA) country eligibility.
  3. The project must integrate gender equality considerations.
  4. In order to promote alignment with both Canadian values and developing country needs, the project must demonstrate that it contributes to a minimum of 2 of 5 climate finance policy objectives.
  5. The project results must align with the Climate Finance Program Results Framework.
  6. If requesting URC funding, projects should demonstrate alignment with the OECD DAC blended finance principles.

1. The project must demonstrate climate change (adaptation and/or mitigation) as the project’s principal objective (CC2 policy marker coding).

Note: Canada has committed to a minimum of 20% of its funding support nature-based climate solutions and projects that contribute biodiversity co-benefits. In addition to meeting the CC2 policy marker requirement, projects contributing to this target will also achieve a biodiversity significant policy marker coding (minimum (BD1), as per the Rio Convention policy markers.

Climate Change Adaptation Coding Requirements

Definition: Adaptation projects intend to reduce climate change vulnerability. Climate vulnerability is generally related to 3 primary variables:

Eligibility Criteria

For more information on the eligibility criteria, please refer to the OECD DAC Rio Convention Policy Markers for Climate and GAC’s Project Coding – Policy Markers.

Note: It is possible to have projects that can have a principal objective that meets the eligibility criteria for both climate change mitigation and adaptation.

Climate Change Mitigation Coding Requirements

Definition: Mitigation projects intend to reduce or avoid the release of greenhouse gases (GHGs) into the atmosphere. They also include initiatives that intend to remove GHGs from the atmosphere.

Eligibility Criteria

For more information on the eligibility criteria, please refer to the OECD DAC Rio Convention Policy Markers for Climate and GAC’s Project Coding – Policy Markers.

Note: It is possible to have a cross-cutting project, meaning a project can have a principal objective that meets the eligibility criteria for both climate change mitigation and adaptation.

Biodiversity Coding Requirements

Definition: Biodiversity projects promote at least one of the three objectives of the Convention on Biological Diversity: the conservation of biodiversity, sustainable use of its components (ecosystems, species or genetic resources), or fair and equitable sharing of the benefits of the utilization of genetic resources.

Eligibility Criteria

In order for a project to be eligible for the 20% of funding allocated to projects that leverage nature-based climate solutions and projects that contribute biodiversity co-benefits, the project must meet the following eligibility criteria:

Ranking Criteria

For more information on the eligibility criteria, please refer to the OECD DAC Rio Convention Policy Markers for Climate and GAC’s Project Coding – Policy Markers.

Note: All biodiversity projects must also have climate change as a principal objective (CC2).

2. The project must respect Official Development Assistance (ODA) country eligibility.

The project respects the Official Development Assistance eligibility criteria, as well as the Official Development Assistance Accountability Act.

Official Development Assistance Eligibility Criteria:

  1. Support country(ies) on the OECD’s DAC List of ODA Recipients
  2. Contribute to poverty reduction
  3. Be consistent with international human rights standards.

With limited exceptions, the project adheres to the United Nations Framework Convention on Climate Change’s (UNFCCC) country eligibility requirements. This ensures that the project can be reported as climate finance to the UNFCCC. For more information, please visit UNFCCC Process – Parties page.

3. The project must integrate gender equality considerations.

Gender Equality Coding Requirements

In accordance with Canada’s Feminist International Assistance Policy and the Government’s commitment to ensure that 80% of all climate finance programming is gender integrated, projects under the $5.3 billion climate finance commitment must obtain at least a GE-1 code (i.e. partially integrated). This means that there is at least one gender equality result at the immediate outcome level in the logic model and that this result will achieve a measurable change in skills, awareness, or knowledge that will contribute to gender equality. These outcomes must be reflected in the project’s theory of change and Performance Measurement Framework. However, to better reflect Canada’s commitment to gender equality and the empowerment of women and girls, preference may be given to projects that go beyond a GE-1 code and strive for a GE-2 code. GE-2 coded projects must have outcomes that show observable changes in behaviour, practice, access or performance at the intermediate outcome level. These results will contribute to stronger gender equality outcomes and deeper gender equality integration. It is important to remember that for a project to be coded GE-2 it is essential that at least one intermediate outcome be a gender equality outcome and that all of these results are reflected in the associated result chains, theory of change and the Performance Measurement Framework.

Please refer to Canada’s Feminist International Assistance Gender Equality Toolkit for Projects for more information.

4. In order to promote alignment with both Canadian values and developing country needs, the project must demonstrate that it contributes to a minimum of 2 of 5 climate finance policy objectives.

Policy Objectives

* Canada maintains its commitment to fully untied aid

5. The project results must align with the Climate Finance Program Results Framework.

The project’s ultimate outcome must align with the climate finance program’s ultimate outcome: “Improved low-carbon, climate resilient economies in developing countries”, and with at least one of the four thematic areas of focus listed below. The project must include intermediate outcomes that contribute to the respective program-level intermediate outcomes according to climate finance program’s Logic Model.

  1. Clean Energy Transition and Coal Phase-Out - Canada will support developing countries’ transition to clean energy by phasing out coal-powered emissions and promoting equitable access to reliable and cost-effective clean energy solutions and energy efficient technologies. 

Note: This priority complements Canada’s leadership through the Powering Past Coal Alliance

  1. Climate-Smart Agriculture and Food Systems - Canada will work with developing countries to support smallholder farmers and food value-chain actors, especially women, to better adapt to climate change, reduce their greenhouse gas emissions through improved access to and adoption of climate-smart agriculture and food system practices and agricultural nature-based climate solutions.
  2. Nature-Based Solutions & Biodiversity - Canada will support actions that protect, sustainably manage and/or restore natural or modified ecosystems in order to address climate change, while also generating biodiversity co-benefits.
  3. Climate Governance - Canada will support projects that help strengthen the enabling environments for effective climate governance at the global, national and subnational levels in order to foster greener, more sustainable and equitable communities.

To ensure alignment between project performance measurement frameworks and the climate finance program’s results framework, please refer to GAC’s Results-based Management page (refer also to the pages linked on the website).

Note: In order to meet the multiple policy marker coding requirements, and in the context of the climate finance program only, intermediate outcomes that express more than one change are accepted as long as each change expressed in the outcome has an associated indicator and there are appropriate references to those changes in immediate outcomes/indicators, as well as in the project documentation and budget lines.

6. If requesting URC funding, projects should demonstrate alignment with the OECD DAC blended finance principles.

The $5.3 billion climate finance program will make its URC funding decisions in line with The Paris Agreement and Canada’s Feminist International Assistance Policy, as well as the OECD DAC Blended Finance Principles. The program will use URCs as an innovative finance tool for initiatives that prioritize and demonstrate the following:

All eligibility criteria must be met in order to be considered eligible for funding under the climate finance program.

How to submit a proposal

For information on how to submit a proposal, please visit Apply for funding through an unsolicited proposal.

When submitting your proposal through the portal, please ensure it includes the information that is required in a standard concept note (see Guidance for Concept Notes) as well as an annex of no more than 1,000 words explaining how your proposal meets the Eligibility Criteria.

Global Affairs Canada will consider project proposals on a rolling basis. Decisions regarding project funding will be made in accordance with departmental processes, and will be subject to funding availability.

Annex 1: Canada’s $5.3 Billion International Climate Finance Program Logic Model

Related links

Mandatory Annex for Concept Notes

When submitting your proposal through the portal, please ensure it includes the information that is required in a standard concept note (see Guidance for Concept Notes) as well as an annex of no more than 1,000 words explaining how your proposal meets the Eligibility Criteria.

Specifically, you will need to explain how the project:

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