The target audience of this brief is development finance institutions and global climate funds as well as multilateral and bilateral development agencies that provide international climate finance in developing and emerging countries. The brief draws on lessons learned from the programming and implementation of climate finance disbursed by the European Structural and Investment Funds in EU Member States from 2000–2020. Lessons learned from European countries provide insight into how a stable long-term climate policy framework can be formed and financed. These lessons suggest that the programming and implementation of international climate policy could benefit from the following: strengthening partnership aspects throughout the negotiation and implementation processes; aligning better climate programmes with national priorities other than the climate; orienting these programmes towards long-term development finance; promoting national ownership of programme implementation; and providing comprehensive technical assistance, not only to manage the disbursement of funds, but also to increase the supply of quality projects.

The European Structural and Investment Funds (ESIF) are a part of the EU budget. These funds accounted for 43% of the EU budget from 2014–2020; the total EU budget scaled to approximately 1% of EU’s gross national income in 2019. Each Member State contributes to the EU budget based on its gross national income. The EU budget is implemented through a range of EU funds and programmes that disburse finance to beneficiaries located in the EU Member States. The beneficiaries include regional and local authorities, small and medium-sized enterprises (SMEs), large enterprises, farmers, non-governmental organisations and academic and research institutions. These entities obtain finances disbursed by the ESIF through grants and other financial instruments. In some EU Member States, the cumulative support that beneficiaries receive from the EU budget exceeds the amount that the respective Member States contribute to the budget; other Member States are net contributors to the EU budget.

Lessons learned from European countries provide insight into how a stable long-term climate policy framework can be formed and financed. Many challenges that arise in Europe, especially in Central and Eastern European countries, are also relevant to emerging countries. The flow of ESIF financing from the EU budget to beneficiaries in the EU Member States bears certain resemblances to the structure of international climate finance that is provided by developed countries to developing economies via development finance institutions (DFIs) and global climate funds.

This brief analyses two ESIF: the European Regional Development Fund (ERDF) and the Cohesion Fund (CF). We studied the changes to and impacts of these funds in EU Member States from 2000–2020 and examined factors contributing to and limiting success, with examples provided from Lithuania and Slovakia. Viewed through the prism of international climate finance policy, these conclusions and lessons learned could be useful for donors and recipients. We narrowed our focus to the analysis of energy efficiency as a component of mitigation action. It is important to note that not all lessons from the EU are easily transferrable or applicable to the international climate finance regime due to the differences between the legal nature of the ESIF and that of international climate policy. The ESIF is a solidarity mechanism among the EU Member States and a means to reach common EU objectives, defined as economic and social cohesion.

Global climate finance architecture is largely governed by the United Nations Framework Convention on Climate Change (UNFCCC), which obliged developed countries to provide new and additional financial resources for climate actions in developing countries.

For more details, please have a look at the full brief document (link above).