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Paris Agreement: U.S. Climate Finance Commitments (CRS Report for Congress)

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Release Date June 19, 2017
Report Number R44870
Report Type Report
Authors Richard K. Lattanzio
Source Agency Congressional Research Service
Summary:

The United States and other industrialized countries have committed to providing financial assistance for global environmental initiatives, including climate change, through a variety of multilateral agreements. The United Nations Framework Convention on Climate Change (UNFCCC, 1992, U.S. Treaty Number: 102-38) was the first international treaty to acknowledge and address human-driven climate change. Among other obligations, the Convention commits higher-income parties (i.e., those listed in Annex II of the convention, which were members of the Organization for Economic Cooperation and Development in 1992) to seek to mobilize financial assistance to help lower-income countries meet certain obligations common to all parties. International financial assistance may take many forms, from fiscal transfers to market transactions. It may include grants, loans, loan guarantees, export credits, insurance products, and private sector investment. It may be structured as official bilateral development assistance or as contributions to multilateral development banks and other international financial institutions. Over the past several decades, the United States has delivered financial and technical assistance for climate change activities in the developing world through a variety of bilateral and multilateral programs. U.S.-sponsored bilateral assistance has come through programs at the U.S. Agency for International Development, the U.S. Department of State, the Millennium Challenge Corporation, the Export-Import Bank, and the Overseas Private Investment Corporation, among others. U.S.-sponsored multilateral assistance has come through contributions by the U.S. Departments of State and the Treasury to environmental funds at various international financial institutions and organizations such as the Global Environment Facility and the Green Climate Fund, among others. Under the Barack Obama Administration, the U.S. government provided about $1 billion annually for climate finance in the developing world. These funds accounted for approximately 3% of the U.S. foreign operations budget and 0.1% of all discretionary spending. In 2015, Parties to the UNFCCC in Paris, France, adopted the Paris Agreement (PA). The PA builds upon the Convention and—for the first time—brings all nations into a common framework to undertake efforts to combat climate change, adapt to its effects, and support developing countries in their efforts. The PA also reiterates the obligation in the Convention for developed country Parties, including the United States, to seek to mobilize financial support to assist developing country Parties with climate change mitigation and adaptation efforts. On June 1, 2017, President Donald Trump announced his intention to withdraw from the PA. Further, the Administration’s FY2018 budget request, released on May 23, 2017, proposes to “eliminate U.S. funding for the Green Climate Fund (GCF) in FY2018, in alignment with the President’s promise to cease payments to the United Nations’ climate change programs.” These actions may have several implications for the United States. Withdrawal may aid the domestic budget process and may assist certain U.S. industries in the global marketplace, specifically GHG-intensive fuels and technologies. However, withdrawal may also restrict the global marketplace for U.S. exporters of low-emission technologies and may impede U.S. efforts in natural disaster preparedness, national security, and international leadership.