Climate Change: Human Causes, Financing, and Pathways to a Just Transition

Introduction

Climate change is no longer a distant threat — it has become a measurable and present-day reality. The science is clear and unequivocal: human activities are the main cause of the global warming observed in recent decades. The burning of fossil fuels, deforestation, intensive agriculture, and unsustainable production patterns are among the leading drivers of the climate crisis. At the same time, the global response faces major obstacles, particularly in securing the necessary funding to mitigate impacts and enable a just and sustainable transition. This article provides an overview of the main anthropogenic causes of climate change, the challenges of international climate financing, and the most effective mechanisms to accelerate global action — leaving no one behind.

Main Drivers of Current Climate Change

Human activities are the main drivers of today’s climate change. This is not just an opinion — it is a widely supported scientific consensus. According to reports from the Intergovernmental Panel on Climate Change (IPCC) — the leading scientific authority on the subject — human activity is unequivocally the primary cause of modern climate change, especially since the mid-20th century.

Key human activities responsible include:

Burning of fossil fuels (coal, oil, and gas): The largest source of carbon dioxide (CO₂), the main greenhouse gas.
Deforestation and land-use changes: Reduce the ability of ecosystems to absorb CO₂ and release stored carbon from forests.
Intensive agriculture and livestock farming: Emit methane (CH₄) and nitrous oxide (N₂O), far more potent greenhouse gases than CO₂.
Industry and chemical processes: Release various greenhouse gases such as hydrofluorocarbons (HFCs).
Consumption and production patterns: Accelerated demand for energy, goods, and transport increases emissions.

Scientific Evidence:

CO₂ concentration in the atmosphere has surpassed 420 parts per million (ppm), the highest level in the last 800,000 years.
Global warming since the 1850–1900 baseline (used by the IPCC and the Paris Agreement) has already exceeded 1.2°C and continues to rise.
2023 was the warmest year ever recorded, with a global average temperature estimated at 1.45°C above the 1850–1900 average.
Climate models excluding human emissions cannot explain the observed warming. Only when anthropogenic emissions are included do the models accurately replicate warming patterns.

The Paris Agreement

Regarding climate finance, the Paris Agreement reaffirms that developed countries must take the lead in providing financial support to less-resourced and more climate-vulnerable nations. The agreement also encourages voluntary contributions from other Parties.

Climate Finance Summary under the Paris Agreement:

Developed countries are obligated to lead in providing financial, technological, and capacity-building support to developing nations.
This support is essential for both mitigation (reducing emissions) and adaptation (building resilience to climate impacts).
The Agreement strongly encourages other Parties — including developing countries in a position to do so — to voluntarily contribute, expanding global cooperation.
A formal financial commitment of at least USD 100 billion per year was agreed to be mobilized by 2020, extended through 2025, with expectations of setting a new financing goal thereafter.

Objectives of Climate Finance:

Support mitigation and adaptation actions in the most vulnerable countries.
Strengthen technological and institutional capacities.
Promote a just transition — reducing poverty, creating green jobs, and supporting sustainable development.

Current Challenge:
Despite commitments, many developing countries argue that promised resources are insufficient, disbursed too slowly or in inadequate volumes, and often arrive as loans instead of grants — increasing the debt burden of already fragile economies.

Most Important Sources of Climate Finance

The three most impactful sources of climate finance today — in terms of volume, scale, and mobilization capacity — are:

Multilateral development banks (e.g., World Bank, Asian Development Bank – ADB): Provide large-scale funding through loans, guarantees, technical assistance, and co-financing. They are essential for enabling mitigation and adaptation projects in developing countries.
Public finance from developed countries: The core of international commitments, especially under the Paris Agreement, aimed at supporting vulnerable nations. This includes grants, concessional loans, and contributions to climate funds.
Private sector and institutional investors: Crucial to closing the climate finance gap. Includes investments in clean energy, resilient infrastructure, green finance, green bonds, and sustainable funding. Without private sector involvement, scaling climate solutions at the needed pace is impossible.

Note:
Climate funds such as the Green Climate Fund (GCF) and Global Environment Facility (GEF) are highly relevant but largely function as channels for resources originating mainly from public finance and multilateral banks. Therefore, they are partially embedded in the two sources above.

Who Should Step Up After the U.S. Withdrew from Climate Finance Commitments

The three regions/countries best positioned to fill the resulting financial gap — based on economic capacity, historical responsibility, and global influence — are:

European Union (EU): A historic climate leader with strong international finance commitments and ambitious internal green transition policies.
United Kingdom: Even post-Brexit, the UK remains a key actor in climate negotiations, having hosted COP26 and maintained consistent international climate finance.
Japan: One of the world’s largest economies with significant financial and technological capacity. It has a track record of contributing to adaptation and clean technology efforts, particularly in Asia.

Additional Notes:

China could also be considered, given its economic weight and growing global influence. However, it maintains its status as a “developing country” under the UN and thus faces different obligations — although it is increasing its voluntary contributions.
Canada and Australia have high financial capacity but a more variable historical engagement in climate finance, depending on the administration in power.

Most Effective Financial Mechanisms to Close the Climate Finance Gap

Top three mechanisms — based on impact, scalability, and capital attraction:

Blended Finance Solutions: Combining public, private, and concessional funding (e.g., guarantees, below-market-rate loans) is highly effective. It reduces private investor risk and unlocks significant funding, especially in emerging markets.
Green and Climate Bonds: These instruments mobilize trillions in global financial markets, allowing governments, companies, and projects to raise capital from investors seeking both financial returns and environmental impact.
Systematic Integration of Climate Risk into Financial Systems: Making climate risk a mandatory consideration in investment, lending, and insurance decisions redirects global capital flows, discouraging high-carbon investments and incentivizing sustainable ones.

Note:
Carbon pricing and climate insurance are also important tools, but on their own, they are insufficient to address the scale of the current financing gap. However, they work well as complementary mechanisms to the three above.

Alternative Forms of Climate Contribution (Beyond Financial Capital)

Climate contributions go far beyond money.

In the climate finance debate, it’s important to remember that real impact can be achieved through various means, including non-financial ones.

✅ Technology Transfer and Innovation: Vital to democratize access to clean energy, carbon capture, and green hydrogen.

✅ Leadership in Policy and Regulation: Countries and companies that lead in setting standards and regulations can shape markets and spread best practices.

✅ Nature-Based Solutions: Ecosystem restoration is one of the most effective (and natural) ways to mitigate climate change and protect biodiversity.

✅ Technical and Institutional Capacity-Building: Many countries cannot access resources or implement solutions effectively without adequate knowledge and institutions.

✅ Stimulating Carbon Markets and Private Investment: With strong governance and integrity, these mechanisms can unlock billions in sustainable project financing.

How Governments Can Facilitate Private Sector Participation

Two of the most effective ways for governments to enable private investment in climate finance are:

De-risking Investments via Public-Private Partnerships and Blended Finance: One of the most powerful mechanisms to attract private capital, especially in developing countries with higher perceived risks. The public sector can offer guarantees, insurance, concessional finance, and co-investment — making projects more appealing to private investors.
Strengthening ESG Regulatory Frameworks and Disclosure Requirements: Clear rules, regulatory predictability, and mandatory climate risk/ESG disclosure push companies and investors to embed sustainability in their decision-making. This not only mobilizes more green capital but also discourages investment in high-carbon (stranded) assets.

Note:
Tax incentives are also relevant but insufficient on their own. The two approaches above address both risk reduction and the creation of favorable regulatory/market conditions, which are the main barriers to large-scale private climate investment.

Most Effective International Instruments for Mobilizing Climate Finance

Top three — based on resource volume, global impact, and influence on climate finance architecture:

Multilateral Development Banks: The largest funders of climate projects globally, with the ability to mobilize billions via loans, guarantees, and co-financing, while attracting private capital. Examples include the World Bank, Inter-American Development Bank (IDB), Asian Development Bank (ADB), and African Development Bank (AfDB).
Green Climate Fund (GCF): The largest dedicated climate fund, focused on mitigation and adaptation in developing countries. Created under the UNFCCC to operationalize financial commitments under the Paris Agreement.
Bilateral/Plurilateral Financing Instruments (e.g., country partnerships, co-financing agreements): Highly effective due to their agility, flexibility, and ability to align interests between developed and developing countries, often complementing multilateral funds with targeted resources and negotiated terms.

Notes:

Carbon markets (Article 6) have enormous potential but still face challenges around governance and integrity.
REDD+ and funds like the Adaptation Fund are crucial for nature-based solutions and adaptation, though they mobilize smaller volumes compared to the three above.

Conclusion

The climate crisis is a human-made problem — and its solution will also depend on human choices. We already have the knowledge, technology, and financial tools necessary to drive a global ecological transition. What is often missing is the alignment between political will, international cooperation, and effective financing mechanisms. More than just financial resources, the fight against climate change demands justice, innovation, and solidarity between nations, sectors, and people. The planet’s climate future will be defined not just by goals — but by the actions and commitments made (and honored) in the present.

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