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Use of budget tagging to better understand climate financing gaps

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Institution
Ecuador – Ministry of Economy and Finance
Published
Topic Area
Other analytical approaches and methodologies
Citation

Ecuador—Ministry of Economy and Finance (2025) Use of budget tagging to better understand climate financing gaps, Contribution to ‘Compendium of Practice from a Global Community of Ministries of Finance and Leading Organizations’, Coalition of Finance Ministers for Climate Action

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Ecuador is implementing its Expenditure Classifier for Policy Guidance on Environment and Climate Change (COGPACC), which is expected to unlock access to a broader portfolio of domestic and external financing that includes an environmental component.

The Ecuadorian public sector is legally required to use this classifier, and the Climate Change Activities Catalogue (CACC) contained within, to register public resources destined for environmental and climate change policies, in order to improve the transparency of resources linked to climate change

Key Messages

  • The CACC outlines 41 categories and 240 subcategories to classify activities within every institutional budget in Ecuador. The dimensions of climate change in the budget tagger are mitigation, adaptation, and means of implementation (for climate finance).
  • The purpose of the CACC is to identify the amounts invested in climate change, achieve an adequate mobilization of economic resources, and help quantify existing financing gaps to meet climate goals.
  • To apply the expenditure classifier (COGPACC), three steps are required: (1) identification of the environment and climate change policies to which the entity contributes, (2) analysis of the projects, and thus the budgetary activities related to the national, sectoral, or institutional policies identified in step 1, and (3) registration of the environment and climate change code at the budget activity level in the financial administration system. Expenditure guide classifiers are used in current expenditure and investment programs.
Keywords
budget taggingbudgetary processesclimate financefinancing gapsmethodologies