Will Glasgow Fix Broken Climate Finance Promises?
Current climate mitigation plans will result in a catastrophic 2.7°C world
temperature rise. US$1.6–3.8 trillion is needed annually to avoid global
warming exceeding 1.5°C.
By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Nov 2 2021 (IPS) - Current climate mitigation
plans will result in a catastrophic 2.7°C world temperature rise. US$1.6–3.8
trillion is needed annually to avoid global warming exceeding 1.5°C.
Creative accounting
Rich countries have long broken their 2009 Copenhagen COP16 pledge to
mobilize “US$100 billion per year by 2020 to address the needs of
developing countries”. The pandemic has worsened the situation, reducing
available finance. Poor countries – many already caught in debt traps –
struggle to cope.
While minuscule compared to the finance needed to adequately address
climate change, it was considered a good start. The number includes both
public and private finance, with sources – public/private, grants/loans, etc. –
unspecified.
Such ambiguity has enabled double-counting, poor transparency and
creative accounting, noted the UN Independent Expert Group on Climate
Finance. Thus, the rich countries’ Organisation for Economic Co-operation
and Development (OECD) reported US$80bn in climate finance for
developing countries in 2019.
Fudging numbers
But OECD climate finance numbers include non-concessional commercial
loans, ‘rolled-over’ loans and private finance. Some donor governments
count most development aid, even when not primarily for ‘climate action’.
Also, the dispute over which funds are to be considered ‘new and additional’
has not been resolved since the 1992 adoption of the UN Framework
Convention on Climate Change (UNFCCC) at the Rio Earth Summit.
Official development assistance redesignated as climate finance should be
categorized as ‘reallocated’, rather than ‘additional’ funding. Consequently,
poor countries are losing aid for education, health and other public goods.
India has disputed the OECD claim of US$57bn climate finance in 2013-14,
suggesting a paltry US$2.2bn instead! Other developing countries have also
challenged such creative accounting and ‘greenwashing’.
Climate finance anarchy
Developing countries expected the promised US$100bn yearly to be largely
public grants disbursed via the then new UNFCCC Green Climate Fund.
Oxfam estimates public climate financing at only US$19–22.5bn in 2017-18,
with little effective coordination of public finance.
Developing countries believed their representatives would help decide
disbursement, ensuring equity, efficacy and efficiency. But little is actually
managed by developing countries themselves. Instead, climate finance is
disbursed via many channels, including rich countries’ aid and export
promotion agencies, private banks, equity funds and multilateral institutions’
loans and grants.
Several UN programmes also support climate action, including the UN
Environment Programme, UN Development Programme and Global
Environment Facility. But all are underfunded, requiring frequent
replenishment. Uncertain financing and developing countries’ lack of
meaningful involvement in disbursements make planning all the more
difficult.
Financialization has meant that climate funding increasingly involves private
financial interests. Claims of private climate finance from rich to poor
countries are much contested. Even the OECD estimate has not been rising
steadily, instead fluctuating directionless from US$16.7bn in 2014 to
US$10.1bn in 2016 and US$14.6bn in 2018.
The actual role and impact of private finance are also much disputed.
Unsurprisingly, private funding is unlikely to help countries most in need,
address policy priorities, or compensate for damages beyond repair.
Instead, ‘blended finance’ often uses public finance to ‘de-risk’ private
investments.
Putting profits first
The poorest countries desperately need to rebuild resilience and adapt
human environments and livelihoods. Adaptation funds are required to
better cope with the new circumstances created by global warming.
Needed ‘adaptation’ – such as improving drainage, water catchment and
infrastructure – is costly, but nonetheless desperately necessary.
But ‘donors’ prefer publicizable ‘easy wins’ from climate mitigation,
especially as they increasingly gave loans, rather than grants. Thus,
although the Paris COP21 Agreement sought to balance mitigation with
adaptation, most climate finance still seeks to cut greenhouse gas (GHG)
emissions.
As climate adaptation is rarely lucrative, it is of less interest to private
investors. Rather, private finance favours mitigation investments generating
higher returns. Thus, only US$20bn was for adaptation in 2019 – less than
half the sum for mitigation. Unsurprisingly, the OECD report acknowledges
only 3% of private climate finance has been for adaptation.
Chasing profits, most climate finance goes to middle-income countries, not
the poorest or most vulnerable. Only US$5.9bn – less than a fifth of total
adaptation finance – has gone to the UN’s 46 ‘least developed countries’
(LDCs) during 2014-18! This is “less than 3% of [poorly] estimated LDCs
annual adaptation finance needs between 2020-2030”.
Cruel ironies
The International Monetary Fund recognizes the “unequal burden of rising
temperatures”. It is indeed a “cruel irony” that those far less responsible for
global warming bear the brunt of its costs. Meanwhile, providing climate
finance via loans is pushing poor countries deeper into debt.
Increasingly frequent extreme weather disasters are often followed by much
more borrowing due to poor countries’ limited fiscal space. But loans for
low-income countries (LICs) cost much more than for high-income ones.
Hence, LICs spend five times more on debt than on coping with climate
change and cutting GHG emissions.
Four-fifths of the most damaging disasters since 2000 have been due to
tropical storms. The worst disasters have raised government debt in 90% of
cases within two years – with no prospect of debt relief.
As many LICs are already heavily indebted, climate disasters have been truly
catastrophic – as in Belize, Grenada and Mozambique. Little has trickled
down to the worst affected, and other vulnerable, needy and poor
communities.
Funding gap
Based on countries’ own long-term goals for mitigation and adaptation, the
UNFCCC’s Standing Committee on Finance estimated that developing
countries need US$5.8-5.9 trillion in all until 2030. The UN estimates
developing countries currently need US$70bn yearly for adaptation, rising to
US$140–300bn by 2030.
In July, the ‘V20’ of finance ministers from 48 climate-vulnerable countries
urged delivery of the 2009 US$100bn vow to affirm a commitment to
improve climate finance. This should include increased funds, more in
grants, and with at least half for adaptation – but the UNFCCC chief has
noted lack of progress since.
Only strong enforcement of rigorous climate finance criteria can stop rich
countries abusing currently ambiguous reporting requirements. Currently
fragmented climate financing urgently needs more coherence and strategic
prioritization of support to those most distressed and vulnerable.
This month’s UNFCCC COP26 in Glasgow, Scotland, can and must set
things right before it is too late. Will the new Cold War drive the North to do
the unexpected to win the rest of the world to its side instead of further
militarizing tensions?
https://www.ksjomo.org/post/glasgow
http://www.ipsnews.net/2021/11/will-glasgow-fix-broken-climate-finance-
promises/
|
|