he global fight against climate change is impossible without climate finance, yet little progress has been made under the current agreements when it comes to international climate finance. While the climate crisis impacts everyone, it hits vulnerable and lower income countries harder. These countries have often contributed very little to global warming but are dealing with the majority of impact in terms of extreme weather events and slow onset effects. Moreover, they don’t have the resources to adequately respond, adapt, or to implement the necessary measures to mitigate the worst effects of the climate crisis. This concept is well established within the formal international climate negotiations under the United Nations Framework of the Convention on Climate Change (UNFCCC) as “the principle of common but differentiated responsibility and respective capabilities.” This lies at the core of international climate justice.
This inequity is especially evident when looking at African countries. The entire African continent has contributed less than 4% to total greenhouse gas emissions, but it’s home to the ten most climate vulnerable countries in the world. The Paris Agreement includes an article in which developed countries agreed to mobilize $100 billion in international climate finance each year between 2020 and 2025 for developing parties. This was a follow up to commitments made as early as 2009, namely to raise up to $100 billion a year by 2020. Based on OECD estimates, climate finance only reached $83.3 billion in 2020 and has never reached the promised $100 billion a year. Without blinking, parties reconfirmed this commitment to the goal at COP27 saying they would reach it in 2023, with negotiations for a New and Collective Quantified Goal (NCQG) post 2025 already kicking off.
Not only was the target never reached, but the target itself is insufficient and not based on a calculation of the actual needs, which are much higher. The costs for African Nationally Determined Contributions (NDCs, plans that outline country specific activities and expected investments to stay below 1.5 degrees global warming) are estimated to go up to $45.5 billion per year alone. The finance target therefore served mostly to signify the duty of high polluting, high income countries to supply the means for vulnerable countries to adapt to the climate crisis—and they failed miserably to comply. Without increased investment in climate action we cannot expect to reach the Paris goals. All the while, governments keep investing in industries that are not compatible with the 1.5 degree goal: the total fossil fuel subsidies in fifty-one major countries were 40% higher than the total global investment in climate finance between 2011-2020. Public investments can incentivize the private sector to get on board for the right projects, or put entire countries on the wrong path. Continued fossil fuel support remains a barrier to achieve the climate goals.
African countries received around a quarter of the provided international climate finance between 2016-2019, amounting to $18.3 billion a year. Almost 55% of Africa’s climate finance is in the form of debt, with the private sector accounting for no more than 14% of total climate finance and 3% of adaptation finance. This brings us to another huge challenge African countries face: debt crises. Of the 38 sub-Saharan countries covered in the World Bank and International Monetary Fund’s debt sustainability analysis, seven are already in debt distress, eighteen are at high risk, and thirteen are at moderate risk.
The UNFCCC needs to agree on a definition of climate finance that clarifies what contributions can truly be counted as international climate finance. The true costs to tackle this crisis are much higher than the set target, and to that extent we do need multiple sources of finance and innovative ways to fund these efforts. Private finance on a large scale and low-interest loans should be part of that push, and so should new initiatives such as the Bridgetown agenda and proposed reforms of the IMF and World Bank, which are needed to bring climate finance from billions to trillions—but high income, high polluting countries should also be obliged to deliver on their promises as to restore trust in this international process. International climate finance, the $100 billion target and any new target that is set based on the principles of equity cannot count loans as contributions and should be reached through public finance.
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Paying the Bill for Climate Change
Image by Lucia Grzeskiewicz from Pixabay
March 4, 2023
It stands in the way of climate progress at every turn-the question of who pays for what action and how. To ensure the most vulnerable have their needs met, the UNFCCC needs a concrete definition of international climate finance that cannot include loans, writes Jessica Antonisse
T
he global fight against climate change is impossible without climate finance, yet little progress has been made under the current agreements when it comes to international climate finance. While the climate crisis impacts everyone, it hits vulnerable and lower income countries harder. These countries have often contributed very little to global warming but are dealing with the majority of impact in terms of extreme weather events and slow onset effects. Moreover, they don’t have the resources to adequately respond, adapt, or to implement the necessary measures to mitigate the worst effects of the climate crisis. This concept is well established within the formal international climate negotiations under the United Nations Framework of the Convention on Climate Change (UNFCCC) as “the principle of common but differentiated responsibility and respective capabilities.” This lies at the core of international climate justice.
This inequity is especially evident when looking at African countries. The entire African continent has contributed less than 4% to total greenhouse gas emissions, but it’s home to the ten most climate vulnerable countries in the world. The Paris Agreement includes an article in which developed countries agreed to mobilize $100 billion in international climate finance each year between 2020 and 2025 for developing parties. This was a follow up to commitments made as early as 2009, namely to raise up to $100 billion a year by 2020. Based on OECD estimates, climate finance only reached $83.3 billion in 2020 and has never reached the promised $100 billion a year. Without blinking, parties reconfirmed this commitment to the goal at COP27 saying they would reach it in 2023, with negotiations for a New and Collective Quantified Goal (NCQG) post 2025 already kicking off.
Not only was the target never reached, but the target itself is insufficient and not based on a calculation of the actual needs, which are much higher. The costs for African Nationally Determined Contributions (NDCs, plans that outline country specific activities and expected investments to stay below 1.5 degrees global warming) are estimated to go up to $45.5 billion per year alone. The finance target therefore served mostly to signify the duty of high polluting, high income countries to supply the means for vulnerable countries to adapt to the climate crisis—and they failed miserably to comply. Without increased investment in climate action we cannot expect to reach the Paris goals. All the while, governments keep investing in industries that are not compatible with the 1.5 degree goal: the total fossil fuel subsidies in fifty-one major countries were 40% higher than the total global investment in climate finance between 2011-2020. Public investments can incentivize the private sector to get on board for the right projects, or put entire countries on the wrong path. Continued fossil fuel support remains a barrier to achieve the climate goals.
African countries received around a quarter of the provided international climate finance between 2016-2019, amounting to $18.3 billion a year. Almost 55% of Africa’s climate finance is in the form of debt, with the private sector accounting for no more than 14% of total climate finance and 3% of adaptation finance. This brings us to another huge challenge African countries face: debt crises. Of the 38 sub-Saharan countries covered in the World Bank and International Monetary Fund’s debt sustainability analysis, seven are already in debt distress, eighteen are at high risk, and thirteen are at moderate risk.
The UNFCCC needs to agree on a definition of climate finance that clarifies what contributions can truly be counted as international climate finance. The true costs to tackle this crisis are much higher than the set target, and to that extent we do need multiple sources of finance and innovative ways to fund these efforts. Private finance on a large scale and low-interest loans should be part of that push, and so should new initiatives such as the Bridgetown agenda and proposed reforms of the IMF and World Bank, which are needed to bring climate finance from billions to trillions—but high income, high polluting countries should also be obliged to deliver on their promises as to restore trust in this international process. International climate finance, the $100 billion target and any new target that is set based on the principles of equity cannot count loans as contributions and should be reached through public finance.
