Climate finance still stalls Paris deal

Foreign aid will help reclaim parts of the Sahara so that it can support trees again.
Image: Jacques Taberlet via Wikimedia Commons

COP21: Settling arguments about who should provide the cash needed by poorer countries to fight and adapt to climate change is key to a strong agreement at the UN summit.

PARIS, 11 December, 2015 – Offers of help to the developing countries to battle climate change have been falling out of the sky over Paris in recent days.

Yet despite the financial promises, the developing countries are still unhappy. For one thing, they’ve been here before: in the past, many finance pledges to them have not been fulfilled.

A number of wealthier countries, led by Germany, have promised US$10 billion to the Africa Renewable Energy Initiative – an ambitious scheme to provide much-needed clean energy across the continent.

Other developed countries are contributing $4bn over the next five years to the Great Green Wall Initiative – restoring areas of land in the Sahara and Sahel, and making it capable of storing vast quantities of climate-warming greenhouse gases.

Increased allocations

Among a long list of other multi-million dollar initiatives, the World Bank – funded mainly by the developed countries – says it is substantially increasing allocations of climate-related finance, with a target of providing annual funds of $29bn by 2020, much of the money focused on projects in the developing world.

Meanwhile, business groups have been queuing up to offer ideas about investing in climate change-related schemes in poorer countries.

The developed world says that by 2020 it will provide $100bn in annual finance to developing countries to help them adapt to climate impacts.

But a recent analysis by the Organisation for Economic Co-operation and Development (OECD), indicating that the target was well on the way to being achieved, has been described as biased and misleading by developing countries.

Many poorer countries remain deeply suspicious about carbon trading, saying that market-based projects
mainly benefit financiers in the wealthy countries

They say much of the approximately $60bn the OECD says is at present being mobilised each year comes in the form of private sector bank loans, or has been diverted out of existing aid budgets. Developed countries have also been accused of indulging in some creative accounting.

Developing countries also say some wealthier countries − in particular, the US − are seeking to weaken the financial negotiating position of poorer nations by questioning long-held definitions of what constitutes a developed and a developing country – “differentiation”, in UN jargon.

There is also the issue of just how committed the wealthy are to helping their poorer counterparts.

Sir Nicholas Stern, who was lead author of the 2006 Stern review on the economic impacts of climate change, says that holding down global temperatures and building a carbon-free economy by mid-century will require immediate multi-billion dollar investments in infrastructure – from renewable energy facilities to carbon-neutral cities.

With a general slow-down in global economic activity, plus the rise of more rightwing, inward-looking political parties in many developed countries, there are doubts about how quickly funds will be mobilised for the developing world to fight climate change.

There are other factors at play squeezing public sector aid budgets. Aside from money to fight climate change, the UN says it needs more than $20bn for humanitarian funding in 2016 – a sixfold increase on the figure 10 years ago.

Carbon pricing

The business sector has been pushing its agenda in Paris, saying market-based solutions – in particular, worldwide carbon pricing and trading schemes – could funnel trillions of dollars into renewable energy projects and other schemes in the developing world.

Market analysts point out that carbon trading schemes, if adopted globally, would need a set of common accounting principles and an agreed way of measuring and verifying each country’s emissions. So far, there is little sign that governments are willing to countenance such moves.

Many poorer countries remain deeply suspicious about carbon trading, saying that market-based projects mainly benefit financiers in the wealthy countries and contribute little to improving the lives of the poor.

Instead, they say, the wealthy nations’ financial commitment to climate change should be similar to that made in the face of the 2008/9 financial crisis. In the US alone, the cost of the bailout of the financial system has been estimated at nearly $13 trillion.

With even a small portion of that spending, the developing countries could look forward to a less threatened future. – Climate News Network

Leave a Comment

Your email address will not be published. Required fields are marked *