Misplaced faith in private sector solutions delays the redistribution of trillions from developed countries and multilateral institutions.
In response to the looming trillion-dollar global climate finance shortfall, a broad array of policymakers, international bureaucrats, environmentalists, and financial institutions have called for the urgent scaling up of private climate investments.
The logic of private finance mobilisation starts by recognising that developing countries will need climate finance “amounting to US$5.8–5.9 trillion up until 2030”. In the face of such eye-watering sums, private finance offers an enticing solution. By leveraging comparatively small government financing into substantial private investments, governments and international organisations can turn “billions into trillions”, sidestepping the problem facing developed countries of how to justify domestically the global redistribution of trillions of dollars.
Private finance is clearly no panacea for the climate crisis. It is no wonder that the developing countries have long called for far more drastic levels of public and multilateral financing. Rather than seeking to pursue global economic justice alone, developing countries have been acutely aware that trillions of developed country government dollars need to be put on the table. If developing country financing asks are honoured, US$5.8–5.9 trillion would be well within reach. But the challenge remains getting developed countries on board. Proposals such as political economist Dani Rodrik’s “bridging compact” hold some promise, although any equivalent global consensus could only emerge following the recognition that a private finance-centred approach doesn’t provide a workable alternative.
And they wonder why we call them climate communists.
Imagine what a rushed removal of $5.8-5.9 trillion from the economies of wealthy nations would do to schools, hospitals, roads, policing, all the things which matter to ordinary people?
The funniest part, China, which still insists it is a developing country, would be a net recipient of a large slice of this pie, which would have to be funded by borrowing money from China.
I believe the fake climate crisis movement is on the verge of collapsing under the weight of its own absurdity.
Back when climate advocates were stringing everyone along with the nonsense claim that renewables were affordable and would bring down energy bills, people accepted the falsehoods. The current green Aussie government won office on the back of a claim their modest green investments would bring down energy bills.
I don’t think anyone serious still believes the nonsensical claim that renewables are cheap.
Africa’s poor will be hardest hit not by ‘climate change’ but by the policies pushed by the West’s green lobby. African forests and drinking water will diminish further.
It would seem straightforward that resolving the “climate change” problem would serve the poor the most, given that they are the hardest hit. But, by a tragic turn of irony, moves to “fight climate change” are precisely what is hurting the poor most. It is not “climate change” but the policies adopted in response to it that are the problem afflicting the poor the most.
…
Most of us who take affordable electricity ‘24/7’ supply for granted are unaware of the existential constraint on people’s daily lives that a lack of electricity implies. This was brought home brilliantly by Geoff Hill at a talk in House of Lords in Westminster on Monday. Geoff is Africa correspondent for The Washington Times, the first non-American John Steinbeck Award winner and has published with the Mail & Guardian(Johannesburg), The East African (Nairobi) and across the African continent.
…
This leads us to the third striking feature of the climate finance data collated by CPI. Within the 92% of the $640 billion spent on climate finance directed to climate mitigation in 2020 (as opposed to the 8% spent on adaptation), 91% (or $536 billion) was spent on solar and wind power. Yet no country in the world has developed without the dense energy available from fossil fuels. Asking Africans to leave their fossil fuels resources in the ground in return for “climate finance” from Western governments and multilateral agencies to invest on unreliable solar and wind power is plainlyunworkable. Dilute, unreliable and intermittent power from the wind and the sun will not meet the continent’s quest for higher standards of living, to save the forests and to have clean water to drink.
I don’t have a link to Geoff’s speech, if anyone has a link please post it in comments.
I really hope this Forbes article is more than a one off glimmer of sanity. If mainstream media news outlets were to start consistently acting like real journalists again, investigating and discussing real world problems caused by climate policy, instead of uncritically cheering on every ridiculous green idea which crosses their desk for the sake of the cause, the world would rapidly become a much better place.
“The bilateral and multilateral inflows are a more accurate indication of contributor country budgetary effort, whereas the outflows are a more accurate indication of actual progress towards the $100bn goal.”
One of the biggest and most contentious issues in climate politics is the provision of money to help poorer countries cut emissions and protect themselves from climate impacts. In 2009, wealthy nations pledged to “mobilise” $100bn in “climate finance” annually by 2020 to help vulnerable nations deal with climate change. As the title notes, even now the target has not been met.
Politicians and observers have warned that this failure could undermine trust between nations as they head into negotiations in Dubai. What is more, there are widespread concerns about the quality of finance being offered, with questions surrounding the use of loans instead of grants, different definitions of “climate finance” and insufficient funding for adaptation efforts.
In this article, which updates and builds on a previous analysis published in 2018, Carbon Brief assesses the state of international climate finance as nations prepare for the next COP. It uses the latest numbers collated by the Organisation for Economic Co-operation and Development (OECD), a club of mostly wealthy nations, many of which are responsible for contributing climate finance.
The OECD, a Paris-based intergovernmental economic organisation, asks its 36 member countries to report on their foreign aid, including climate finance. The data captures climate finance that is both bilateral (country to country) and multilateral (via international institutions) It also gives detailed information about funded projects. (The OECD calls this database “climate-related development finance” rather than strictly climate finance).
Key takeaways from 2015-2016 Report
Donor governments gave climate finance totalling $34bn in 2015 and $37bn in 2016, according to OECD estimates (note that this is not a full estimate of money counting towards the $100bn pledge – see below for more).
Japan was the largest donor, giving $10.3bn per year (bn/yr) on average over the two years. It was followed, in order, by Germany, France, the UK and the US.
India was the largest recipient on average, receiving $2.6bn/yr. It was followed, in order, by Bangladesh, Vietnam, the Philippines and Thailand
The single largest “country-to-country” flow was an average yearly $1.6bn from Japan to India.
The US was the top contributor to the multilateral Green Climate Fund (GCF) in 2016. (However, the US has now ended its support for the GCF).
Around $16bn/yr went to mitigation-only projects, compared to $9bn for adaptation-only projects. Around 42% of the finance consisted of “debt instruments”, such as loans.
Key takeaways from 2018-2019 Report
In 2019, the OECD found that climate finance had reached $79.6bn, up just 2% from 2018, and while official figures for 2020 are not yet available, Bloomberg reported that rich countries reckon they had raised $88-90bn, as of October 2021.
The shares attributed to countries are based on analysis by the World Resources Institute (WRI) of bilateral and multilateral development funds that can be traced to Annex II nations. These roughly align with the OECD’s figures, which are not broken down by country but, like the WRI’s, are partly derived from Annex II nations’ reports to the UNFCCC.
The remaining finance, indicated by the grey bars in the chart above, is made up of export credits, additional outflows from multilateral institutions and, most of all, private contributions by businesses and philanthropic groups (this is an approximation based on the OECD’s total values with the WRI estimates removed).
Private funds count towards the $100bn target, but the WRI did not include them in its analysis as the data is less complete and difficult to attribute to individual nations. The OECD estimates that annual private finance has been stable at around $14bn since 2017.
The top five finance providers – Japan, Germany, France, the UK and the US – have remained the same since Carbon Brief’s last analysis for 2015/16. These five nations contributed more than 60% of the 2018/19 finance. While Japan, Germany and France appear to be by far the biggest contributors, the WRI warns that the lack of clarity around climate finance reporting means the numbers should be approached with caution.
As in Carbon Brief’s previous analysis, India was by far the biggest recipient of climate finance, with more than double the funds received by the next largest, Bangladesh.Japan and Germany provided about 94% of the funds to India, almost all in the form of loans.
Implications
Climate finance figures are widely contested, with many global-south nations questioning how much funding is new and not simply diverted from other development funds. Criticism has also been levelled at the overreliance on loans and the inclusion of support for “high-efficiency” coal plants by Japan and Australia.
A recent assessment prepared by the UNFCCC’s Standing Committee on Finance concluded that developing countries require $5.8-5.9tn up to 2030 in order to fund less than half of the actions outlined in their official climate plans – although some of this would be funded domestically.
This year’s negotiations are likely to spark calls for a significant scaling up of finance, although the slow pace of proceedings means that, for the time being, the focus of new goal discussions will primarily be on agreeing a framework for future talks.
Nevertheless, there are various issues that could be on the table during this next phase, including ensuring that more money is spent on adaptation.
The Paris Agreement specifies that climate finance should aim for an even split between these two categories, but funding has long been skewed towards mitigation. According to Jan Kowalzig, a senior policy adviser at Oxfam, governments often tend to view such projects as more attractive investments:
“Since [mitigation projects] often have to do with energy, they seem to be more directly linked to a country‘s development, even though, of course, this is a huge misconception given the central (but, for politicians, often less visible) role of adaptation.”
Of the roughly $40bn average for the 2018/19 period, 39% of money went on mitigation, while just 25% went on adaptation – a slightly more even split than was recorded in Carbon Brief’s previous analysis for 2015/16.
However, other estimates, including the OECD’s own climate finance report, suggest a more pronounced split, with around three times as much finance going to mitigation than adaptation in 2018 and 2019.
This imbalance is a major concern amid rapidly escalating climate costs. The UN Environment Programme places current annual adaptation costs for “developing countries” at $70bn, but says they will reach $140-300bn by 2030.
Ensuring adequate adaptation finance in the coming years is, therefore, seen by many vulnerable nations as a key priority for post-2025 climate finance plans as they are developed.
We must also bear in mind that global warming is not the planet’s only challenge. We often hear that it is the defining issue of our time, but it is no such thing. By the 2070s, the IPCC — the U.N. climate change panel — estimates that warming will cost between 0.2 and 2 percent of global GDP. This is certainly a problem, but not the end of world.
Speaking of climate change in catastrophic terms easily makes us ignore bigger problems, including malnutrition, tuberculosis, malaria and corruption. The World Health Organization estimates that climate change since the 1970s causes about 140,000 additional deaths each year, and toward the middle of the century will kill 250,000 people annually, mostly in poor countries. This pales in comparison with much deadlier environmental problems such as indoor air pollution, claiming 4.3 million lives annually, outdoor air pollution killing 3.7 million and lack of water and sanitation killing 760,000. Outside of environment, the problems are even bigger: Poverty arguably kills 18 million each year.
Every dollar spent on climate change could instead help save many more people from these more tractable problems. The current approach to subsidize solar and wind arguably saves one life across the century for every $4 million spent — the same expenditure on vaccinations could save 4,000 lives. Each person — and the next president — needs to decide his or her legacy.
Postscript: Financing for Climate Aid is a Fraction of the Full Cost of Climate Crisis Inc.
A fuller accounting of the climate crisis industry more likely exceeds 2,000,000,000,000 US$ per year (2 Trillion)
The president of the upcoming COP28 climate talks in Dubai called on Sunday for governments to abandon “fantasies” such as hastily ditching existing energy infrastructure in pursuit of climate goals, reports Phys.org.
Climate talks are being held in the Saudi capital Riyadh ahead of the COP28 conference that will take place in Dubai in November.
By Robbie Corey-Boulet with Imran Marashli in Paris
The president of the upcoming COP28 climate talks in Dubai called on Sunday for governments to abandon “fantasies” such as hastily ditching existing energy infrastructure in pursuit of climate goals.
“We cannot unplug the energy system of today before we build the new system of tomorrow. It is simply not practical or possible,” Sultan Al Jaber said during the opening session of Middle East and North Africa (MENA) Climate Week, a UN-organized conference hosted in the Saudi capital Riyadh.
“We must separate facts from fiction, reality from fantasies, impact from ideology, and we must ensure that we avoid the traps of division and distraction.”
Much of international climate diplomacy revolves around the thorny issue of how and when to quit fossil fuels.
At COP26 in Glasgow in 2021, countries agreed to phase down “unabated coal”, the first time a fossil fuel was explicitly mentioned in a final text.
But efforts since then to extend such a target to all fossil fuels have foundered, most recently at last month’s G20 summit in India.
Climate activists have criticized the appointment of Jaber to lead the COP28 talks which kick off in Dubai in November, given that he is also head of the Emirati state-owned oil firm ADNOC.
But Jaber has garnered the support of COP parties including US climate envoy John Kerry, partly by emphasizing his belief that “the phase-down of fossil fuels is inevitable”.
Energy officials in the United Arab Emirates and other oil-producing countries—notably Saudi Arabia, the world’s biggest oil exporter—have argued for continued investments in fossil fuels to ensure energy security even as they eye an eventual transition away from them.
Finding funds
The vast and fractured landscape of climate finance is the other major stumbling block in climate negotiations.
Developing countries least responsible for climate change are seeking money from richer polluters to adapt to its increasingly destructive and expensive consequences.
In 2009, rich countries pledged to supply $100 billion of climate finance every year to developing nations but failed to meet the 2020 deadline. There are hopes the goal will be met this year.
“Old promises must be kept, including the $100 billion pledge made over a decade ago,” Jaber said on Sunday.
Last year’s COP27 talks in Sharm el-Sheikh, Egypt, ended with the first ever creation of a “loss and damage” fund into which countries would pay to support poorer nations suffering the most from more intense and frequent storms, floods and droughts.
The fund’s operation, governance, location, contributors, beneficiaries and a timeline for payouts are all up in the air ahead of COP28.
“We must make the fund for loss and damage that was promised in Sharm el-Sheikh a reality in Dubai,” Jaber said.
Climate ‘crossroads’
The talks in Riyadh are intended to “shine a spotlight on challenges and solutions in a region that is among the most vulnerable to the effects of climate change,” organizers said in a press release on Sunday.
The region must already grapple with high temperatures and water scarcity, with more than 60 percent of the population having “very little if any access to potable water”, the statement said.
“Increasing temperatures are predicted to lead to more persistent and acute drought,” it added.
Jaber also highlighted challenges facing the region, referring to extreme events like hurricane-strength Storm Daniel, which last month caused two dams in eastern Libya to burst and flood the city of Derna.
“Climate change isn’t a threat waiting around the corner—the MENA region knows this from first-hand experience with fierce heat waves and water shortages,” said Inger Andersen, executive director of the UN Environment Programme.
Simon Stiell, executive secretary of UN Climate Change, said the region was “at a crossroads, facing not only the devastating impacts of climate change but also the challenge of transitioning their economies to ensure prosperity in a 1.5C aligned world.”
The goal of limiting warming to 1.5 degrees Celsius above pre-industrial levels was set at the 2015 climate talks in Paris.
At the last Conference of the Parties to the Framework Convention on Climate Change held in Egypt in 2022 (“COP27”), the Parties decided to establish a fund for responding to “loss and damage”. The concept of “loss and damage” is, in principle, the basis upon which the wealthier countries should now pay compensation in various forms for historic emissions. COP27 established a transitional committee to work on “operationalizing” a new loss and damage fund, which is to be approved and adopted at COP28. COP 28 will be held in Dubai in November and December this year.
A Summit for a New Global Financing Pact, held in Paris, France on June 22 and 23, 2023, under the chairmanship of French President Emmanuel Macron discussed how to create new sources of funding for loss and damages. At the conference end, there was no significant progress to report on these subjects, a result that sends an early signal of what probably will happen at COP28.
However, the discussions examined several new mechanisms for extracting money from the wealthier countries like Canada. These included:• A fossil fuel extraction levy, a global tax on all oil, gas, and coal producers. • An air passenger ticket levy, a tax on every international and domestic passenger trip • A levy on all international shipping based on each ship’s consumption of heavy fuel oil • A tax on oil and gas industry “windfall profits” resulting from sudden increases in world prices • A financial transaction tax on all financial instruments such as bonds, stocks, options, derivatives, and currency exchanges • A stock buyback tax, imposed when a company purchases its shares of its own stock on the public market • A special tax on “wealthy individuals”
The discussion of financial mechanisms is taking place in the context of what appears to be irreconcilable positions on the part of the “Annex II” countries (i.e., the mostly OECD countries identified as able to pay) and the rest. One group keeps raising the ante in terms of the amounts demanded and the other grudgingly agrees to discuss such funding “in principle” while refusing in practice to go beyond what the publics in the OECD countries find tolerable.
It seems inevitable that COP28 will fail to make significant progress in resolving the financing issues. For that, the people in the OECD countries should be very grateful.
Global warming, climate change, all these things are just a dream come true for politicians. I deal with evidence and not with frightening computer models because the seeker after truth does not put his faith in any consensus. The road to the truth is long and hard, but this is the road we must follow. People who describe the unprecedented comfort and ease of modern life as a climate disaster, in my opinion have no idea what a real problem is.
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