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28/09/2016

Climate finance: The Global North is failing on its $100 billion promise

Climate & Environment

Climate finance: The Global North is failing on its $100 billion promise

A wind farm in South Africa.

[Warren Rohner/Flickr]

A report by the OECD has found that efforts will need to be stepped up if developed countries plan to honour their promise of providing $100 billion per year to the Global South from 2020. Journal de l’Environnement reports

For years, developing countries have been clamouring for technical and financial aid from the richest countries in the world to help them face the consequences of climate change.

>>Read: Climate finance eclipsed by fossil fuel subsidies

Their case appears to be logical. The global South is already suffering the effects of climate change (extreme weather events, droughts, rising sea levels), which are to a large extent a by-product of the economic progress of the North.

>>Read: Climate negotiations undermined by doubts over financing

The World Resources Institute  (WRI) calculated that between 1850 and 2011, the United States, the countries of the European Union, Russia, Japan and Canada were together responsible for 66% of all CO2 emissions from human activity.

Cornerstone of the debate

At the Copenhagen Climate Conference in December 2009, the most industrialised countries in the world committed to providing financial support for the less developed countries of the South. They promised an initial emergency aid package of $30 billion between 2010 and 2012, followed by a commitment to “mobilise jointly $100 billion a year by 2020 to address the needs of developing countries.”

Since Copenhagen, this $100 billion promise has become one of the cornerstones of the talks. At each round of the international climate negotiations, the countries of the South demand details on how their richer partners plan to keep their promise.

And they are understandable frustrated with the non-committal answers they receive.

Up by $10 billion in one year

The OECD report on climate finance and the elusive $100 billion fund, published this Wednesday (7 October), will do little to ease these frustrations. The organisation of rich countries is not convinced the developed world can live up to its promises.

>> Read: France targets carbon tax in energy transition law

The study showed that the flow of climate finance from North to South had increased from $52.2 billion in 2013 to $62 billion in 2014. But five years before the deadline, the fund remains a long way from the $100 billion per year promised at Copenhagen.

Wind turbines a major investment

The majority of this financial flow comes from public aid (37%), loans, grants and subsidies from development banks (33%) and projects co-financed by the private sector (27%).

More than three quarters (77%) of this funding is devoted to climate mitigation efforts (cutting greenhouse gas emissions), and 16% to climate change adaptation.

Export credits account for only around $1.6 billion. 72% of this sum is spent on exports of wind turbines from the global North to the South, and 22% on solar power infrastructure.

New resources

But unless something changes soon, it looks increasingly unlikely that the North will keep its promise to the South. Earlier this week, the French Senate proposed to redirect French climate finance to the least advanced countries. But this alone will not be enough to make the difference.

As the reallocation of private sector funds to low carbon investments begins to gain momentum, observers are looking to governments to boost their efforts. A group of European Union member states is due to introduce the Financial Transaction Tax in 2017, and dedicate a portion of the revenue to financing climate mitigation and adaptation efforts in the global South.

All eyes are now Lima, where the World Bank and the International Monetary Fund will this week announce their climate programmes for the coming years.

>>Read: Report: fund climate action through European FTT (in French) 

Background

The Green Climate Fund was created during the climate conference in Durban (South Africa) in 2011. The objective for developed countries was to raise $100 billion a year by 2020.

An initial capitalisation objective has been fixed at 15 billion dollars for the next three years.

This money will be used to help poorer countries to limit their greenhouse gas emissions and adapt to the effects of climate change, but it will only go some way towards covering greenhouse gas reduction targets.

The global cost of cutting emissions to sustainable levels is estimated at between 500 and 1,500 billion euros per year. 

Timeline

  • December 2015: 21st yearly session of the Conference of the Parties (COP 21)