G20 set to scale back climate funding pledges
Pledges from G20 nations to finance climate mitigation strategies, including the $100bn fund for developing countries, could be set aside, with ministers instead calling on development banks to raise private capital to meet the bill.
G20 nations were encouraged to establish a method of mobilising funds to mitigate climate impacts as part of the UN Conference of Parties in 2010. This aim was then put into motion as part of the COP21 climate conference, including a specific target to generate $100bn to help developing countries manage climate impacts.
Public-funding finance towards the $100bn bill was expected to reach more than $67bn by 2020, up from $44bn in 2014, but a new draft statement from G20 finance ministers, obtained by Bloomberg, suggests that the responsibility of reaching the target will be left with developmental banks.
The draft statement cites “scarce public resources” as the supposed change in heart towards mobilising climate finance. At a meeting in Germany next week, it is expected that ministers will call on multilateral development banks to help reach the target.
Institutions, such as the World Bank and the European Bank for Reconstruction and Development, all pledged new funds to the $100bn roadmap in 2015, outlined in a report compiled by the UK and Australia last year.
The report highlights that the World Bank provides around $10bn on average each year towards climate action, equating to 28% of its overall investment. If current financing levels were maintained, the report claims that this would increase to $16bn by 2020.
Just last week, the World Bank also unveiled the first set of green bonds directly linked to business actions against the Sustainable Development Goals. However, even with the current acceleration amongst developmental banks, the mooted watering-down of climate finance from the G20 threatens the mobilisation of funds for developing countries.
The G20 had stressed the importance of “scaling up green financing” in partnership with the private sector in order to shift trillions of dollars from dirty to clean investments. However, the political shift in the US, and subsequent threats to pull out of the Paris Agreement, has derailed some of this momentum.
Before Trump’s presidential reign started, the outgoing President Barack Obama injected an extra $500m into the Green Climate Fund, which uses finance from rich countries to aid developing nations with climate mitigation and low-carbon growth. The US had promised to provide $3bn to the fund, but with Trump now calling the shots it appears unlikely that contributions from the US will move beyond the $1bn already provided.
In related news, an investigation from the Telegraph has shown that Climate Investment Funds (CIFs) totalling £6.75bn were providing “little benefit” to developing countries they were intended to help. A total of 28 renewables-based projects are set to be financed through CIFs, of which one-third of the funding comes from the UK Government.
To date, only three projects are actually producing renewable energy or increasing access to it, the Telegraph notes, despite the funding tools being established eight years ago. The funds are meant to provide 72 developing and middle income countries with the necessary capital to manage the challenges of climate change and reduce their greenhouse gas emissions.