Wealthy nations still well short of $100bn climate finance promise
Wealthy nations are failing to address a finance gap on the long-standing pledge to mobilise $100bn (£72.5bn) annually to help developing nations adapt to the climate crisis, according to new research from Oxfam which found that up to £57bn may not be delivered across a six-year period.
Under the UNFCCC developed nations committed to financing $100bn annually by 2020, however, developed nations have failed to fulfil this commitment, with as little as $70bn provided in recent years. It will be one of the crucial discussion points at COP26 and, if not addressed sufficiently, could lead to the collapse of global negotiations geared at combatting the climate crisis.
New research published today (20 September), has found that commitments from developed nations are set to fall well short of the pledge.
The Organisation for Economic Co-operation and Development (OECD) released new data on Friday showing that developed countries provided only around £58bn in climate finance in 2019. Of this figure, 70% of public climate finance was given out as loans instead of grants, which could push some nations into more debt.
According to Oxfam, this trajectory will see developed nations offer up to £69bn annually by 2025 – five years after the goal should have been met. Oxfam states that developing nations could miss out on up to £57bn over a six-year period as a result.
“The pandemic has shown that countries can swiftly mobilize trillions of dollars to respond to an emergency — it is clearly a question of political will. Let’s be clear, we are in a climate emergency. It is wreaking havoc across the globe and requires the same decisiveness and urgency,” Oxfam’s global climate policy lead Nafkote Dabi said.
“Millions of people from Senegal to Guatemala have already lost their homes, livelihoods and loved ones because of turbo-charged storms and chronic droughts, caused by a climate crisis they did little to cause. Wealthy nations must live up to their promise made twelve years ago and put their money where their mouths are. We need to see real funding increases now.”
Climate change could trigger economic losses double that of the Covid-19 pandemic, however, it is not receiving the same sort of financial response. In 2020, the EU, UK, US, Canada, Australia and Japan spent more than £11trn on Covid-19 stimulus packages, which is equivalent to meeting the climate finance goal 151 times over. Global military spending for 2019 was also measured at nearly 20 times more than the climate finance commitment.
Oxfam estimates that a quarter of the climate finance provided in 2025 will be spent on adaptation and resiliency.
In contrast, the UN Environment Program notes that annual adaptation costs in developing countries are expected to reach £102bn to £218bn per year by 2030.
Earlier this year, the final agreements from this year’s G7 summit were published, featuring commitments to phase out coal-fired power generation and get back on track to deliver $100bn of climate finance to less wealthy nations.
The communique reiterates a commitment to halve emissions by 2030, against a 2010 baseline, on the road to net-zero by 2050 at the latest. Businesses are encouraged to contribute by setting science-based targets to cut emissions and by joining the UN’s Race to Zero initiative.
The communique also states that the G7 will strive to get back on track to deliver an existing commitment to provide $100bn in annual funding to help low-income nations decarbonise while accelerating climate adaptation. A separate Oxfam report reiterated that G7 governments are failing to deliver on the longstanding $100bn pledge. Oxfam estimates the G7’s current commitments would deliver $36bn by 2025, of which less than $10bn would be for projects and initiatives on climate adaptation.
Also detailed in the communique is a commitment to mandate climate reporting in line with the recommendations of the global Taskforce on Climate-related Financial Disclosures (TCFD). This was agreed upon at a meeting of the G7 finance ministers. One key facet of the TCFD is scenario analysis; businesses must quantify risks at a range of warming trajectories.