Why the rows over climate finance pledges spells trouble for global adaptation efforts

The costs of adaptation look set to reach the higher end of $140-$300bn each year by 2030

The Guardian’s exclusive on Sunak’s preparations to cut the UK’s flagship pledge to provide £11.6bn of international climate and nature funding this year arrived during the Government’s Net-Zero Week.

The Government has since rejected the notion that funding will be cut. A Government spokesperson said: “Claims that the International Climate Finance pledge is being dropped are false. As the Prime Minister set out at COP27, the Government remains committed to spending £11.6bn on international climate finance and we are delivering on that pledge.”

The commitment was first made by the UK at COP26. It forms part of a collective commitment from wealthy nations to $100bn of annual climate finance to the Global South. This $100bn commitment was first announced in 2009 and ratified in 2015 but is yet to be delivered in full for any given year since.

For CARE International’s senior advocacy adviser John Nordbo, there is a risk that talks at COP28 this year breakdown even further due to the lack of trustworthiness displayed by developed nations – citing the US and the EU as other parties that are failing to deliver.

“There’s so much lack of trust in these international climate negotiations,” Nordbo tells edie. “A lot of it is due to the fact that the wealthy countries haven’t delivered on climate finance commitments and there is a real risk that we won’t meet their $100bn target this year either. It’ll become really, really tricky to get a good global agreement at COP 28 unless trust can be restored.

“There is definitely a risk of a total meltdown due to the kind of situations where rich countries refuse to deliver. It’s not just the $100bn target, but also the need to increase adaptation finance and if you look at the numbers, those targets are probably more in danger right now.”

Nordbo notes that there has been a huge turnover when it comes to the negotiators and politicians in developed countries to the point where most of the ministers that announced the mechanism in Copenhagen in 2009 are no longer working on current negotiations. The risk is that their replacements “don’t understand the whole reason why it was so important to have this commitment”.

For the 2021/22 financial year, the UK, for example, spent £1.4bn on international climate finance. Meeting the commitment will require a major scaling of finance.

“Current finance ministers from Western countries don’t really see the results of spending on international climate finance,” Nordbo adds. “For them, it’s money out the window.”

“In many institutions, there’s still a lack of urgency and understanding when it comes to the climate problem. We’ve got the coronavirus crisis, we’ve got the Ukraine war and immediately people understand that we need to act. But we are in the same situation when it comes to climate. If we want to avoid the worst consequences, we need to act. But it is just not understood that way.”

Nordbo does express hope that the UN has commenced talks on a New Collective Quantified Goal on Climate Finance, which aims to set new finance goals from the $100bn per year base, “taking into account the needs and priorities of developing countries”, prior to 2025.

CARE has also published analysis tracking plans for scaling international climate finance from rich nations to poorer ones, thus assessing their progress toward a pledge to deliver $100bn a year.

Developed countries are “still unable to provide evidence” that they will deliver $100bn of climate finance to nations on the frontlines of the climate crisis, the report notes.

Wealthy nations had stated an intention to reach the $100bn mark by 2023, but the actual amount, CARE is warning, is likely to stand at around $83bn.

The report also raises concerns about the funding of projects with no tangible climate benefits being counted towards the $100bn, and the provision of loans rather than grants, which can lock low-income nations into greater debt. These same issues were recently raised in a key climate finance report from Oxfam.

Adaptation finance

Half of the $100bn is supposed to go towards climate adaptation and the other half towards mitigation. Regardless of how steeply emissions are cut now, scientists have warned that more investment will be needed for adaptation due to climate-related changes that are already baked in.

Nordbo also warns that the lack of trust in delivering on climate finance could cascade into the negotiations around adaptation, stating that a “clear plan” was needed for climate adaptation.

CARE estimates that just 24% of the international climate finance provided between 2016 and 2020 went towards adaptation.

By the UN’s own estimations, at least a fivefold increase in adaptation finance to developing nations is needed to secure a climate-resilient future for their populations. International adaptation finance flows to developing countries are estimated to have reached $29bn in 2020. The estimated annual need, however, is at least $160bn annually in 2030.

As for loss and damage, discussions are still shaping up as to how funding should be provided and who pays for what.

At COP27 in Egypt late last year, nations agreed to create a dedicated fund to support nations experiencing physical climate impacts. The fund will be used to rectify losses and damages resulting from extreme weather events.

Climate-vulnerable countries had been calling for the fund since the 1990s, but wealthy nations including the UK, EU and US had been blocking progress until 2022. Last year, the EU made a U-turn, with the support of other G77 nations. A key point of contention was whether rapidly emerging economies like China and India should pay into the fund, or receive money out of it.

Most nations in the Global North are still shaping up plans regarding how much they will pay and how this money will be raised. Christian Aid has assessed the UK’s options for paying its fair share. It prices the UK’s contribution at $15bn each year (around £12.57bn) from 2030. This would see the UK making 3.5% of the overall global contribution.

“We need the front of this funding to be operationalised and we need developed countries to clearly state that we will in fact see new annotation and finance to fill up the fund in the coming years,” Nordbo adds.

COP 28 clarity

Many of these discussions could be ironed out at COP28 later this year.

The United Arab Emirates (UEA) has selected Sultan Ahmed Al Jaber as president for this year’s conference. Al Jaber, as well as being UAE minister for industry and technology, is chief executive of the state-owned Abu Dhabi National Oil Corporation (ADNOC).

In a recent interview with edie, H.E Ambassador Majid Al Suwaidi and COP28 director-general said that engaging non-state actors would be crucial to catalysing climate finance.

Al Suwaidi said that one success is already underway – mobilising finance for climate. He explained that he is considerably more optimistic than he was in early 2023, partly due to recent meetings in Paris to chart a course to unlock additional climate finance flows through multilateral development banks (MDBs).

For Nordbo though, the success of COP28 depends on whether developed nations can bridge the gap between what they’d like to deliver in the form of climate finance mechanisms and what developing nations have been in need of.

“Developed countries seek some sort of or arching target that is not clearly defined and where the additionality of climate finance is not secured,” Nordbo says. “Then you have developing countries that are fighting hard for clear targets and clear public finance targets, soft targets for mitigation, adaptation and loss and damage and so on.

“So there will be some sort of stock take at COP28 and we could get some form of hope and the rebuilding of trust if developed countries confirm that they are in fact willing to set some of the more fundamental parameters for the talks in the coming years, like agreeing that there will be a sub-target on loss and damage.”