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How to fix the failures of climate finance
Saleemul Huq is director of the International Centre for Climate Change and Development at the Independent University Bangladesh.
ONE of the positive outcomes of the COP26 held in Glasgow, Scotland in November 2021 was a universal acknowledgement of the failure of developed countries to deliver climate finance to developing countries, and even of developing countries themselves to actually deliver to the most vulnerable communities within their own territories.
While it is good that countries acknowledged their failure and promised to do better going forward, the devil is in the details. I will take this opportunity to provide proposals on what needs to be done and who needs to do it to make sure that promises made at COP26 are actually delivered by COP27 this November in Sharm Al Shaikh, Egypt.
The first and biggest failure was the abysmal inability of the developed countries to deliver the USD 100 billion a year they had promised at the time of the Paris Agreement in 2015. One common misconception is in thinking that the environment ministers who attend the COP are responsible, when they are not the ones with the money. In fact, it is the finance ministers of the G7 countries who have to keep their promise. Back in June 2021, they met in Cornwall in the UK and decided to renege on their commitment. They then sent their environment ministers to the COP in November to apologise on their countries’ behalf.
Now, we need to see what the G7 Finance Ministers meeting in June 2022 in Germany will decide, rather than wait for November. The question is: Will they keep their promise this year, or renege as they did last year?
The second associated failure that developed countries’ finance ministers must overcome is agreeing on which country should contribute how much to reach the iconic USD 100 billion amount each year. At the moment, it is left to each country to decide what their share should be and, not surprisingly, they could only agree on less than USD 80 billion so far. The finance ministers of developed countries have to agree on what the contribution of each country will be towards meeting the agreed goal of USD 500 billion over the next five years. They also need to agree on a neutral body, such as the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat or the UN Statistics Bureau, to collect and collate the data, rather than self-certifying their own contributions, as has happened so far.
A third, more forgivable failure was that the proportion of global funds that were provided counted 80 percent towards loans to support mitigation measures while only 20 percent counted for grants to support adaptation in the most vulnerable developing countries, when the expectation was for a 50-50 split between support for mitigation and adaptation. To the credit of the developed countries, they acknowledged this failure and promised to double their grant funding to support adaptation in the most vulnerable developing countries, and several countries such as the United Kingdom, Germany and the US actually announced more funds for adaptation while they were in Glasgow. However, it is not just the amount allocated that is the problem but also how it is delivered and who receives it.
This has also been a major collective failure of the contributing developed countries and agencies such as the Green Climate Fund (GCF), UNDP, World Bank and Asian Development Bank (ADB), who acted as conduits to channel the funds to the developing countries to support adaptation. The two big failures were in making the funds far too difficult to access for the most vulnerable developing countries, so much so that it took years to get the first penny out of the funds. Only 10 percent of the adaptation funds actually reached the intended most vulnerable communities.
The fund-providing developed countries, the fund management agencies and the recipient developing countries’ national governments all have to raise their game to make sure that the funds are allocated at scale and disbursed speedily so that the ultimate beneficiaries, who are the front line adapters, actually get the help they so desperately need. This will require much better coordination, better accessibility to funds and monitoring of the actual delivery—all of which are sorely lacking at present. The good news is that this collective failure has been recognised and accepted, and reforms such as the eight principles of locally-led adaptation have been adopted. But making it happen at the requisite speed is now the challenge for all concerned.
The second annual Gobeshona Global Conference at the end of March 2022 on Locally-Led Adaptation and Resilience will be an opportunity for all the relevant players to take stock and report on their progress while correcting their failures of the past.
Acknowledging failure is a positive development only if it leads to reforms to avoid making the same mistakes again.