Climate finance offers grow but critical gap remains

climate finance

Creative Commons: DIVatUSAID, 2013

In the next few days, the world’s poorest countries could come a step closer to the US$100 billion a year promised by richer nations, at UN climate change summit in Copenhagen in 2009, to help them adapt to and mitigate climate change.

With the finance issue seen as crucial to reaching an international agreement to limit global warming, all eyes are on the World Bank and International Monetary Fund (IMF) meeting kicking off today in Peru, at which donor nations are expected to unveil their climate finance plans.

Some real progress has been made already: a new report from the OECD shows the majority of the promised US$100 billion is now being provided.

Angel Gurria, secretary-general of the OECD said:

Our estimates paint an encouraging picture of progress. We are about halfway in terms of time [between the pledges made in 2009 and the deadline of 2020] and more than halfway there in terms of finance, but clearly there is still some way to go.

Countries including China, France and the UK, as well as development banks have made significant financing pledges in recent weeks, and experts say the private sector is increasingly stepping up.

But a significant gap of nearly $40 billion remains, and vulnerable nations are joining forces to call on developed governments and institutions for better access to international climate change finance to help plug it.

Cesar Purisima, Finance Minister of the Philippines said:

In the absence of an effective global response, annual economic losses due to climate change are projected to exceed US$400 billion by 2030 for the V20, with impacts far surpassing our local or regional capabilities. Here in Lima, we unite for what we believe is the fundamental human rights issue threatening our very own existence today. Global climate action gives us hope that we can still see a future free from the most devastating effects of climate change.

The least developed nations are often those who will be hardest hit by, and least able to cope with the impacts of runaway climate change such as food shortages, flooding, drought, extreme heat and geo-political risk.

Many of their UN climate pledges hinge upon the US$100 billion promised by richer nations.

Ensuring the full amount is provided will help poorer countries maximise their emissions reductions, get on a course to 100% renewables and adapt to the damage caused by climate change.  

Activists say governments need to provide a credible roadmap showing how the full pledged amount will be met by 2020, and ramped up afterwards.

Oxfam International’s climate change policy expert, Isabel Kreisler said:

If finance ministers want to ensure there is something in the Paris deal for those on the frontline of climate change, they must significantly increase public funding for adaptation before 2020, and ensure a new and separate financing target looking past 2020 is also agreed on in Paris.

It is critical that governments – this weekend in Lima or very soon – spell out how the rest will be sourced.

By doing so, leaders will build the bridges of trust between developing and developed countries that are necessary to reach a meaningful and ambitious international climate change agreement in Paris this December.

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