As the governments of the world have started discussions on setting a new climate finance target – the money that developed countries as historic polluters must pay to developing countries for fighting climate change – rich countries are continuing to dilute their responsibilities. Climate finance, a bone of contention dominating global climate negotiations, is the money used to fund activities to combat and cope with climate change.
Even as rich countries continue to struggle to achieve the climate finance target commitments of US $100 billion, which was committed at the 16th Conference of Parties held in Cancun in 2010, talks have begun to decide on a new higher target by 2025.
The talks will be held at the climate conference in Bonn, Germany where the countries meet again to negotiate a new target. The conference will run till June 15 and host the sixth Technical Expert Dialogue (TED) on June 12 and 13.
While media reportage has so far focused on speculations about what the new goal could be, we look at submissions made by different countries to the United Nations Framework on Climate Change (UNFCCC) in the run-up to the meeting, to break down the global politics around Climate Finance.
These submissions reveal an ongoing pitched battle between rich and poor nations, where developing countries are fighting to prevent rich countries from going back on their promise to take the lead in providing climate finance. In their submissions, rich countries said that they alone should not be asked to fund the climate fight but the private sector and the developing countries should also contribute.
This comes on the heels of the negotiations at the Conference of Parties (COP27) held at Sharm El Sheikh, Egypt last year. It was during COP27 when rich countries started to push to expand the contributor base for climate finance. Their demand: developing countries must seek other sources of money – like the private sector as well as other major developing countries like India and China. At COP27, rich countries had demanded that China and India must also contribute.
This push comes despite the United Nations Convention, as well as the Paris Agreement, making it clear that historical polluters bear a larger share of financial burden as developing countries will not be able to afford it. It also comes at a time when developing countries face immense pressure to meet ambitious climate targets while at the same time ensuring development within the country.
India and other developing nations oppose the rich countries’ move. India submitted, “Climate Finance is an obligation of the developed world to the developing world owing to their (developed countries) stock of GHG in the atmosphere.”
If finalised, the new climate finance goal known as the New Collective Quantified Goal on Finance (NCQG) will be the second climate finance target that countries set for themselves. This is expected to happen during COP28 in Dubai later this year.
According to Aarti Khosla, founder of Climate Trends, the quantity and type of finance can only be determined once there is clarity on the gap and actions needed.
“All the crucial negotiations come to a lower bar with lack of trust in the negotiations on finance and that still needs to form the basis of discussions which should have been done decades ago,” said Khosla.
Representational image for greenhouse gases. Photo: Cam McGrath/IPS
Developed countries shrug off responsibility
It was in 2010, when for the first time developed countries pledged to meet a tangible financial target – of $100 billion by the year 2020 – towards combating climate change. To date, the goal remains unfulfilled. And despite several figures thrown around, there is no formal mechanism to measure how much of it has been achieved.
Now as part of the NCQG work programme, countries were asked to make submissions with suggestions on the new finance target. A look at the submissions shows that most submissions made by rich countries demand widening of the contributor base. Rich countries also cite Article 2.1 (c) of the Paris Agreement which, developing countries say, is vague and dilutes principles of equity.
Take for instance, Sweden on behalf of the European Union mentioned that the structure of the NCQG must make “all financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” This is the contentious Article 2.1c of the Paris Agreement, which states that the provision of climate finance would be conditional on how funds are used. Large developing countries fear it’s a way of dictating their future economic trajectories, and even forcing them to adopt costly technologies that the rich nations want to sell.
In its submissions, the European Union also advocated that South-South finance flows must be encouraged. This means that the global south, which is mostly poor or developing countries, would have to contribute to their own climate finance flows.
This has remained a major roadblock with the $100 billion goal. Since the stress is on “mobilisation” and not “provision” of finance to developing countries, developed countries could end up being merely a channel to pass money rather than actually providing finance.
At Sharm El Sheikh, the US had even gone a step further and asked developing countries to turn to the private sector to provide the required finance. In their submissions in March this year, the US was joined by the United Kingdom and the EU, who insisted that it is important to bring in the private sector to meet climate finance goals.
Pushback from developing countries
Responding to this sentiment, the negotiating bloc of developing country groups, the Like Minded Developing Countries or LMDC, submitted a strongly worded statement saying that the onus of mobilising finance must ultimately be on the public sector of the developed countries.
“Any mobilisation of private finance must not shift the responsibilities of developed countries’ public sector,” LMDC said in their submission. They added that “developed countries, through public financing, must shoulder the responsibility for the shift from the billion to the trillions required by developing countries.”
On May 18, India made a submission on behalf of LMDC stating that, “LMDC finds it regrettable that the principles of the United Nations Framework Convention on Climate Change and its Paris Agreement continue to be called into question and diluted.”
India was referring to the omission of the principles like equity and common but differentiated responsibilities (CBDR) from the latest summary prepared by technical experts on the new goal. This means that countries have different duties and abilities to address the negative impacts of climate change. Developing countries have held that these principles are integral to deciding a new climate finance goal.
“For three long decades, wealthier nations have abandoned their climate finance obligations, shirking their duties while placing an undue burden on emerging economies,” said Harjeet Singh, Head of Global Political Strategy, Climate Action Network International. “Developing countries, like India, are left to juggle the Herculean task of combating poverty and bracing for escalating climate impacts. The delay in climate finance is directly sabotaging our collective actions against climate change.”
We have reached out to the environment ministry and the external affairs ministry for comment on their expectation from TED and the need for climate finance for developing countries. We’ll update the story once we receive a response.
A general view of the entrance to the Sharm El-Sheikh International Convention Centre grounds, during the COP27 climate summit, in Sharm el-Sheikh, Egypt, November 15, 2022. REUTERS/Mohamed Abd El Ghany.
What is the ideal number for the next goal?
Several experts have alleged that the $100 billion goal was simply “pulled out of thin air” with no scientific backing. When it was first proposed, the process to finalise NCQG resolved to change this.
In their submissions, developing countries have repeatedly mentioned the Needs Determination Report prepared by the Standing Committee on Finance back in 2019. This report was prepared to ascertain the amount of money required for developing countries to meet climate finance goals. It pegs the required climate finance amount to be between $5.8-11 trillion!
Although the report could not give an accurate figure, it set a quantitative basis for the first time. Developed countries, however, have made it clear that the final goal would be a political decision in their submissions.
Subrata Chakrabarty, associate programme director with the Climate Program at World Resources Institute India, said, “It is the start of the technical dialogue, so expecting something out of it, especially since it is a contentious topic is too much to expect, in my opinion. Most of the negotiations will be conducted at COP28.”
“Climate Finance, however, is an important topic. Countries, especially developing and vulnerable countries, need finance, technology as well as capacity to implement adaptation and mitigation activities,“ he added.
Developed countries have also aggressively shut down any efforts made to define climate finance. Even last month, the European Union in its submission on operational definition for climate finance stated that “developing a single climate finance definition is neither feasible nor useful.”
Monitoring climate finance flows, however, has remained a challenge. One of the major setbacks of the $100 billion commitment is that there is no way to measure the progress. Issues like greenwashing still exist due to the lack of a common understanding. For example, a donation by Japan for the procurement of medical eye equipment has been included as climate finance. The NCQG work programme aims to tackle this as well by establishing a mechanism to monitor such finance flows.
Mrinali is the Climate Change Research Lead with Land Conflict Watch, an independent network of researchers studying land conflicts, climate change and natural resource governance in India.