Rich countries promised billions of dollars in climate aid. The bill is overdue — and growing.
The developing world needs help to build up infrastructure while adapting to the ravages of a changing climate.
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After almost a decade of intense drought in Namibia devastated cattle herds, struggling small farmers got some much-needed help in early 2020: 420 drought-resilient goats distributed to households in the country’s northwest.
The hardy animals are part of a $10 million aid project run by the Green Climate Fund (GCF), a U.N.-backed program aimed at helping the developing world cope with the changing climate. By 2020, the GCF and other “climate finance” funding sources were supposed to deliver $100 billion dollars in aid each year — everything from solar panels to sea walls to those goats, all to improve lives and cut greenhouse gas emissions.
That hasn’t happened. Estimates vary, but the Organization for Economic Cooperation and Development reports that industrialized nations contributed $79.6 billion in climate finance in 2019, the most recent year for which data is available.
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The cost of the continued gap between rich countries’ climate promises and their actions is human suffering — not just in poor countries but the planet as a whole. Programs to help the developing world limit its emissions and adapt to rising temperatures and worsening weather extremes don’t only save lives, they help protect the global economy. Over the long term, then, rich countries’ failure to deliver on their $100 billion pledge will make life harder for everyone.
Lorena Gonzalez, a climate finance expert with the nonprofit World Resources Institute (WRI), said it is “very, very likely” that 2020 contributions may be lower than 2019′s, in part because of the pandemic. When nations met in November at U.N. climate talks in Glasgow, Scotland, known as COP26, their final agreement noted “deep regret” for missing the $100 billion target.
“The hundred-billion goal was a political outcome, [created] at a moment of crisis for the multilateral process,” said Gonzalez. Its failure underlines a tragic truth: that many of the people most vulnerable to the changing climate have neither caused the problem nor have the means to adapt to its ravages.
At the same time, intensifying climate impacts since 2009 have made clear that the price of helping the developing world cope with a warmer world will be far greater than $100 billion per year. And the cost of inaction is likely to be even higher.
“In reality, actually we should be talking in trillions, not billions,” said Chukwumerije Okereke, a professor and director of Nigeria’s Centre for Climate Change and Development. “And yet the $100 billion mark has not been met.”
That financing shortfall has reinforced the developing world’s distrust of the U.N. climate process, perhaps making an already steep hill more difficult to climb.
For now, the world’s poorest nations are competing for limited funding resources to address a growing set of needs. “Poor countries want to take action,” Okereke said. “They are the ones feeling the pinch.”
The developing world is struggling to cope with a problem rich countries created. Wealthy nations have failed to deliver on their promise of $100 billion a year to help poor ones limit their emissions of heat-trapping gases and adapt to climate change — and the true cost is only getting bigger.
What climate finance pays for — and why
The money rich countries contribute for climate aid is distributed through a variety of sources and mechanisms. These include multilateral development banks such as the World Bank; climate-specific funds like the GCF and the Adaptation Fund; and the private sector.
What are all those dollars really doing?
First, mitigation — reducing or preventing greenhouse gas emissions. The developing world is modernizing fast. Global energy consumption is slated to jump by 50 percent between 2018 and 2050, according to the U.S. Energy Information Administration, and the bulk of that will come from non-OECD countries as their middle classes expand, urban areas grow and transportation networks become more sophisticated. Climate finance projects aim to help poor countries avoid the mistakes rich nations made as they grew.
The middle class in China, already a global powerhouse, is expected to exceed 1.2 billion people by 2027, a leap of half a billion in just 10 years. India’s population will exceed China’s within a decade. Nigeria will have 400 million people by midcentury. And so on.
Meeting that demand will require a tidal wave of energy infrastructure development. If the world has any hope of limiting warming to 2 degrees Celsius (3.6 degrees Fahrenheit) or the more ambitious 1.5 degrees, those new power plants and transportation systems and heating and cooling systems will need to be built with low or zero emissions in mind. Enter climate finance.
Some large projects administered through the Green Climate Fund cut across a number of countries. One called the LEAF (Leveraging Energy Access Finance) framework will provide almost $1 billion for “decentralized” renewable energy — meaning smaller, localized projects rather than massive power plants — across Ghana, Tunisia, Ethiopia, Nigeria, Kenya and Guinea. These green-energy initiatives will help prevent 30 million tons of CO2 emissions; that’s roughly equal to Tunisia’s current annual output.
Meanwhile, the $3.7 billion ASEAN Catalytic Green Finance Facility will fund green energy, building, transport and other infrastructure across Southeast Asia, and the $150 million Green Climate Financing Facility for Local Financial Institutions in Latin-America will offer money for renewable energy, efficiency and land-use projects, helping avoid more than 10 million tons of emissions across Chile, Ecuador, Panama and Peru. Other multicountry projects have similarly wide-ranging goals and ambitions.
And then there are country-specific projects. $2 billion is earmarked for a renewable-energy-powered light rail system in the greater San Jose area in Costa Rica, where the transport sector accounts for half the country’s total emissions. In Senegal, where more than half the rural population lacks access to electricity, $231 million will be deployed to provide solar-powered microgrids to 1,000 remote villages.
Not all projects are about constructing power plants or energy-efficient buildings. Deforestation and forest degradation account for more than 10 percent of all emissions worldwide, and some climate finance is being used to stop the burn. In Côte d’Ivoire, where cocoa production plays a huge role in a rapid rate of deforestation, money to support more than 7,500 farmers will help implement “zero-deforestation agroforestry models.” The funds will subsidize the use of shade-grown cocoa, which can take longer to produce profitable yields, and other sustainable farming practices. The Green Climate Fund’s projects alone are slated to shave 2 billion tons of emissions from the global total.
Mitigation is relatively straightforward, in concept at least: build and do things that emit less carbon dioxide than might be emitted otherwise. The other side of the climate finance coin, adaptation, is more region- and country-specific, and often more obviously important to the daily lives of vulnerable people. Sometimes it gets right to the question of a country’s very survival.
The Maldives, an island nation with an average elevation of less than 6 feet above sea level, has long served as a poster child for climate vulnerability. Already, 90 percent of the country’s 1,190 islands have experienced flooding, and 97 percent are seeing shoreline erosion. A $66 million project financed via the Green Climate Fund will help implement what is known as “Integrated Coastal Zone Management,” using best practices to shore up beaches and urban waterfronts, helping stave off catastrophe — at least for the time being.
Other efforts are aimed at helping countries where water is in short supply. A $6 million project administered by the Adaptation Fund aims to improve resilience to water scarcity in Pakistan. Another would improve groundwater sustainability in Zimbabwe. And a $10 million initiative will scale up “climate-smart agriculture” in eastern Guinea-Bissau.
But total funding for adaptation lags behind the money for mitigation. The 2015 Paris Agreement called for climate finance programs to “achieve a balance between adaptation and mitigation.” Yet as of 2019, only about 20 percent of climate finance went toward adaptation. A January 2021 report from the U.N. Environment Programme found that developing countries currently need at least $70 billion per year to adapt to climate change — far more than the available funding — and that cost is likely to rise as high as $300 billion every year as soon as 2030. By 2050, it could reach half a trillion dollars annually.
Importantly, those numbers would shrink with more aggressive mitigation efforts — keeping warming to 1.5 degrees Celsius rather than 2 degrees Celsius could cut the global damages roughly in half.
“Adaptation works,” U.N. Secretary-General António Guterres said in November at U.N. climate talks in Glasgow. “Early warning systems save lives. Climate-smart agriculture and infrastructure save jobs. All donors must allocate half their climate finance to adaptation.”
The variety of climate-driven trauma is reflected in the litany of adaptation needs. Along with addressing agriculture and water scarcity, other targets include helping communities grapple with sea-level rise, as in the Maldives; managing fisheries stressed by warming waters; and addressing rising heat and water scarcity in urban areas.
Sometimes, a dollar spent on climate adaptation helps with mitigation as well. In one region of Sudan, the yield from harvested gum trees has diminished by as much as 50 percent due to climate change. A climate finance project will both help farming communities restore their agricultural output by improving land-use practices — while also avoiding more than 9 million tons of CO2 emissions. Of the Green Climate Fund’s 200 or so projects, 48 are deemed to be “cross-cutting,” with both adaptation and mitigation benefits.
It has become painfully clear in recent years that the world will need many more projects like these to help poor countries cut their emissions and deal with climate change’s most damaging effects. No one at the Glasgow meeting dissented from that reality. Every speech was more impassioned and dire than the last. The delegates, the world leaders, the activists all agreed: The broad strokes of what climate change is doing to the developing world, and the way to help without exacerbating the problem, are well known.
At this point, rich countries simply need to deliver on their promises — and that means navigating an ongoing geopolitical staredown.
Paying a fair share
The $100 billion-a-year climate finance target has taken on increasing importance since 2009. “The relevance of the hundred billion is more than a practical issue,” said Gonzalez, of the WRI. “It is also a symbolic issue. When it comes to trust, it has become one of these tokens, or a handshake between developed and developing countries.”
But there has never been a way to ensure rich countries make good on their $100 billion promise. When then-Secretary of State Hillary Clinton announced the climate finance pledge at U.N. talks in 2009, and even after the plan was codified into the Paris Agreement half a decade later, no one specified how much each nation would contribute to the total. The result was that many countries appeared to wait for someone else to go first — one someone in particular.
“The number that the U.S. puts forward is extremely important, because that sets the standard for everybody else,” said Rishikesh Bhandary, the assistant director of Boston University’s Global Economic Governance Initiative.
The Trump administration’s withdrawal from the Paris Agreement and general refusal to engage on climate change in any fashion played a big role in the world’s failure to meet the 2020 climate finance target, he said. “Because of the absence of the Trump administration, that peer pressure that the U.S. could exert on these countries, first of all diplomatically and second by setting a good example, both of those pieces were missing,” said Bhandary. “Right now what’s happening is the United States is playing catch-up.”
President Joe Biden acknowledged as much at the Glasgow talks in November. “I do apologize for the fact the United States, the last administration, pulled out of the Paris accords and put us sort of behind the eight ball a little bit,” he said.
In September, the president announced the U.S. would double its climate finance funding to $11.4 billion per year. Months later in Glasgow, Biden added that the U.S. would make its first-ever contribution to the Adaptation Fund. Whether these moves give the world’s biggest economy back its moral high ground — especially given that growing understanding of the enormity of actual need — is an open question. A World Meteorological Organization analysis found that as weather-related disasters have increased over the last 50 years, a full 91 percent of the deaths from those disasters occurred in developing countries. How do we put a price on that sort of calamity? What is a reasonable contribution for the U.S. and other developed nations?
Again, the original $100 billion announcement didn’t help answer the question. In absolute terms, the U.S. has trailed only Japan and Germany in terms of yearly contributions, with France and the U.K. not too far behind, according to a WRI analysis. But the U.S. has fared poorly in recent think-tank reports that have attempted to assess a “fair share” for rich countries, based on factors such as size of economy and historic greenhouse gas emissions.
Laetitia Pettinotti, a researcher at the U.K.-based think tank ODI and a co-author of one such report, said the Biden commitment would bring the U.S. to only about 25 percent of its fair share of more than $43 billion per year. “It’s progress, but it is clearly not enough,” she said.
The WRI report, using different methodology, gave some big economies slightly more credit, but still found that the U.S., Australia, Canada and others have failed to provide even half their fair shares. Among high-emitting developed nations, Germany, France and Japan led the way in providing more than a quarter of a percent of their gross national incomes to climate finance; the U.S. was dead last at 0.03 percent. If every rich country achieved 0.22 percent of GNI, the $100 billion goal could be met.
The other elephant in the room is China. Under U.N. rules, China qualifies as a developing country, or non-Annex 1 party, despite being the world’s second-largest economy and the world’s largest annual emitter of CO2 emissions. China, therefore, is not expected to donate money to help fulfill the $100 billion climate finance pledge — although it spends billions on relevant projects abroad.
Pressure from developing countries, and perhaps from recent developments like the U.S. doubling its financial commitment, did prompt a long-sought pledge from China to cease all funding for international coal power projects. But the country has not offered much detail on its future domestic coal policy, which accounts for more than 7 gigatons of emissions per year. (If it were a country, “coal in China” would be the second-biggest emitter on the planet, behind only China.) From a geopolitical standpoint, though, China’s pledge represented a distinct softening. Bhandary called it “a huge step forward.”
Even so, the U.N. meeting in Glasgow didn’t produce the results that many were hoping for. “There was much ado about nothing at COP26 in terms of climate finance,” said Arjun Dutt, an energy and climate finance expert at the Council on Energy, Environment and Water in New Delhi. He pointed out that while there was extensive discussion in Glasgow, and general consensus that a new target beyond $100 billion needs to be set, the international community took little or no concrete action in that direction. “We aren’t very far away from where we started off before COP26.”
To meet the increasingly urgent needs of the developing world, that stagnation will have to resolve quickly. And beyond the practical mitigation and adaptation requirements, the developed world must honestly confront the basic moral principle on which climate finance is based. Call it the case for reparations.
Environmental Justice Lens
History and morality at root
Back in September, a coalition of green groups called for the U.N. talks in Glasgow to be postponed, citing the pandemic as an obstacle for attendance from the developing world. And then in the days before the conference started, another organization helping marginalized groups from around the world travel to Glasgow said that as many as two-thirds of those they were supporting simply gave up, due to vaccine-related roadblocks and other complications.
“There has always been an inherent power imbalance within the U.N. climate talks, between rich nations and poorer nations,” said the executive director of the Climate Action Network, Tasneem Essop. “This is now compounded by the health crisis.”
Delegates from poorer countries faced a stark vaccination gap, onerous travel and quarantine rules on the road to Glasgow, and other obstacles to participation in a collective process aimed at what amounts to global salvation. The echoes of the climate crisis were unmistakable. Wealthy nations by and large created the trauma, and poorer nations are most often its victims. Helping those victims is an undeniable moral imperative, and the shortfall toward the $100 billion goal is just as undeniable a moral failure.
Along with the dual finance goals of mitigation and adaptation, there is a push for a separate pool of money for what is known as “loss and damage,” or what can better be described as climate reparations. The changing climate has already unleashed various forms of hell on countries and people that did not cause the problem, and those backing reparations argue that the perpetrators should compensate the victims. The Glasgow Climate Pact does include provisions recognizing loss and damage, but it does not promise any particular action.
“It’s a huge disappointment,” said Eva Peace Mukayiranga, a climate activist from Rwanda and a representative of an international advocacy group called the Loss and Damage Youth Coalition. “COP26 did not meet the urgency on the ground. We expected to have a loss and damage finance facility established but ended with an agreement to have a dialogue.”
Africa, which is home to roughly 17 percent of the global population, has contributed only around 3 percent of all CO2 emissions since the Industrial Revolution began. Most of those emissions have emanated from just a few countries, including South Africa and Egypt, while the rest of the continent has contributed almost nothing.
“Yet this is the continent which is the most vulnerable, because 7 out of the 10 most vulnerable countries in the world are in Africa,” said Al-Hamdou Dorsouma, the officer-in-charge for climate change and green growth at the African Development Bank, which funds many of the climate finance projects on the continent. Speaking via Zoom from Abidjan in Côte d’Ivoire, he pointed out that despite that vulnerability, Africa still lacks access to much climate financing.
The problem is similar in South America, where historical emissions are also only about 3 percent of the global total. Oceania, home to a collection of island nations barely gasping for breath above the rising surf, is responsible for only 1.2 percent of historic emissions — and almost all of that has been generated by Australia. Even India, the world’s third-biggest emitter today and home to more than 1 in every 6 people on the planet, spent so long emitting almost nothing that its contribution still stands at only about 3 percent.
By one analysis, the five countries most vulnerable to climate change are Nigeria, Côte d’Ivoire, Bangladesh, Tanzania and Tunisia. Their total cumulative historic CO2 contribution — meaning ever — is around 7 billion tons. Or, as it’s unofficially known in the United States: a year and a bit.
Mukayiranga said she hopes to see the wealthiest nations take more concrete actions in the near future, including meeting the $100 billion target in 2022 — rather than their latest deadline of 2023 — and basing a post-2025 finance goal on the specific needs of the affected countries. “We are at the forefront of climate change impacts,” she said. “This means, for [the] Global South, heavy rain, floods, drought, landslides, etc., all increasing in intensity and repetition. More than ever, we need climate finance now.”
There is also the issue of what experts call the “quality” of existing climate finance, meaning whether money is provided as loans rather than grants. “That means that poor countries will still be indebted for collecting money to take action on an issue which they did not cause and for which they suffered the greatest burden,” said Okereke. He compared the concept to an arsonist burning down someone’s house and offering only an interest-accruing loan in compensation. “That doesn’t sound like justice to me.”
Biden, in Glasgow, acknowledged the collective responsibility of the U.S. — responsible for around 20 percent of all historic emissions, far and away the leader — and other industrialized nations. “We have to help,” he said, “much more than we have thus far.”
A huge swath of the world is waiting.