Just before the 26th United Nations Climate Change Conference of Parties (COP26) due to take place in Glasgow in October and November, developing countries have raised the alarm to the fact that climate financing has fallen far short of the amount promised by rich states.
In 2009, wealthy nations pledged to contribute US$100 billion a year by 2020 to support the developing world to mitigate and adapt to climate changes. According to estimates from the UN and the Organization for Economic Co-operation and Development (OECD), that target has not been reached.
According to the OECD, in 2013 wealthy states contributed US$52 billion and US$62 billion in 2014 while in 2015 the figure fell to about US$44.6 billion followed by increases to US$58.6 billion in 2016, US$71.2 billion in 2017, and US$78.9 in 2018.
“Over 2016-18, Asia benefited from the largest share of climate finance at 43%, followed by Africa (25%) and the Americas (17%). In terms of distribution by income group, 69% of climate finance went to middle-income countries, 8% went to low-income countries and 2% went to high-income countries, with the remaining 21% allocated at regional rather than country level,” the OECD noted.
During the last G7 summit (comprised of the world’s seven largest economies) in June 2021, the UN chief, the UK, and 48 developing countries appealed to the G7 leaders to meet the commitment of US$100 billion with UN Secretary-General, António Guterres, calling this the “bare minimum.” Amar Bhattacharya, an analyst at the US-based think-tank, Brookings Institution, shared his opinion telling the BBC that:
“The US$100 billion commitment should be seen as a floor not a ceiling. Some progress has been made – but a lot more needs to be done.”
Amongst the G7 states, the largest contributors to the climate mitigation and adaptation budget for developing states are Germany, Japan and France followed by the UK and Canada. The last positions are occupied by the US and Italy.
The US announced it would double the amount of its contribution in April 2021 compared to that which was allocated in 2016 so as to provide US$5.7 billion until 2025. Brandon Wu, director of policy and campaigns at ActionAid USA, described the announced increase as “very low” given campaigners’ expectations that the U.S. should contribute US$800 billion in total by 2030.
Italy has provided just $0.6 billion a year, yet during the latest G20 meeting of environment ministers, held in Naples in June 2021, the Italian administration expressed its willingness to increase the budget.
However, it is expected that further announcements on boosting climate change funding for developing states will be made before the COP26 summit and government ministers of Germany and Canada are to prepare a “credible delivery plan,” aiming to ensure that the pledged US$100 billion will be provided on an annual basis.
It is not only the lack of sufficient resources that is a shortcoming in terms of developing states tackling climate change but also the way the funding is distributed. Three-quarters of the money that had been provided by 2018 by rich countries to poor states for adaptation and mitigation of climate changes was in the form of loans that need to be paid back. The poorest nations received more money in grants than other developing states but this still represented less than half. Bearing in mind that developing countries are heavily indebted and the COVID-19 outbreak has only worsened their situation, it will prove even more difficult to build climate resilience.
While developing countries urge the richest to meet at least the US$100 billion pledge, the International Energy Agency together with the World Bank and World Economic Forum estimate that more than US$1 trillion dollars is needed by 2030 to undertake the energy transition in developing states.
