Robbing Peter to pay Paul: Climate financing at the expense of other development goals

By Sam Ursu

Robbing Peter to pay Paul: Climate financing at the expense of other development goals

A new report from the non-profit organization CARE International has revealed that 93% of climate financing in developed nations came directly from their development aid budgets, violating multiple pledges and potentially threatening global progress on the UN 2030 Agenda Sustainable Development Goals (SDGs) as well as putting the world at risk of a climate catastrophe.

The CARE International report analyzed climate financing from 23 wealthier nations between 2011 and 2022 and determined that most of it was taken directly from their development aid budgets at the sacrifice of achieving other development goals. This is in direct violation of the pledge these countries made in 2009 at the COP15 climate change summit in Copenhagen to collectively mobilize $100 billion per year until the year 2020 on climate change, separate and additional to their existing development aid commitments. However, not only did the countries fail to mobilize less than the promised $100 billion per year (in some years, it totaled just $44.6 billion) on climate finance, but nearly all of it was taken from their development aid budgets, which themselves have not been increased (and, in some cases, have been decreased).

“The vast majority of climate finance is just development finance in disguise. Money is being diverted towards climate change at the expense of health, education, women’s rights, and poverty alleviation,” said John Nordbo, a senior climate advisor at CARE International and a co-author of the report.

Even as recently as the 2022 United Nations Framework Convention on Climate Change, it was made abundantly clear that “new and additional funds” must be mobilized to combat climate change so that progress on achieving the SDGs could be maintained. While wealthier nations have failed to honor their pledges, many less-developed countries have invested time and effort into designing projects to mitigate climate change but were unable to implement them due to a lack of the promised financing over the past 12 years.

Falling down on the job

According to the CARE International report, wealthy nations reported $295 billion of spending on climate finance between 2011 and 2020, but only $20 billion of that was not sourced from their development aid budgets, meaning that only 7% of funds were in addition to the commitment to allocate 0.7% of GNI towards ODA budgets.

As a result, progress towards non-climate-related Sustainable Development Goals such as ending poverty and hunger have been severely affected by a lack of funding.

Out of the 23 wealthier nations which made the climate funding promise in 2010, only three (Luxembourg, Norway, and Sweden) have even been able to maintain an overall development aid spend of 0.7% of GNI, and these three nations were also the top-ranked for spending additional funds on climate change.

Meanwhile, the United States has spent just 0.01% of its GNI on climate financing despite being the second-largest emitter of greenhouse gasses in the world.

Furthermore, the total amount of climate financing provided by wealthier nations since 2011 has been extremely erratic, ranging from a low of just $44.6 billion in 2015 to a high of $83.3 billion in 2020, all of which is well short of the oft-repeated pledge of $100 billion per year. Additionally, the source of some of those funds was from multilateral institutions, thus further diluting the direct contribution from wealthier nations towards providing climate financing for developing countries.

Even bigger promises

Currently, wealthier nations are struggling to commit 0.7% of their GNI toward development goals and honor their pledge of $100 billion annually in additional climate financing, but they have, nonetheless, agreed to adhere to the United Nations New Collective Quantified Goal on Climate Finance (NCQG), which is set to take effect in 2024.

Under the Paris Agreement of 2015, Article 9, paragraph 3, which served as the basis for the original annual target of $100 billion in additional climate financing, the NCQG has been established to create a framework for meeting and exceeding the yearly $100 billion goal. Currently, working groups from Paris Agreement party members are negotiating to nail down the specifics of the NCQG, but there is little objective evidence that more ambitious climate finance goals can be met. But there is hope that more precise definitions of what constitutes “new and additional” (to existing development aid budgets) spending can be agreed upon as well as what exactly counts as climate finance despite deep divisions amongst participants.

The World Bank estimates that the world actually needs approximately $600 billion a year in financing in order to meet climate mitigation goals, but it remains extremely unclear how or if this target can even be met, especially at a time when wealthier countries like Germany are facing severe budgetary shortfalls. Even Sweden, which has been at the forefront of both development aid spending and (additional) climate change financing, has just slashed its own climate budget, and both Sweden and Germany have reported that they will be increasing their carbon dioxide emissions next year due to problems with sourcing low-emission energy supplies.

With wealthier European nations suffering from what the EU Commissioner for Economic Affairs calls a “double crisis” as a result of multiple member states entering an economic recession as well as drastically rising fuel costs as a consequence of Russia’s unprovoked aggression against Ukraine, it remains to be seen exactly how wealthier nations are going to meet their own climate finance targets, much less increase funding for climate change mitigation efforts across the Global South. Already, the EU’s biggest polluters (Germany, France, and Italy) are falling well short of meeting their pledges to transition to a net zero economy at home.

Faced with multiple threats in the form of rising energy costs, economic recession, shrinking budgets, and negative progress in achieving the 2030 Sustainable Development Goals, there is now a serious risk that the climate change mitigation goals of the Paris Agreement will not be met despite the United Nations Secretary-General warning that the world is now in an era of “global boiling.”