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Cop27 must not ignore the clarion call for climate finance

Poorer countries face mounting debt unless the system changes.

By Leia Achampong

In early September satellite maps showed that unprecedented flooding in Pakistan had submerged an area approximately the size of the United Kingdom. The necessary infrastructure repairs are estimated at $10bn, and this does not even take into account loss of livelihoods, heritage sites, or other socio-economic costs.

Pakistan’s climate plight is one shared by many countries. The unrelenting nature of climate change – which probably exacerbated the extreme monsoon that caused the floods – means that some families in poorer nations lack food and water, and girls are denied access to education. Communities are displaced as they try to escape floods and droughts. The Intergovernmental Panel on Climate Change estimates that an additional 35 to 132 million people will be pushed into extreme poverty by 2030 if climate change is left unchecked. What’s more, there is thought to be an almost 50 per cent likelihood that between 2022 and 2026 the world could temporarily exceed a global temperature rise of 1.5°C above its 1850-1900 average. In this scenario communities would experience climate impacts at far higher magnitudes and frequency. 

It is against this backdrop that Cop27, the UN climate conference, has taken place. One crucial job for rich nations attending is to deliver high-quality and sufficient quantities of climate finance to help poorer nations. The conference, in Sharm el-Sheikh, Egypt, is an opportunity for government ministers to examine the current climate finance goal, future goals and the projects that need to be financed. Ministers need to consider what is happening in Pakistan, the Cayman Islands, Somalia and other countries affected by extreme weather and climate problems this year, and agree on a path that adequately supports communities. These are countries that have little historical responsibility for the causes of climate change but are being ravaged by its consequences. 

One issue has been how to get rich nations to fulfil promises of climate finance. It is shocking to see how far behind the agreed goal these nations are. To date they have provided just over half – $418.4bn of $800bn – of the funding that should have been contributed in 2013-2020. 

This increases the urgency of setting a new global climate finance goal by 2024 to ensure poorer nations do not have to bear the financial burden of tackling climate change on their own. It is particularly pressing as it is estimated by the UN that they need up to $5.9trn to implement their Paris Climate Agreement action plans by 2030. With this in mind, rich nations must ensure that the new Climate Finance Delivery Plan, which will summarise progress made on the current $100bn-a-year climate finance goal, set over a decade ago in 2009 and intended to be met by 2020, is not simply a compilation of previous commitments but outlines measures to meet shortfalls in climate finance and expand access.

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[See also: Cop27 leaders – hold your nerve and reinforce the need for urgent action

One of the major issues that must be addressed is the amount of loans that are being used. The way it stands now, once poor nations have repaid these loans (in most cases with interest) they will have essentially funded their own climate action, despite historically contributing the least to causing climate change (through greenhouse gas emissions). More than 70 per cent of climate finance was provided as loans in 2020. This has also affected national debt levels in poorer nations and reduced funding for public services, such as access to drinking water in the wake of climate impacts. Instead of accruing debt in this way, an automatic suspension of debt should be granted after a disastrous event such as the floods in Pakistan, as well as debt cancellation for all countries in need.

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Making matters worse, rich nations seem intent on including the world’s largest lending institutions, such as the World Bank, in strategies to increase climate finance. If this were to happen, it would amount to actively creating space for extra loans that could cause even more indebtedness, which is a huge concern for poor nations with unsustainable debt. Instead, rich nations should be working to build trust and acting in solidarity by prioritising grants. 

Grants are especially important when it comes to finance to address loss and damage, the consequences of climate change that cannot be avoided. For years rich nations have ignored this issue, which the current global climate finance goal does not cover. While a few wealthy countries, such as Denmark, have stepped up, it is evidently too little, too late. 

Bangladesh, for example, has been forced to try to establish a loss and damage mechanism to support its communities after climate-related disasters. Vanuatu is leading a coalition of countries seeking an advisory opinion from the International Court of Justice on climate change, an initiative resulting from these countries experiencing loss and damage. 

Before Cop27 some poorer nations were concerned that the summit would not pave the way for the quantity and quality of climate finance that is needed now and in the future. Much of this concern was based on perceived lack of engagement from rich nations in various climate finance meetings in 2022.

But there is a clarion call that must not be ignored for the new global climate finance goal to usher in real change. It must cover mitigation, adaptation and loss and damage measures, and enshrine genuine access to financial grants. This time, those countries and communities most impacted must have a say over how and where finance is used. Once agreed, the goal must be regularly reviewed to evaluate progress and evolving needs, and be covered by a comprehensive monitoring and reporting framework.

Tackling climate change was always going to require a global effort, so international climate finance was always going to be extremely important. Rich nations must intensify their climate finance efforts and ensure people and communities are supported.

This article is a part of a series exploring what we need from Cop27. See more in the series here.

[See also: The African Cop must ensure rich nations pay up]

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