As frustrations mount among developing nations bearing the worst of climate change’s consequences, the governments of Canada and Germany have produced a new report highlighting ways in which developed economies continue to fall short in providing financial support.
In doing so, they have set the stage for an edition of the annual United Nations annual climate summit – COP27, to be held in Egypt in November – at which tensions around that relationship threaten to bubble over.
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Work between Canada and Germany to hold countries such as theirs to account began last year at the request of the British government, which hosted COP26. They started with a progress report on the long-standing promise to provide developing countries with at least US$100-billion in annual climate finance by 2020 – a sum that has still not been reached.
The latest report, overseen by Environment Minister Steven Guilbeault and German climate envoy Jennifer Morgan and released on Friday morning, includes updates on some modest new commitments toward the $100-billion total, which may finally be achieved starting in 2023.
It also flatly acknowledges that even that target amount is not nearly sufficient, and calls for developed countries to turn their attention to setting an “effective and fit-for-purpose” annual goal from 2025 onward.
The bulk of the report, however, is focused on more specific areas of climate finance where richer countries need to do better. Among them are ensuring that a specific portion of the committed funds go toward helping countries adapt to already inescapable climate-change consequences (as opposed to reducing their emissions), bringing greater accountability to the international development banks through which much of the money flows, making it easier and less bureaucratic for vulnerable countries to actually access the funds and finding ways to bring more private dollars into the mix.
The adaptation imperative could be most top of mind at COP27. There is increasing recognition that it’s especially hard for countries to attract that form of investment, and a series of recent disasters – such as massive floods putting much of Pakistan underwater, and historic drought in the Horn of Africa – has underscored the urgency of strengthening resilience.
The final agreement at COP26 last year included a call for adaptation finance specifically to be doubled from 2019 levels by 2025, which would require it to reach about US$40-billion annually.
The report suggests some progress on that front, itemizing pledges by contributor countries to designate a share of their overall climate-finance spending explicitly for adaptation. That includes Canada, which has promised adaptation will make up at least 40 per cent of its total annual commitment (which averages slightly above $1-billion). It also shows that some other countries have either made no such commitments, or ones proportionately too small to hit the overall target.
Perhaps more worryingly, it emphasizes the need for greater transparency, because it’s difficult at this point to know exactly how much money really is going toward adaptation. That’s been a common criticism surrounding the $100-billion target generally – with groups such as Oxfam International alleging that much less money than reported has actually flowed – but seems to be a particular challenge when breaking it down beyond the topline numbers.
The report is most pointed, however, around the development banks, which according to the report (citing the Organization for Economic Coordination and Development) were responsible for over US$30-billion of the committed climate-finance funds as of 2020.
Some of those entities, such as the African Development Bank, are praised for recent progress in getting money out the door relatively quickly and responsively. But the report’s overall thrust is that the banks need to be more transparent about where the money is going (especially when it comes to adaptation), improve accessibility and responsiveness to countries they are supposed to be helping, better co-ordinate with each other and more ambitiously try to mobilize private finance.
The report repeatedly calls for countries to more actively use their status as shareholders in the development banks to push them to strengthen their efforts. And it wades in particular into ongoing controversy around the leadership of the World Bank, which it notes saw “unprecedented calls for reform” earlier this month – including from U.S. Treasury Secretary Janet Yellen – because of its perceived lack of climate ambition and focus.
Ms. Morgan is among those who have called for the replacement of World Bank President David Malpass, who at one point this year declined to answer whether he believes the science of climate change. (Mr. Guilbeault and other Canadian officials have been more circumspect on that subject.)
Although the report could help put the spotlight on the development banks, as leaders and delegates gather in Egypt, it will do little to alleviate the heat on the governments of the richer countries themselves.
The biggest flashpoint in that regard may not actually be financing for climate-change mitigation and adaptation, but the push by developing countries for the separate establishment of loss-and-damage funds. Those would be a form of reparations for disproportionate suffering from climate-change consequences by poorer countries, despite their historically minimal contribution of greenhouse gas emissions, which the report recognizes as an area of “intensified debate,” despite it not falling under its purview.
While some developed countries (including Germany) have begun to work on loss-and-damage mechanisms and others (including Canada) express openness, prospects for broad agreement on the subject at the summit are generally considered to be low. That’s in part because of the improbability of some governments that would have to be major contributors, including the United States, being able to get the new form of spending approved domestically.
But the long-promised US$100-billion in financing, which was supposed to be a way for rich countries to prove they take the climate plight of poorer ones seriously, will still be a source of friction as well, because of its delayed delivery.
And as Friday’s report shows, even once the target total is finally reached, there are fundamental issues to be addressed and higher expectations to be met in terms of how it is delivered.