Up until now, climate finance has always been determined by developed countries – they decided what to provide,when,andforwhat.It’sbeenaWildWest,andarecipe for mistrust. Now that it is part of an international agreement, very close to adopting this COP24 Rulebook package, we have reached a crucial opportunity for developing countries to have their say in what climate finance should look like. By helping shape the rules, emerging economies will steer climate finance to where it is most needed.
We all know climate finance was a crucial element in the deal that was struck in Paris. Developing countries, many of which have contributed very little to the causes of climate change, have taken their share of responsibility in helping to stabilise the climate. But in order to achieve this, they were offered substantial financial support. Paris also recognised that developing countries are often on the frontline of impacts of climate change, while lacking the resources to respond – another good reason to support them financially.
Not less than $100 billion was offered in Copenhagen. Parties have agreed many times, for example in Lima, that developed countries would provide new, additional, adequate and predictable funding to developing countries. When you think about it, the Copenhagen commitment was made close to a decade ago, and we are still in the dark regarding what the $100 billion stood for. The Paris Agreement sets a whole range of priorities and criteria for this climate finance, in article 9.4. There needs to be a balance between adaptation and mitigation; it must be informed by country-driven strategies, priorities and needs; it must prioritize the countries hardest hit and with most limited capacities, particularly least developed countries and small island developing states. Furthermore, it refers to the need for public and grant-based resources particularly for adaptation.
Yet, close to the year when this should all materialise, official reports from the OECD and the SCF paint a very different picture of climate finance. We see that more and more of it is serving mitigation rather than adaptation and taking the form of loans rather than grants. Far from being prioritised, LDCs are having great difficulties accessing climate finance. ECO is particularly surprised about the loans. Aren’t economists warning about an emerging debt crisis in many countries?
ECO understands and supports the likes of Ecuador and Malawi who, in the contact group, asked for the calculation of the real grant equivalent value of loans and other risk instruments that increasingly make up climate finance. They’ve made a very reasonable point, and we don’t understand why, particularly the European Union, is not making a move to support these countries on this issue. They already calculate the grant equivalent value of their ODA in the OECD database, can they not report the same for climate finance?
ECO is wondering how many of the people who are takinghits on the frontlines of climate change are seeing any impact of these funds. The accounting rules that now seem to be negotiated until the late hours of every day are essential for making sure that the support provided actually serves its purpose.
