Monday’s ministerial dialogue on climate finance was a hoot (isn’t it always?!). India, Costa Rica, Vanuatu, Jordan, Bangladesh, and other LDCs demanded a more meaningful definition of climate finance be set forth. The current “definition” is more vague than a convention center venue map, allowing loans to be counted at their face value instead of their grant equivalence. This is misleading (almost as bad as the upside-down map outside zone C) and over-inflates figures for achieving the promised US$100 billion.
As discussions on the NCQG (that’s the New Collective Quantified Goal to you and me, folks) ramp up, let’s take a minute to reflect on how sturdy the $100 bn foundation really is. Developed countries are saying they reached $83 bn in 2020, of which $68 bn was public finance. Ministers from Nigeria and Uganda referred to the recent Oxfam report that estimates the “true value” to be between just $21 bn to $24 bn , a third of what developed countries are reporting.
To make matters worse, 70% of the public finance is in the form of loans that must be paid back. Even more concerning is the increase in non-concessional loans with higher interest rates. These financial instruments are MDBs’ guilty pleasure, representing a ‘have your cake and eat it too’ situation for them. ECO finds it unacceptable that non-concessional loans are counted as part of the $100 bn. Flooding someone’s house and then lending them the moolah for damp-proofing ain’t gonna fly.
Half of the World Bank’s climate finance today is for adaptation, with 80% of that adaptation finance being provided through loans (and half of those loans are non-concessional). It is unjust that developing countries – that have contributed negligible emissions – must pay back money spent on adaptation and resilience. Non-concessional loans are being provided even to countries considered at risk of debt distress by the IMF. An issue that will worsen as interest rates increase in the international capital market.
ECO asks for enhanced transparency and accountability from the World Bank and other development banks. This is vital to building and maintaining trust in financial reports to the UNFCCC. ECO voices the concerns of ministers from developing countries who stated that we need a real increase in public and grant-based resources for adaptation and resilience, which is essential now and for the NCQG.