Last week, the International Energy Agency (IEA) released the World Investment Outlook. ECO was not surprised to see that it shows rich countries are failing miserably at paying what they owe to support a just transition away from fossil fuels and toward 100% renewables globally. Meanwhile, filthy fossil fuels are still raking in over a trillion a year in cash from governments and banks alike.
That’s why, as negotiations continue in Bonn to establish a New Collective Quantified Goal on Climate Finance (NCQG), we must secure trillions each year for mitigation, adaptation, and loss and damage. Funding to address climate crisis impacts cannot be pitted against funding to stop climate crisis causes — there is enough to go around if we get the priorities right.
But in Bonn we see wealthy countries once again shirking their responsibilities, claiming there isn’t enough money to cover the costs, and instead offering the equivalent of pocket change. These rich countries have some tried and failed magical thinking to dodge the bill: a “private sector first” or “derisking” approach that puts profit before people, drowns low-income countries even further in debt to address a crisis they had no hand in creating, and uses taxpayer money to subsidize private benefits.
This “private sector first” approach won’t deliver any energy transition, let alone a just and equitable one. For this, we will need a fair mitigation subgoal that includes public finance for the energy transition that is mostly grant-based, with fair and favorable terms to pay for many of the most-needed projects like 100% renewable-ready grids, affordable universal energy access, public transit, and worker- and community-led planning and programs for a just transition. And yet so far no wealthy governments mention finance needs for a just transition as part of their NCQG submissions.
ECO knows that there is more than enough public money available, it is just poorly distributed: going to fossil fuels, war, and the super-rich instead of the solutions we need. As just one example, while wealthy Annex 1 countries pledged paltry sums towards the Loss and Damage Fund, they continue to provide billions to back climate-wrecking new fossil fuel projects that will only increase the need for, you guessed it, loss and damage finance.
As a start, governments must stop funding fossil fuels and make polluters pay. Year after year, wealthy governments provide hundreds of billions in subsidies to dirty fossil fuels, all while the oil and gas companies have brought in record profits. Ending these fossil fuel handouts and taxing the excess profits of fossil fuel companies could together raise hundreds of billions in public funds.
There is already momentum to stop a particularly influential form of fossil fuel support: international public finance, which has remained skewed towards the fossils. Pledges as part of the Clean Energy Transition Partnership (CETP) are already ending billions a year in financial support that plays an outsized role in building out large fossil infrastructure. If key laggard countries including Japan, Italy, and the United States keep their overdue promises, this initiative can shift $30.2 billion a year and go a long way to cementing fossil free public finance as a global norm.
The list goes on: taxing the rich is yet another tool wealthy governments have at their disposal to raise trillions in public funds. So would canceling unjust and illegitimate debts and rewriting unfair global tax, trade, and finance rules that penalize the Global South and just happen to mirror the colonial relations some leaders claim we have left behind.
The public money has always been there to pay for the solutions we need for a just and livable future. ECO calls for those most responsible for the climate crisis to be held to account and pay up.