Global climate action needs reliable financial data
Fifteen days before the adoption of the Paris climate agreement in 2015, the Indian government released a report that could have jeopardized the talks.
Developing countries were invited to commit to reducing their greenhouse gas emissions. In return, they expected developed countries to provide climate finance totaling $ 100 billion annually by 2020. Data released by the Organization for Economic Co-operation and Development (OECD), a body that represents many of the world’s richest countries said developed countries are on track to meet this goal, providing around $ 50 billion annually to low- and middle-income countries. But India said the actual figure was closer to $ 2.2 billion, and the figures reported by the OECD were open to “‘gambling’ and exaggeration,” adding to tensions between the two. parts.
The Paris meeting was saved. Both developed and developing countries have pledged to reduce greenhouse gas emissions and come back in 2020 with more ambitious commitments. But the arguments over funding data have persisted. Five years later, they cast a shadow over the next United Nations climate conference (COP26), scheduled for November, where nations are expected to meet in Glasgow, UK, to take stock of their climate commitments.
This is a crucial year for efforts to combat climate change. A number of countries are committing to work towards achieving net zero emissions. And the UK is making a determined effort to get banking, other sectors of private finance and industry to commit to greening their processes and operations. But there has been little progress in resolving disagreements over the public provision of climate finance. According to the latest data from the OECD, developed countries mobilized nearly $ 80 billion in 2018, including 62.2 billion from public sources and 14.6 billion from private financing. If increases continue at the same pace, these countries are within reach of the target of $ 100 billion by 2020.
But other studies do not support these results. According to a report released by aid group Oxfam last October, specific climate assistance provided by developed countries amounted to no more than $ 22.5 billion in 2017-18. And last month, researchers commissioned by UN Secretary-General António Guterres found that donors were over-reporting climate finance data by $ 3-4 billion.
Such disagreements are nothing new, but they are once again fueling mistrust ahead of a crucial climate meeting, said Saleemul Huq, director of the Dhaka-based International Center for Climate Change and Development. Ideally, verification should be carried out by organizations or processes that all parties can trust. Only then will there be any hope of resolving these disagreements.
Climate finance has been a point of contention since at least 1992, when the Earth Summit was held in Rio de Janeiro, Brazil. Because the richest countries are largely the source of the emissions responsible for global warming, they have agreed, albeit reluctantly, to help the most vulnerable countries protect themselves from the effects of climate change. The Global Environment Facility has been established, headquartered at the World Bank in Washington DC. But its complicated rules have made it difficult to secure finance for some of the most vulnerable developing countries, especially for climate adaptation projects.
Over time, developing countries have struggled to persuade the international community to create funding bodies, such as the Green Climate Fund and the Adaptation Fund, better able to meet their specific needs. But donor countries have mostly avoided providing climate finance through these channels, preferring to finance countries directly or through multilateral development banks such as the World Bank.
A major point of contention is the fact that over 80% of climate finance provided to developing countries includes loans. The share of climate finance granted in the form of grants has decreased: between 2013 and 2018, for example, it fell from 27% to 20%. The lending trend is problematic, both because loans have to be repaid, with interest, and because they tend to be given for projects that can demonstrate a return on investment, such as power generation. Loans are less likely to be obtained for projects, such as building flood defenses, which are designed to help countries become more resilient but do not make money.
The pandemic has also led to downgrades in the credit ratings of many countries, and the subsequent reduction in borrowing capacity has hit the poorest countries hard. Ultimately, the nature of loan financing means that these countries will end up taking on more and more debt – as the costs of damage from climate change rise as temperatures rise.
But it is the lack of accepted and reliable accounting rules for climate finance that fuels mistrust. The absence of such rules is a major oversight in climate diplomacy, say Romain Weikmans of the Free University of Brussels and Timmons Roberts of Brown University in Providence, Rhode Island.1.
The authors of India’s 2015 report arrived at the figure of $ 2.2 billion by counting the money they claimed had been disbursed. In contrast, donor data includes all pledged funding, whether or not the money reached the recipients. OECD data also includes funding for projects that are only partially linked to climate change mitigation.
Another complicating factor is that OECD researchers are working on a rulebook agreed upon at a previous climate meeting, COP24, held in Poland in 2018. UN member states seek to improve the accuracy of the data. But even with clear criteria and better reporting, one thing will not change: the OECD is an intergovernmental body whose leadership does not represent the majority of nations. If we want to avoid recurring arguments, we need to find a climate finance verification mechanism that fully incorporates the perspectives of non-OECD members.
“Meeting of the Spirits” necessary
To agree on new accounting rules, both developed and developing countries should consider seeking advice from a trusted third party who already has a role in setting data standards, but who is not. involved in international diplomacy. It could be the United Nations Statistical Commission or the International Organization for Standardization. “Countries should come up with proposals,” says Selwin Hart, who advises Guterres on climate finance. “There has to be an agreement so that all parties can be sure that there is accuracy and accountability,” he adds.
The COP26 meeting is less than a year away. Widely regarded as the world’s last chance to take meaningful and unified action on climate change, it must succeed. This means that developed and developing countries must agree on more ambitious targets for reducing emissions and ensuring that the poorest and most vulnerable countries to climate change receive support as they scale up their businesses. economies more sustainably and prepare for the inevitable effects of global warming. The $ 100 billion pledge is a fraction of what is needed. Ultimately, investments in the world must change to support sustainable development. If world leaders can accomplish this, Earth might still have a chance.