As the world’s biggest donor for climate finance and disaster relief, the EU has the potential to play a pivotal role in the current climate negotiations. Though the recent pledges from European countries for pre-2020 finance are welcomed, a lot more needs to be done to ensure that European money truly meets the needs of vulnerable populations around the world. Here’s a look at six ways for the EU to improve its climate finance.
Equal amount of funding for mitigation and adaptation
An OECD report published last October on climate finance found out that only 16% of climate finance is devoted to helping developing nations cope with the impacts of climate change. If the EU is to be considered a credible partner for developing and vulnerable nations, it has to scale up the amount of finance that directly targets adaptation actions in order to reach a 50:50 balance between mitigation and adaptation.
New and additional finance
In numerous member states, the money pledged for climate finance comes from the development aid budget. In Belgium, for example, most of the EUR 50 million that were pledged at the Leaders’ Event comes from an already reduced development aid budget. It’s the same situation in the UK although their development aid is still increasing. This means that some schools, hospitals and other development projects won’t take place anymore because the money initially allocated to them is redirected towards climate activities. This is why civil society is strongly pushing to ensure that all climate finance is additional to development aid and not merely a relabelling of existing commitments.
There are several cheap and easy ways for the EU to mobilize additional climate finance. The first one is the establishment of a financial transaction tax that could help fund renewables and climate change adaptation projects in vulnerable countries. The second would be to shelve part of the European Emissions Trade System (ETS) revenues for climate action in developing countries. According to WWF, if 10% of the EUR 8 Billion generated yearly by the ETS is set aside for climate finance, this could raise as much as EUR 3 billion annually from 2020.
Predictability of financial flows
A major issue with current finance pledges in Europe is that they do not always include a clear roadmap of how and when the money will be delivered. For example, in November, the EU was incapable to provide any indication on its 2015 contribution. This is a critical issue for beneficiaries as uncertainty on financial support strongly limits their ability to adequately plan climate-related activities.
Post 2020 finance
In relation to predictability, it is important that the EU pushes for an ambitious climate finance package that enshrines the principle of five-year cycles for collective finance targets that address both adaptation and mitigation in a separate way. In addition, such a package could call on Parties to submit, every three years, their planned contribution to these targets.
Fossil fuel subsidies
Finally, the EU must address the critical issue of fossil fuel subsidies. Every year, at least EUR 35 billion are spent by member states on these harmful subsidies. This is two and half times more than Europe’s overall contribution to climate finance. Although the EU has agreed on phasing out harmful subsidies, no concrete actions have so far been seen to move in that direction.
Beyond the numbers, climate finance is also about how the money is delivered. It is only by providing its fair share of climate finance that Europe can build trust and engage in a truly constructive partnership with developing nations around the world. Working together on an honest and fair basis is the only way we will be able to address climate change.