climate finance
Demonstrators carry banners and loudspeakers in a global strike related to climate change issues. Credit: Getty Images

“Fair Climate Finance”…a hopeful goal and a painful reality”

The Climate Policy Initiative report estimates that adequate funding is estimated at $4.35 trillion annually, an increase of 588% over current funding.
The Climate Policy Initiative report estimates that adequate funding is estimated at $4.35 trillion annually, an increase of 588% over current funding.

In the Danish capital, Copenhagen, developed countries pledged in 2009 to provide climate finance of $ 100 billion annually to developing countries, in order to mitigate and adapt to the effects of climate change by 2020, and even now at the end of 2021, we are still seeking the same number, despite the changes across the whole world after the spread of the Covid-19 pandemic.

Although more than a decade has passed since the Copenhagen summit, the goal has never been met, and developed countries provided a total of $79.6 billion in climate finance in 2019, an increase of only 2% from the previous year, according to the OECD report .

In parallel, the Covid-19 pandemic has created the world’s worst humanitarian and economic crisis since World War II, as described by a United Nations report .

The obligation of the advanced industrial countries to climate finance was not only “voluntary participation” based on their technological and economic strength in contrast to the poverty of developing countries only, but also came out of fairness in bearing responsibility in the first place, as 10 advanced countries contribute to the export of more than two-thirds of greenhouse gas emissions. With 68%, it is led by China, the USA, and the European Union, while only 3% of emissions come from 100 other countries.

Climate finance at the climate conference table

The issue of climate finance was one of the four goals of COP26, and it was supposed to seek to achieve net zero emissions by 2050.

There was a discussion about the extent of adherence to the specific amounts approved by the Paris Climate Agreement in 2015, and the challenges facing equitable and gender-sensitive financing, and its recommendations came out in the end calling for the need to mobilize the estimated $100 billion financing again.

What does climate finance mean? How does it become fair? What are the obstacles to its access to developing countries?

The United Nations defines climate finance as support for efforts to reduce greenhouse gas emissions, or to help societies adapt to the effects of climate change, and it flows from industrialized countries that have the money and technological expertise towards the poorest and most vulnerable developing countries, and passes through two tracks, the first is the “general track.” That is, through governments, often targeting investments that contribute to the public good such as strengthening the banks of a river to protect the population from drowning, or the “special path” that plays an important role in green economy projects.

On the eleventh of November, the conference hosted a session on financing sustainable cities, during which they discussed the constraints they face in preparing and financing climate mitigation projects, bridging the gap between required and provided financing, and promoting the transition to a green economy. Speakers reviewed some projects to support cities’ adaptation to climate change, and they also called for investment and money to be invested in climate-friendly and low-carbon infrastructure projects.

Heik Hein, Director of Climate Policy at the German Federal Ministry for Economic Cooperation and Development, and a speaker at the session, found that although final numbers for 2020 are not yet available, it has become clear that developed countries have not mobilized $100 billion. Although it is disappointing, the Delivery Plan published prior to COP26 is confident that this target will be achieved in 2023.

Heik Hein – Director of Climate Policy at the German Federal Ministry for Economic Cooperation and Development

And she continued in her interview with Al-Alam: “Germany has committed to paying its fair share of climate finance in 2020 from public and private sources, amounting to approximately 8 billion euros.”

“Working to bridge the gap between the required and actual funding is not limited to granting money only, but also includes helping developing countries to improve their ability to access financing, optimal use of available resources, and providing them with technical support, which ultimately makes the achievement of financing goals open and transparent,” according to Hein.

At the local level, the German official believes that cities need huge amounts of climate finance directed to adaptation measures; Because 90% of the world’s urban areas are located along coasts, making them vulnerable to sea-level rise, and although many cities have drawn up initial plans to address these challenges and launched low-carbon and climate-resilient infrastructure projects, they are still unable to Turning these ideas into real projects; to poor funding.

“The Cities Climate Finance Gap Fund and C40 Climate Finance Facility support cities in turning their ideas into bankable projects because effective climate mitigation and adaptation require new and innovative solutions on the one hand, and empowerment to negotiate financing agreements on the other hand.”

And she continued: Turning projects into reality involves high costs in all aspects, so it requires all stakeholders to change their ways of working, especially since the Covid-19 pandemic has made the situation more difficult, so cities had to turn their attention to managing the epidemic, which imposed restrictions. Economically and led to the loss of some of their jobs, and the budget of governments became unstable with high social spending, low revenues and increased debt.

In response to a question about the possibility of financing conditions that some countries may see as unfair and hinder their economic growth, Hein said: “Germany is committed to supporting developing countries for better access to climate finance, and seeks to ensure that all financing flows are supportive and do not undermine the transition to a world Low-emission and climate-resistant,” stressing that Germany renewed this support at the last climate conference.

In the same context, the current total financing flows are far from the estimated needs, as seen in this year’s Climate Policy Initiative report, which said that adequate financing is estimated at $4.35 trillion annually, a 588% increase over current financing.

This number may seem very large if we consider that the world has not met a hundred billion dollars in climate finance so far, but Barbara Buchner, Global Director of the Climate Policy Initiative, commented in her conversation with Al-Alam that the global financial system is able to invest at these levels, “For example, the current level of investment in the light vehicles and new building sectors exceeds $7.5 trillion annually, which are sectors that produce a high proportion of carbon emissions,” she added.

Barbara Buchner, Global Director of the Climate Policy Initiative

Buchner, who was also one of the speakers in the session, believes that the lack of reporting and monitoring systems for tracking the flows of climate finance and its effectiveness is an obstacle to the flow of capital to projects compatible with sustainability, and believes that the separation of development finance from climate finance must stop, but rather Bringing them together in many areas such as energy, sustainable agriculture, and sustainable infrastructure, will also require more negotiations with donors and give them a good reason to provide climate-oriented development assistance at the same time.

It believes that cities are struggling to prepare bankable projects compatible with sustainability due to lack of capacity, lack of understanding of climate risks and how to structure mitigation and adaptation projects, while at the same time facing enormous pressure to provide basic services and address infrastructure deficits with limited budgets.

She added that the public and private sectors need to adopt more innovative methods to stimulate investment, and micro-climate projects must be supported by providing affordable financing that includes banking services and loans, granting the necessary training, and facilitating access to technology such as renewable energy sources and energy-saving equipment, explaining that The small size of these projects and their weak experience, in addition to the lack of guarantees, limit their access to services.

While some countries provide pure climate finance, there is the so-called climate co-benefits finance, which the World Bank defines as supporting climate action while promoting development goals, and this type of project occupied 62% of the Bank’s projects last year.

Egypt and the need to strengthen institutional work

The difficulty of developing countries in accessing adequate financing is not only related to the lack of allocated funds, but also to local obstacles, such as their inability to determine the size of their financing needs, and the absence of a central entity for inventorying greenhouse gases and tracking mitigation and adaptation measures, and therefore it is difficult to access accurate data. Climate finance is creating robust information systems and training staff to prepare donor-acceptable funding proposals, according to the report Egypt submitted to the United Nations Convention on Climate Change in 2018, the most recent to date.

In the previous report, Egypt could not put a specific classification on the climate finance it receives; Because it could not separate it from the total development amounts it receives, but considered it related to grants and soft loans, and excluded commercial loans and official development aid for projects that were implemented before 2015, and stressed that climate change measures are “voluntary and conditional on providing financial and technical support, taking into account the right of states. developing countries in achieving sustainable development and eradicating poverty.

Egypt identified four sectors that need to improve their reporting capabilities, namely agriculture, energy, industry and waste as the main sources of emissions, while the sectors of water resources, irrigation, agriculture, and coastal protection are the most vulnerable to climate change.

Egypt ranked first in obtaining climate finance in the Middle East and North Africa with 29%, according to a report by the “Climate Finance Update” website – an independent website that collects data on climate finance initiatives for developing countries – followed by Morocco with 19%, of the total financing climate of $1.5 billion between 2003 and 2020.

Saber Othman, former director of the Department of Adaptation to Climate Change at the Egyptian Ministry of Environment and former coordinator of the United Nations Framework Convention on Climate Change, sees the necessity of having a plan with specific goals, timing and cost to overcome the obstacles mentioned in the report. Many developed countries, but it is not implemented, so it is as if it were not.

On the other hand, Osman believes that Egypt needs to strengthen institutional work so that it can benefit from funding optimally. Because the weakness of the current institutions leads to poor benefit, and most projects are repetitive or focus on certain aspects without the other, he adds: “For example, we do not have systems that enable us to calculate losses, when any depression and heavy rains occur, as happened on March 16, 2020, we cannot Knowing and identifying those affected, and there is no way to compensate them, which raises the importance of databases, early warning systems and insurance systems.

He added that, for example, the awareness-raising sectors for farmers take a lot of focus, while the sectors of infrastructure, institutional systems, data collection, monitoring, development of early warning and insurance systems, crop development and health improvement do not receive enough attention, and the implementation of most projects is for pilot activities only. Therefore, the experience is not generalized for the most part. to many difficulties.

He added that the negative effects of climate change have increased on the affected sectors such as agriculture, water and coastal areas, but the Covid-19 pandemic has attracted attention, and we see this, for example, in the impact of the mango crop this year.

Is the priority adaptation or mitigation?

Climate finance does not go to one destination. There are funds allocated to “mitigation” measures, i.e. reducing carbon emissions or enhancing greenhouse gas sinks, and others to “adaptation,” i.e. adapting to the actual or expected climate, reducing the damages of climate change and exploiting beneficial opportunities.

On the public scene, long-term mitigation of carbon emissions may seem the definitive solution to protecting the world from the effects of climate change, but the path of “adaptation” also relates to the current protection of individuals from climate disasters, and to securing their food that keeps them alive.

So far, the world has not been able to hold the stick in the middle and achieve the required balance between mitigation and adaptation, as recent studies and reports indicate that the largest proportion goes to mitigation in the framework of the tireless pursuit to keep the Earth’s temperature below 1 and a half degrees Celsius by 2030, and in light of the need to reduce Emissions will be halved in the next eight years, according to the latest Emissions Gap Report.

Adaptation finance still represents only a small proportion of overall climate finance at around 20 percent, and in contrast, the estimated costs of adaptation in developing countries are five to ten times greater than current flows of adaptation finance.

Annual adaptation costs in developing countries are estimated at between 140 and 300 billion dollars by 2030, according to the United Nations report on the adaptation gap. US dollars only in favor of adjustment.

In January of this year, the “Adaptation Alliance” was formed, and initially aimed to focus on the health, infrastructure and water sectors this year, and the World Bank – the largest source of climate finance in developing countries – announced the allocation of at least 50% for adaptation measures. With climate impacts in his new financing plan, a simple step on a long, extended path; In pursuit of fair spending on climate issues in the world.

This story was originally published on The Scientific American, with the support of Climate Tracker.

Hadeer El-hadary
Hadeer El-hadary is a freelance Egyptian journalist. She’s written for Egyptian and Arab websites such as Scientific American, Vice Arabia, and Shorouk News. Her work focuses on the topics of environment, climate change, science, health and women’s rights. She’s won an award from the Egyptian Journalists Syndicate for an environmental story about converting date palm seeds into fuel and other products, and another award from Plan International organization and the Ministry of Social Solidarity for a story about discrimination against women in job interviews.