Let's Talk Finance
5 years, 1 month, 20 days, 18 hours
31 May 2024
It was 15 years ago, in 2009 at COP15, that developed countries first committed to invest in decarbonisation (‘mitigation’) and climate resilience (‘adaptation’) in developing countries.
Diplomatically, the many COP communiques that have since confirmed that commitment don’t articulate precisely why, but clearly both some sense of responsibility and self-interest underlie it. It was a year later, in 2010 at COP16, that it was arbitrarily decided the amount should gradually increase to at least $100 billion a year from 2020. The commitment was reconfirmed as part of the Paris Agreement in 2015, but when I went to COP26 in Glasgow in 2021 the fact that only $80 billion had been allocated in 2020 lit the fuse on the loss and damage row that ran through COP27 before being defused at COP28 last year.
It is a subset of the bigger issue of the urgent need to scale up climate investment. The UNFCCC estimate that $2.5 trillion a year needs to be invested, and we are only at about 30% of that level today. Developing countries might, and do, argue that $100 billion in their direction is not enough. Much of the money flows as loans, leading to arguments that it just drives indebtedness in poor countries, and some of the money comes tied to trade obligations. But allowing for all that, it seems to me a cause for celebration that the recently-published OCED report Climate Finance Provided and Mobilised by Developed Countries in 2013-2022 reveals that in 2022 the level of climate finance to developing countries rose to nearly $116 billion.
Of the $116 billion almost 80% is public funding from multilateral agencies and direct from individual countries. So whilst the amount of private finance that is flowing has increased significantly (to nearly $22 billion), it is where everyone understands there is still huge scope to unlock more. This is particularly true in relation to climate adaptation investment which is still tiny at $3.5 billion. Big thanks to colleague Avery Johnstone for sharing and summarising the report.
