Can COP26 live up to climate finance hype?

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Residents of Les Cayes, Haiti, waking through damaged streets in the aftermath of Hurricane Matthew, the category 4 storm in October 2016. Copyright: UN Photo/Logan Abassi, (CC BY-NC-ND 2.0)

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  • Rich countries ‘lack credibility’ on climate finance pledges
  • Developing countries denied money monitoring mechanism
  • Hopes pinned on COP27 for action on climate finance

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Despite failing to secure funding for the long-term impacts of climate change, global South leaders say they will take the momentum generated on climate finance at COP26 to next year’s summit in Egypt.

Ahead of November’s Glasgow climate change conference, COP26, climate scientists and civil society from the global South flagged finance for climate adaptation, mitigation, and the irreversible impacts of climate change — known as loss and damage — as a key priority.

Rich countries agreed in 2009 to mobilise US$100 billion a year in climate finance by 2020 — a pledge which has not yet been fulfilled. In spite of this, dollar signs flashed across announcements at COP26 as political leaders promised millions in a litany of climate finance pledges, declarations and schemes.

These included $413 million for the Least Developed Countries Fund; $40 billion by 2025 for adaptation funding; more than $450 million to locally led adaptation; and $356 million for climate financing mechanism the Adaptation Fund.

“Not only do we need to take that with a pinch of salt, we need to take it with a bucket of salt.”

Saleemul Huq, International Centre for Climate Change and Development, Bangladesh

And funds were committed for developing economies via the Accelerating Coal Transition, an investment programme of nearly $2.5 billion touted as a “first-ever effort to advance a just transition from coal power to clean energy in emerging economies”.

But with previous financial commitments still unmet, the new pledges were deemed less-than-credible by seasoned climate negotiators.

Delivery and monitoring

There are no mechanisms or frameworks in place to monitor or manage the delivery of the money promised by developed countries, says Saleemul Huq, the director of the International Centre for Climate Change and Development (ICCCAD) in Bangladesh.

“One of the things that the developing countries asked for was a mechanism,” Huq says. “How are you going to deliver it? What’s the plan? How is it going to be distributed? Through which channels are you giving it?”

He said that interpreting pledges was complicated. The Organisation for Economic Co-operation and Development reported that less than 80 per cent of promised climate finance had been delivered and the annual $100 billion was unlikely to materialise until 2023.

But analysis by development organisation Oxfam International suggested that only about $20 billion was ‘climate-specific net assistance’. “The rest was double counted development assistance that [rich countries] claimed was also climate finance,” Huq says.

“Their credibility is shot. First, they promise and don’t deliver and then when they say they delivered they actually haven’t delivered. Not only do we need to take that with a pinch of salt, we need to take it with a bucket of salt.”

Quality of finance

Another crucial issue is whether climate finance comes in the form of debt or grants — known as the ‘quality’ of finance.

Camila Isabel Zepeda Lizama was the head of Mexico’s delegation at COP26 . She said that historic greenhouse gas emitters were denying climate-vulnerable states the financial assistance they needed to cope in a warmer world.

She said that beyond simply making cash available, quality finance would be crucial to adaptation. “The current financial infrastructure is not delivering those resources effectively,” Zepeda said.

“You have to go through a long list of bureaucratic steps that take about five years. [The finance is] not arriving urgently.”

Poor quality climate finance was forcing developing states into debt, Zepeda said. “These resources are not donations, they are loans,” she said. “And if they are donations, they ask for seven to one co-financing. For every peso they give you, the government … has to put seven pesos.”

Quality of finance for loss and damage is essential, says Maria Laura Rojas Vallejo, executive director of Colombian non-profit climate group Transforma and senior adviser to the Colombian Climate Asset Disclosure Initiative.

She said that ‘concessional loans’ — those that have below-market interest rates or longer repayment periods — and grants should be made available, rather than commercial and private loans alone.

Loss and damage

The issue of loss and damage made its first significant appearance at a United Nations climate summit this year. The term refers to the irreversible impacts of climate change, which can no longer be adapted to or mitigated against.

Loss and damage is often associated with extreme weather events such as floods, droughts, wildfires and catastrophic storms. While island states facing rising sea levels have been dealing with loss and damage for years, it is also being seen on a massive scale in wealthy states such as Australia, North America and Europe, where wildfires, flooding and extreme storms have been wreaking havoc.

While numbers in the billions were being thrown around the corridors of COP26, minor financial pledges for loss and damage from the Scottish government, the Belgian region of Wallonia and private funds were seen as important first steps that could catalyse larger action.

“We now have six or seven million dollars in a fund for loss and damage,” says Huq. “It’s not a huge amount, but it’s more than zero. Other leaders simply refuse to even talk about putting anything in, which demonstrates the level of audacity they have to not recognise the reality of the impacts of climate change.”

The UN Environment Programme estimates that the finance required to meet climate adaptation needs in developing countries alone will reach up to $500 billion a year by 2050. Climate leaders estimate loss and damage costs will number in the trillions.

But while climate-vulnerable countries advocated at COP26 for a new finance facility dedicated to loss and damage, rich countries pushed back. Instead, delegates opted to create a new dialogue to continue discussing possible arrangements for loss and damage funding.

“If you were to listen to the voices of the vulnerable country representatives — from Africa, from the small islands, the Maldives, the Marshall Islands, from Guinea, from Bhutan — in the closing plenary you can hear the tears in their voices,” Huq says. “They were forced to accept an unacceptable outcome in Glasgow.

“And they said that this is a death sentence on us, and we are going home with it because we can’t fight it. The people who are imposing it on us are too powerful.”

While the decision to simply continue talking about the irreversible impacts of climate change was “grossly insufficient”, global research organisation the World Resources Institute says it could pave the way to concrete solutions and progress on finance in the years ahead. The institute says that loss and damage is likely to be a major issue on the road to the COP27 summit in Egypt.

Developing and climate-vulnerable communities will continue their appeals for a humane response on climate finance and loss and damage over the next year.

“The presidency will be African — Egypt, who have already said that they will represent Africa and the vulnerable countries, they will take up the issue of loss and damage more seriously,” Huq says.

“We have 12 months between now and then to prepare the ground for taking this issue forward.”

This article is part of our Spotlight on ‘The road to climate justice

This piece was produced by SciDev.Net’s Global desk.

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