As for the present moment, the 21st Conference of the Parties (COP21) is taking place in Paris, aiming to provide the world with a new agreement on climate change. As already stated in our previous blog, this climate conference happens in accordance to other key development agreements this year, and among the issues still open for discussion, one is of key importance for both climate and development concerns: the financing of climate action.
The question of who is going to afford the costs of climate action is central to the discussion because it is an important step in the right direction towards taking concrete action on commitments that countries make in international negotiations. Extra resources are needed to adjust to a low carbon economy, and to refrain and increase resilience to climate extreme events that are already taking place.
The debate around climate finance is also a debate about justice. Climate change is a global issue, and those facing its consequences are generally not the ones who caused the problems. Anthropogenic climate change results from greenhouse gases emitted mostly from developed countries, but the burden of climate change impacts affect first and foremost the most vulnerable in developing countries (such as indigenous and local communities), many of whom depend on the environment for their livelihoods. Developed countries have the largest historical responsibility for causing climate change, and also have more technical knowledge and financial resources to overcome this crisis. Nonetheless, as climate change is a challenge that must count with the engagement of all actors, developing countries must also engage in fighting climate change, especially those that are nowadays large emitters, such as China and India. Developing countries, on their turn, engage in the negotiations as they will be the ones more affected, but have less financial and technical conditions to cope with the changes. Therefore, the provision of financial and technical resources through climate finance can bridge the different motivations and create a common ground for different actors to negotiate on climate action.
Climate finance is central to the achievement of a sustainable development model. As Sunita Narain, director of the Indian Centre for Science and Environment puts it: “Individuals have a right to development, wherever they are” and climate finance must also direct its efforts to ensure such right. The Sustainable Development Goal (SDG) 7 of Agenda 2030 recently adopted by Member States at the UN General Assembly calls for universal access to affordable and clean energy for all. In order for this to become a reality, renewables must have an increased share in the global energy mix, and investments in new technologies are needed so that these becomes more affordable to governments, particularly in the global South. It also means strengthening efforts to mitigate greenhouse gases emissions. Complementarily, adaptation is also needed to plan in advance for potential social, economic and environmental impacts of climate change, and to increase the resilience of the most vulnerable to such changes. Financing adaptation can lead to better infrastructure, improving water management and land use, and reducing poverty through social protection schemes. If at least some effects of climate change are unavoidable, adaptation to this changing climate must provide resources to reduce the impacts that those effects will have. Therefore, it is a pivotal part of sustainable development debate as well.
Both development and climate concerns are extremely important to developing countries and strategies need to be integrated and aligned as part of the same effort so that achievements can be consistent and long-lasting. A recent study from the World Bank states that, without proper climate action, 100 million more people can fall into extreme poverty by 2030, undermining the recent efforts to reduce poverty.
The coordination between climate action and development must happen not only through the choice of policies, but also through resource allocation. Developed countries are already engaged in providing finance for development purposes, and this rising pressure to finance climate change must be seen as additional to the already existing development investments, as to avoid the risks of diverting resources from other relevant aspects of development. The Overseas Development Institute states that if no additional resource is allocated and priorities simply shift from conventional development concerns to climate change sectors such as education and health would be compromised, and resources could also be shifted away from sub-Saharan Africa towards Southeast Asia, for example.
Current trends of climate finance
The Global Landscape of Climate Finance 2015 shows that climate finance increased by 18% in 2014 to a total of $391 billion, the largest amount ever allocated to mitigation and adaptation finance. However, mitigation accounted for 93% of this sum, which shows the great disparity between financing mitigation and financing adaptation. This tendency is being contested by developing countries, which are calling for an equalisation of resource distribution by allocating more money for adaptation practices. Nonetheless, if mitigation is given much more emphasis than adaptation, investment in renewable energy is still limited when compared to the amount of investment and subsidies directed to fossil fuel based energy sources. The G20 still spends four times more in subsidies to fossil fuels than to fund renewables, deemed central to the strategy on mitigation. Such tendency must be urgently reverted in order to achieve the objective of a fossil free future.
Additionally, efforts are being led to mobilize new resources for climate finance. The French economist Thomas Piketty, whose seminal work on wealth distribution provided extraordinary evidence supporting the urgent need to address inequality, also called for the need to promote climate finance in order to fund adaptation in developing countries through the taxation of wealthier individuals. Such strategy, according to his recent study, could be a means of compensation to reduce inequality and increase resilience in developing countries.
A simple look at the reality of millions of poor and marginalized citizens around the world provides overwhelming evidence that human centred development must be mainstreamed into climate change debates, and vice versa. Combining both agendas can help to leapfrog from old development practices that are no longer suitable in a climate changing world, and to ensure that resources are being allocated additionally, so that efforts can produce more effective long-term results. When the decision-makers in Paris issue a decision around climate finance disbursement, they will also be influencing the prospects of shifting towards sustainable development practices. It is then important to push countries to commit to a comprehensive, fair and binding agreement that will benefit the most vulnerable citizens, and also to provide the financial means to implement it so that efforts on climate action and sustainable development can effectively hold hands and promote the necessary changes to a climate safe, resilient and sustainable development.
Image: Farmer Harvests Rice in East Timor. UN Photo/Martine Perret