Climate finance of US$100 billion annually by 2020 was committed by developed countries in 2012 to help developing countries take action on climate change. Yesterday, they presented a roadmap showing how they planned to meet this objective.
The document projects public finance rising from recent levels of around US$41 billion to $67 billion annually in 2020, and a doubling of adaptation finance.
This roadmap should serve to give confidence that climate finance transfers to developing countries will continue to increase, but ultimately fails to provide the needed certainty about future financing levels. It does provide a useful benchmark for assessing progress in meeting the US$100 billion target and financing the transition to low carbon, climate resilient development.
Concerns remain about roadmap
As WWF we are pleased to see some movement on this issue – by way of this climate finance roadmap by developed countries – but we still have concerns:
- The projected financing falls short in some key aspects, and further efforts will be necessary to meet the US$100 billion annual commitment and ensure that it effectively contributes to meeting our climate objectives. Adaptation will continue to be woefully underfunded, even with the projected funding doubling. Less than 25 per cent of the projected US$100 billion annual commitment by 2020 will go to assisting developing countries to adapt to climate impacts.
- The report uses questionable methodologies to measure and project financial flows which have been contested by developing countries and observers. This is especially with regard to accounting for loans and export credit agency financing. Parties will have the opportunity to negotiate mutually agreed rules for reporting on financing in the coming years, and that should help build trust and confidence in the accounting methodologies in future reporting cycles.
- The forecasts rely on mobilising private financing for almost one third of the projected climate financing in 2020. It will be very difficult to direct profit-seeking private finance to adaptation needs, further limiting the availability of funds to developing countries. The report also argues for specific policy changes in order to mobilise such funds that could be interpreted as conditionalities. In addition, the methodologies for accounting for private financial are unreliable and contested, but the overall shifts of investments of public and private flows necessary are at least an order of magnitude greater than the US$100 billion goal.
Transformative public finance should make up almost the entire $100 billion
More than US$1 trillion will be required annually in 2020 to transform energy systems, protect forests and develop sustainable agricultural, production and waste management practices, along with building resilience. If the US$100 billion annual goal is expected to make a significant contribution to financing this transition, then it should be done in a way that leverages private flows at a much greater scale. This means that the US$100 billion should be almost entirely transformative public finance, to meet adaptation needs and to increase the potential for leveraging and mobilising private financing, particularly for mitigation.
Despite these limitations, this climate finance roadmap is a useful exercise that will result in greater transparency and shared understanding of the current state of affairs. It will enable both developing and developed countries to take stock of current efforts and make the best use of projected financial flows as well as mobilise efforts to scale them up.
Finance only one part of the solution
In the end, financial transfers are only one part of the solution. Elimination of fossil fuel subsidies worldwide, setting a price on carbon, divestment in polluting technologies and fossil dependent infrastructure, regulation of polluting technologies – like the recent accelerated phase-out of hydroflurocarbon’s (HFCs) under the Montreal Protocol – are all required to put the world on track to a climate safe and prosperous future.
Manuel Pulgar-Vidal is leader of WWF International’s Climate and Energy Practice. He is based in Lima, Peru. email@example.com
Read the full report here: http://bit.ly/2edn6Aq
Gaps remain in developed countries proposed plan to provide $100bn annually by 2020 for climate action by developing countries @climateWWF http://bit.ly/2dr6YIU
Developed countries roadmap to meet $100bn annual commitment by 2020 not fully mapped @climateWWF http://bit.ly/2dr6YIU