A new report highlights the shortfall in developed countries climate finance, including noting Australia as a particular laggard. It estimates the Australian Government is contributing about 8 per cent of what our global fair share commitment should be for the years 2020-2025.
Antonio Guterres, the UN Secretary General, has warned developed nations they must deliver on climate finance for a successful outcome from the UN Climate Conference in Glagow (COP26) in November.
The UN Secretary General, speaking at High-Level Dialogue on Climate Action in the Americas, hosted by the Government of Argentina , said developed nations must deliver on the solidarity agenda. He told the Dialogue:
“developed nations must deliver on the solidarity agenda. That means support to developing countries on vaccines, debt and liquidity, as well as climate finance. We need a credible plan for delivering on the $ 100 billion dollar commitment made over a decade ago. We need it well ahead of Glasgow, to restore trust.” he said.
In 2009 at the UN Climate Change Conference (COP15) in Copenhagen Australia committed with other developed nations to raising US $100 billion climate finance per year from 2020 to developing countries to assist the transition and global decarbonistion.
Of the 23 developed countries responsible for providing international climate finance, only Germany, Norway and Sweden have been paying their fair share of the annual $100 billion goal. All other countries are falling short.
Australia, Canada, Greece, New Zealand, Portugal and the United States (US) all contributed less than 20% of their fair share of international climate finance.
Australia has committed AU$1.5 billion (US$1.1 billion) for climate finance for 2021–2025, which means it will be funding only 8 per cent of its fair share over the next five years, according to the study.
The OECD and Oxfam International in recent media releases have also highlighted this shortfall in climate finance commitment, one of the pillars behind the Paris Agreement. (see updates below)
Update: Australian NGOs published the Fairer Futures: Financing Global Climate Solutions report 20 October 2021. This report called for the Scaling up Australia’s contributions to global climate finance in three stages to 2030: including Immediately double Australia’s current climate finance to $3 billion over 2020-2025; by 2023, shape regional and global climate responses by committing an additional $700 – $990 million to the Green Climate Fund; by 2030, scale up Australia’s climate finance to meet its fair share of $12 billion annually.
The research was prepared in response to requests from the COP26 team in the United Kingdom Cabinet Office, donor governments and civil society organisations looking to secure and benchmark new commitments before COP26 in Glasgow. The working paper was funded by the Zurich Flood Resilience Alliance.
According to decision 1/CP.21 reached in Paris in 2015, and reiterated in decision 14/CMA.1 agreed at Katowice in 2018, the $100 billion a year target also serves as the annual floor for international climate finance to 2025, when the new goal will be adopted.
As the original commitment in 2009 and the decisions in 2015 and 2018 did not include any methodology, this research used three metrics for apportioning climate finance responsibility. These are Gross National Income (GNI), Cumulative CO2 emissions (1990–2019), and population. A subsequent composite indicator was calculated based on the three metrics to determine a Fair share based on a composite index ($ billions).
Australia's Gross National Income (2020) was $1,331 trillion producing a 2.9 percent share.
Australia's Cumulative CO2 emissions (1990–2019) was 10.9 Gt CO2 producing a 3.3 percent share.
Australia's population (2020) was 25.7 million producing a 2.7 per cent share.
Australia's Fair share based on a composite index was calculated to be $2.948 billions.
Australia actually contributed Bilateral and multilateral, public climate finance (2017–2018 average), according to OECD data, $0.477 billion. This amounted to just 16 percent progress towards providing a fair share of climate finance.
Australia, Canada and Italy are noted as significant laggards, all paying less than a quarter of their fair share.
Under Progress towards fair share the report noted for Australia:
"Australia should be contributing $2.7–3.7 billion a year depending on which metric is used to attribute fair share. In 2017–2018, it provided an annual average of $477 million, or 16% of its fair share measured against the composite index. Almost all of Australia’s bilateral climate finance was provided as grants. Looking forward, Australia has committed AU$1.5 billion ($1.1 billion) for climate finance for 2021–2025 (Government of Australia, 2020), which means it will be funding only 8% of its fair share over the next five years."
It is clearly time that Australia increased its share of climate finance, and rejoined the Green Climate Fund.
Under the Abbott government Australia decided to support the Green Climate fund, committing A$200 million in 2014 and co-chairing its board for much of its early stages. Australia being on the board had some advantages in a say in allocating project funding for the Pacific region and was a vocal advocate for robust decision making and transparency.
In October 2018 Prime Minister Scott Morrison announced over talkback radio that Australia would not “tip money into that big climate fund”. Australia lost its board seat at the end of 2019.(2) Australia stopped all payments to the Green Climate Fund in early 2019 and received a Fossil of the Day award for this action at COP25 in Madrid.
Australia is not pulling its weight, is indeed a major laggard with addressing climate finance. If we want to be taken as a serious diplomatic actor we should at minimum be contributing our global fair share.
Update 18 September 2021 - OECD data shows climate finance still short
In a statement on Climate Finance released 17 September, OECD Secretary General Mathias Cormann, outlined the present shortfall as of 2019 data.(3)
“Climate finance continued to grow in 2019 but developed countries remain USD 20 billion short of meeting the 2020 goal of mobilising USD 100 billion,” OECD Secretary-General Mathias Cormann said.
“The limited progress in overall climate finance volumes between 2018 and 2019 is disappointing, particularly ahead of COP26. While appropriately verified data for 2020 will not be available until early next year it is clear that that climate finance will remain well short of its target. More needs to be done. We know that donor countries recognise this, with Canada and Germany now taking forward a delivery plan for mobilising the additional finance required to reach the USD 100bn a year goal.”
Mr Cormann emphasised that, “It is more urgent than ever that developed countries step up their efforts to deliver finance for climate action in developing countries, particularly to support poor and vulnerable countries to build resilience against the growing impacts of climate change.”
May be Mr Cormann should have a few words to his former political colleagues in the Coalition government in Australia about ramping up Australia's contribution to climate finance?
The OECD report highlights:
- that public climate finance from developed countries reached USD 62.9 billion in 2019. Bilateral public climate finance accounted for USD 28.8 billion, down 10% from 2018, and multilateral public climate finance attributed to developed countries accounted for USD 34.1 billion, up by 15% from 2018. The level of private climate finance mobilised was down 4% at USD 14.0 billion in 2019, after USD 14.6 billion in 2018. Climate-related export credits remained small at USD 2.6 billion, accounting for just 3% of total climate finance.
- that out of the overall climate finance in 2019, 25% went to adaptation (up from 21% in 2018), 64% went to climate change mitigation activities (down from 70% in 2019), and the remainder to crosscutting activities. More than half of total climate finance targeted economic infrastructure – mostly energy and transport – with most of the remainder going to agriculture and social infrastructure, notably water and sanitation.
- that Asia has been the main beneficiary of climate finance over 2016-19 with 43% of the total on average, followed by Africa (26%) and the Americas (17%). Climate finance for Least Developed Countries rose strongly in 2019 (up 27% on 2018) but funding for Small Island Developing States fell back to 2017 levels (from USD 2.1 billion to 1.5 billion) after a temporary increase in 2018.
- that SIDS face specific challenges in accessing climate finance. The international community needs to consider financing for climate that is appropriate for the challenges that SIDS face, less fragmented, easier to access, predictable and long-term.
If Australia was contributing to the Green Climate Fund and was on the governing board (a place it once occupied) it could have an important role in ensuring Asian and Pqacific country projects were funded adequately.
Prime Minister Morrison withdrew Australia from the Green Climate Fund in 2018.
Update 21 September - Oxfam calls out lack of global climate finance
Oxfam International have called out rich countries for failing to step up to promised climate commitments with climate finance for porrer countries.
there is a looming gap of $75 billion short of fulfilling long-standing pledges by wealthy countries to mobilize $100 billion each year from 2020 to 2025 to help the most vulnerable countries adapt to the dangerous effects of climate change and reduce their emissions, according to estimates by Oxfam.
According to Oxfam, based on current pledges and plans, Oxfam estimates that wealthy governments will continue to miss the $100 billion goal and reach only $93 billion to 95 billion per year by 2025, five years after the goal should have been met. This means that climate-vulnerable countries could miss out on between $68 billion and $75 billion in total over the six-year target period.
In a media release Oxfam highlights that while a few countries - the US, Canada and Germany - have increased their pledges in recent months in 2021, their efforts have been far from enough. It should be noted that at the G7 Summit in June, leaders repeated their commitment to narrow the gap, but those of France, Australia and Japan failed to increase their contributions above current levels. Several other countries, including Italy, Spain and the Netherlands have made no new climate finance pledges.
Oxfam also raised serious concerns about how wealthy countries are currently allocating climate finance. For example, in 2019 70 percent of public climate finance was given out as loans instead of grants. This pushes developing countries into more debt. It seems set to continue through to 2025.
The UN Secretary-General, Oxfam and others have also called for half the money to be spent on adaptation. According to the existing pledges by donor countries Oxfam estimates that only about a quarter ($26 billion to 27 billion) of total climate finance in 2025 will be spent helping developing countries build resilience and adapt to worsening climate impacts.
In 2019, 70 percent of public climate finance was given out as loans instead of grants. This seems set to continue through to 2025 which will push developing countries into more debt.
Climate finance commitment was one of the three key pillars of the Paris Agreement to ensure wide developing country agreement. Failure to meet this commitment undermines trust and the cohesion in the Paris agreement.
Oxfam highlights that wealthy countries had no hesitation in stepping up funding for a health response with the Covid19 pandemic. Oxfam estimates during 2020, the EU, UK, US, Canada, Australia and Japan spent more than $15 trillion on COVID-19 fiscal recovery packages ―equivalent to meeting the climate finance goal 151 times over. At the same time, total global military spending rose by 2.6 percent since 2019 to just under $2 trillion ―nearly 20 times more than the climate finance goal.
For Australia our Government has just cancelled a Aus$90 billion diesel-electric military submarine contract with the Naval Group in France, opting to join a new strategic alliance with the UK and USA with a commitment to order a fleet of nuclear powered submarines at a cost likely to far exceed Aus$90 billion.
Oxfam estimates Australia spent an estimated US$273.89 on Covid19 pandemic response measures yet is not willing to commit to around US$3 billion a year for climate finance as our fair share to address the existential risk facing the countries in the Indo-Pacific region from climate impacts.
“The pandemic has shown that countries can swiftly mobilize trillions of dollars to respond to an emergency — it is clearly a question of political will. Let’s be clear, we are in a climate emergency. It is wreaking havoc across the globe and requires the same decisiveness and urgency. Millions of people from Senegal to Guatemala have already lost their homes, livelihoods and loved ones because of turbo-charged storms and chronic droughts, caused by a climate crisis they did little to cause. Wealthy nations must live up to their promise made twelve years ago and put their money where their mouths are. We need to see real funding increases now.” says Nafkote Dabi, Oxfam International’s Global Climate Policy Lead.
Update 25 October: Australian NGOs call for greater climate finance from Australia
On October 20, Oxfam Australia, Action Aid, Greenpeace, Climate Action Network Australia published the Fairer Futures: Financing Global Climate Solutions report. A key point highlighted was the need to Scale up Australia’s contributions to global climate finance in three stages to 2030; these stages are:
- Immediately double Australia’s current climate finance to $3 billion over 2020-2025.
- By 2023, shape regional and global climate responses by committing an additional $700 – $990 million to the Green Climate Fund.
- By 2030, scale up Australia’s climate finance to meet its fair share of $12 billion annually.
References:
(1) Colenbrander, S., Cao, Y., Pettinotti, L. and Quevedo, A. (2021) A fair share of climate finance? Apportioning responsibility for the $100 billion climate finance goal. ODI Working Paper. London: ODI (https://odi.org/en/publications/a-fair-share-of-climate-finance-apportioning-responsibility-for-the-100-billion-climate-finance-goal/ ).
(2) Jonathan Pickering, Paul Mitchell, (November 30, 2020), After Biden’s win, Australia needs to recommit to the UN Green Climate Fund, DEVPolicy Blog, https://devpolicy.org/after-bidens-win-australia-needs-to-recommit-to-the-un-green-climate-fund-20201130/
(3) OECD, Statement from OECD Secretary-General Mathias Cormann on climate finance in 2019, 17 September 2021, Climate finance for developing countries rose to USD 79.6 billion in 2019 – OECD https://www.oecd.org/newsroom/statement-from-oecd-secretary-general-mathias-cormann-on-climate-finance-in-2019.htm
(4) Oxfam International media release, Poorer nations expected to face up to $75 billion six-year shortfall in climate finance: Oxfam, 20 September, 2021 https://www.oxfam.org/en/press-releases/poorer-nations-expected-face-75-billion-six-year-shortfall-climate-finance-oxfam
(5) Fairer Futures: Financing Global Climate Solutions (2021). Available at: Action Aid https://actionaid.org.au/resources/fairer-futures-financing-global-climate-solutions/
Oxfam Australia https://www.oxfam.org.au/wp-content/uploads/2021/10/OXF063-Climate-Finance-Report-WEB.pdf
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