Climate finance – not kind, climate justice

The international community is failing to move to important discussions: sources, mechanisms and access modalities of Strategic Climate Fund (SCF) since 2012 and this hampers climate justice.

“We live in constant fear that a direct hit from intensifying cyclones could wipe out our economy altogether and set back our development by decades. This is not the way our children and our children’s children should live. This is not the way our children and our children’s children should live”, Inia Seruitaru, climate champion for Fiji, portrayed the potential adverse impacts of climate change induced extreme events and in 2017, a significant increase in climate impacts have been observed e.g. floods in South Asia,  hurricanes in the Caribbean, droughts in Africa.

Climate Analytics (2015) predicted that annual climate change induced economic loss would be USD 428 billion and USD 1.67 trillion by 2030 and 2050 respectively if the planet gets warmer to 3 degree celcious. To find out sources of funding for loss and damages and the role of sustainable development in reducing the risk of L&D in the vulnerable developing countries including LDCs and SIDS the Warsaw International Mechanism (WIM) on Loss and Damage with its Executive Committee was established at the 19th Conference of Parties (COP19) of the United Nations Framework Convention on Climate Change (UNFCCC) held in 2013. However, though the WIM has developed their five-year work plan on specified nine areas of work and Parties are obliged to identify the financing process including modalities for the WIM by the end of 2019 five years have passed but except imposing insurance, either financing mechanism or entity to provide the supports or not a single penny has been mobilized for the millions of climate victims. The ongoing Bonn meeting of UNFCCC (from 30th April to 10th May, 2018) has obligation to identify the means, tools and process to implement the Paris Agreement.

The Paris Agreement “Acknowledged that climate change is a common concern of humankind, Parties should, when taking action to address climate change, respect, promote and consider their respective obligations on human rights–“. However, developed countries except Germany did not show importance about the loss and damage finance enough to discuss about.

This is truly contradictory to the Paris Agreement that recognized the “need for an effective and progressive response to the urgent threat of climate change”. There is no room to impose ‘insurance’ to minimize risks of  L&D in LDCs since the poor and marginalized climate victims deserve the climate justice. At COP23, under the leadership of Fiji, the vulnerable countries argued for addressing the issue of finance for loss and damage and they were able to get an agreement to finally discuss the issue as part of the “Suva Dialogue”. Under the UNFCCC the innovative sources of finance for L&D would be a fair, equitable, polluters’ pay ‘Climate Damages Tax’ to protect free riding of Parties. It’s required the financing for L&D under the WIM shouldn’t be standalone but also will be integrated with both national and international funding sources e.g. proposed Climate Damages Tax, Green Climate Fund (GCF) etc.; funding for loss and damage and climate change adaptation in vulnerable countries would be compensation or grant as ‘new’ and ‘additional’ to ODA. The Least Developed Countries (LDC) group, along with other vulnerable countries will give a big push to finally put this issue on the agenda of ongoing Bonn meeting.

UNEP (2014) estimated annual adaptation and L&D cost would be US$ 50 billion and US$ 100 billion only in the LDCs by 2030 and 2050. Against the concrete commitment by the developed countries to provide annually US$100 by 2020 as “new” and “additional” to ODA with the emphasis on public grant OXFAM highlighted that net climate specific public finance in 2015 and 2016 is estimated to be around US$16 to $21 billion per year – significantly lower than the estimated $48 billion per year. Moreover, only US$16-US$21 billion of the ODA commitments fell under the strict definition of climate finance for altogether mitigation and adaptation. Existing climate finance accounting rules are inadequate and inaccurate accounting of climate relevance too. That is also allowing loans to be counted at full face value which is unfair. That’s why, Parties have to agree with the fair and robust new accounting standards for climate finance under the Paris agreement.

Source: Illustration by author

Against the requirement of at least additional US $4 billion to implement all of the LDCs’  NAPAs public finance from the OECD has been predicts to the highest of US$67 billion in 2020.  However, we need to focus on how the developed countries are going to raise funds of at least $50 billion a year by 2022 and up to $300 billion a year by 2030 as some estimates projected. Non-concessional loans and hard loan as well as other instruments should not be counted as climate finance as contrary to the provision against the obligation under Article 9.1 of the Paris Agreement and also Article 2, para. 1(c) refers to finance flows that are “consistent with”, rather than aimed at, a pathway towards low-carbon and climate-resilient development.

The international community is failing to move to important discussions: sources, mechanisms and access modalities of Strategic Climate Fund (SCF) since 2012. To raise confidence of developing countries about the $100 billion goal a clear time-bound roadmap towards real mobilization of support is required, ways to finance these tools in fair and robust way. To recover the huge gap in climate finance vulnerable developing countries must be united to mobilize public contributions by developed countries. It is estimated that by imposing such tax the amount of 50 billion dollars could be raised from the global polluter companies and depositing that into a loss and damage fund under the UNFCCC. Though that amount is peanut with respect to profit amounts to billions of dollar each year made by the polluting companies but it will have major contribution to meet the dire needs of the climate vulnerable countries.

The Paris Agreement’s “rule book” will include details on how countries will communicate their efforts with regards to adaptation, climate finance, transfer of technology and capacity building; how Parties will be held accountable for their commitments; how collective efforts will be reviewed, leading to scaled-up actions and support every five years; and how to create a mechanism/process to facilitate implementation and promote compliance focusing on “Whole-of-Governance” in CF under the robust and meaningful ‘Enhanced Transparency Framework’ that would be adopted in upcoming COP24.  Parties should work together to propose the robust measurable indicators of CF, MRV++ process with anti-corruption safeguards to meet the compliance requirements under both the Paris Agreement and climate related SDGs especially SDG13 in light of SDG16.