Developed countries not only promised to provide “scaled-up” climate finance, but also committed to finance being “new and additional” to existing overseas development aid budgets.
CARE’s latest report, titled, ‘That’s Not New Money,’ outlines how much of the public climate finance reported to the UNFCCC by the G7 and 16 other rich countries was truly “new and additional” to their support for development.
By John Nordbo, climate adviser at CARE Denmark
At Copenhagen Climate Change Conference in 2009, developed countries committed to supporting climate change adaptation and mitigation activities in developing countries. The Copenhagen Accord stipulates that developed countries would provide scaled-up climate finance to developing countries, reaching USD 100 billion a year in 2020.
This climate finance commitment was not an altruistic pledge by the wealthier, developed countries. It was a component of a broader global green deal which pledged climate finance to support countries in the global South in stepping up climate action as part of their sustainable development efforts.
The global North had failed to cut its own emissions fast enough to bring climate change under control, and global warming reached a level that necessitated costly adaptation to climate change. It was therefore agreed that developed countries would pick up at least some of the bill for climate action in the global South.
Critically, in recognition of existing development priorities such as eradication of extreme hunger and poverty, the Group of 7 (G7) and other rich countries not only promised to provide “scaled-up” climate finance, but also committed to finance being “new and additional” to existing overseas development aid budgets.
Rich countries have failed to live up to their climate finance commitments
Published to coincide with the G7 talks currently underway in Germany, CARE’s latest report, titled, ‘That’s Not New Money,’ outlines how much of the public climate finance reported to the UNFCCC by the G7 and 16 other rich countries was truly “new and additional” to their support for development.
The report finds that most of the public climate finance reported by rich countries from 2011 to 2018 was taken directly from development aid budgets.
Countries never formalized a definition of “new and additional,” something that must be agreed on within the ongoing UNFCCC negotiations. But if we take rich countries’ commitment to provide 0.7% of gross national income (GNI) as official development assistance, and ask how much climate finance has been delivered on top of this, the figure is as low as USD 14 billion – 6% of what has been reported.
If we apply a more generous definition and use the baseline of development finance provided by rich countries in 2009, when they made the pledge, USD 99 billion, or 45%, of the global North’s public climate finance is additional.
Even under this weaker definition, the majority of climate finance is still development finance being diverted towards climate change action, meaning less financial support for health, education, women’s rights, and poverty alleviation.
The members of the G7 bear responsibility for most of the failure.
Canada, France, Germany, Italy, Japan, the UK, and the US represent some of the largest global economies that report significant amounts of climate finance. Collectively, G7 countries account for 85% of climate finance reported by all rich countries from 2011 to 2018.
But despite reporting such large quantities of finance, these large economies provide almost no additional climate finance, as they have failed to provide 0.7% of their GNI as official development assistance (ODA).
CARE’s new research is particularly damning in the face of current global challenges – including Russia’s invasion of Ukraine, global energy and food insecurity, and the ongoing effects of the COVID-19 pandemic. The finance required for SDG investments is vast and needed urgently. Recent OECD statistics show that development aid is already spread thin among the SDGs, humanitarian response and relief, COVID-19, and refugee costs. According to the World Food Programme (WFP), a total of 45 million people are on the brink of famine across 43 countries, unless they receive immediate life and livelihoods-saving assistance.
External public resources such as ODA remain essential for developing countries
The harsh realities of climate change will add substantial costs to the development agendas in the global South, threatening achievement of the SDGs and creating a cycle of poverty that becomes increasingly harder for countries to move beyond.
This, in turn, undermines resilience to climate change, as pointed out by the April report of the Intergovernmental Panel on Climate Change (IPCC), which noted that “a key agreement was that climate financing should be ‘new and additional’ and not at the cost of SDGs.”
The IPCC articulates what millions of people across the global South are experiencing firsthand, that “resources prioritising climate at the cost of non-climate development finance increase the vulnerability of a population for any given level of climate shocks, and additionality of climate financing is thus essential.”
All the while, wealthier countries continue to adapt and build their own resilience to the global climate crisis.
The injustice of an ‘either/or’ funding model
Faced with this funding injustice, it is imperative that the G7 and other Annex II Parties to the UNFCCC begin to honor their obligations and commitments to provide USD 100 billion of new and additional climate finance annually, and that rich countries follow the example of Luxembourg, Norway, and Sweden by delivering all of their climate finance on top of the pledge to provide 0.7% of their GNI as ODA.
Countries not yet meeting the 0.7% target should redouble their efforts to do so within the next few years, and make sure that their climate finance comes on top of a growing aid budget.
Finance for climate change adaptation and mitigation is essential. However, it should not replace pre-agreed finance to support the SDGs. In many contexts, the physical realities of climate change will add substantial costs to the development agendas of countries in the Global South.
Diverting funds from poverty, health, and education initiatives in developing countries to climate change mitigation and adaptation strategies in an ‘either/or’ scenario, which is unjust. This short-sighted approach will only serve to widen the inequality gap between developed and developing countries, slow the achievement of the SDGs, and – crucially – require those who have contributed least to the climate crisis to pay the highest price.