FINANCING A GREEN FUTURE
As rich governments fail to adequately finance green initiatives worldwide, private and institutional investors are being sought to pick up the slack. SYNERGIA FOUNDATION R E S E A RCH
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t will be recalled that at the 2009 UN Climate Summit in Copenhagen, rich countries had made promises to fund developing countries in their transition to green processes that reduced greenhouse admissions. By 20102012, this assistance was to be to the tune of US $30 billion and was to increase exponentially to US $ 100 billion by the next decade. In a 2020 report, the UN had concluded that the 100 billion target was ‘out of reach’. This has seriously jeopardised efforts to meet the 2015 Paris agreement goal of restricting global warming to “well below” 2 °C, if not 1.5 °C, above pre-industrial temperatures.
UNREALISTIC PLEDGES
International pledges and agreements have not kept up to the original intent. The US$100 billion a year commitment left many unanswered questions. There was no agreement on how to measure the pledges of individual countries. The Organisation for Economic Co-operation and Development (OECD) estimates that countries contributed $80 billion in climate finance to developing countries in 2019, up from $78 billion in 2018. The pandemic has ushered in a new era of uncertainty. Investments are now prioritised in areas such as public health, challenging the wider universe of climate finance. The true measure of success or failure, analysts point out, will be whether climate finance pledges are translated into actual projects. Others criticise that even these suggested numbers are vastly inflated. Oxfam estimated public climate financing at only $19 billion–$22.5 billion in 2017–18, around one-
Much of climate finance has gone towards projects to reduce greenhouse gas emissions, despite the Paris agreement calling for a balance between these ‘mitigation’ projects and those that help people ‘adapt’ to the effects of climate change third of the OECD’s estimate. The difference is attributed to the scope of projects assessed as well as accrued value from development loans. They argue that only the ‘benefit accrued from lending at below-market rates should be counted’ and not the full value of the loan itself. Similarly, it would be incorrect, they argue, to assess aid projects as ‘climate relevant’ when they do not target climate action primarily. Without a common methodology for allocation of resources and assessment of projects’ effectiveness, divergent estimates are bound to flourish. Thus far, much of climate finance has gone towards projects to reduce greenhouse gas emissions, despite the Paris agreement calling for a balance between these ‘mitigation’ projects and those that help people ‘adapt’ to the effects of climate change. These mitigation projects clearly find favour with donors since the impact is measurable, whereas it is less easy to define successful adaptation. Private finance, in particular, has consistently favoured mitigation projects which generate quantifiable returns on investment, such as solar farms and electric cars. The expectations from rich countries have risen since. “By the time we get to Glasgow, if they haven’t given us another $100 billion [for 2021], then
