By GRT Guest Blogger Narayan Subramanian, Climate Policy Officer at Independent Diplomat
The Paris Agreement adopted this past December by 194 countries was a remarkable global achievement. The agreement establishes the framework for global climate action for the coming decades. Contained within this framework is a built-in mechanism to review and spur progress in five-yearly cycles as well as a clear signal to governments and the global investment community that the “low-carbon era” has arrived.
More than 180 countries have pledged to take varying degrees of climate action spanning both developed and developing countries. However, the latter are especially concerned with the question of how to finance their clean energy transition. For India in particular, estimates say its 2030 target will cost USD $2.5 trillion to achieve. This money will come from a variety of sources both public and private, but a sizable amount will have to come from overseas climate finance.
The discussion on climate finance over the last few years has revolved around the Green Climate Fund (GCF), which was established in conjunction with the commitment made by developed countries at the Copenhagen Climate Conference in 2009 to mobilize USD $100 billion annually for climate finance by 2020. At the time, it was agreed the target would be achieved by drawing from a “wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.” Many assumed that the GCF would still be the primary vehicle for delivering climate finance but in the lead up to the Paris Climate Conference, the woefully inadequate initial capitalization (~USD $10 billion) of the GCF became a cause for concern.
In October of last year, the OECD released a study claiming that annual climate finance flows from private and public sources in the developed world could be estimated at ~USD $60 billion. The news was received with fierce skepticism from developing countries, which insisted they had seen little discernible increase in climate finance. The OECD’s report appeared to these countries more like an “accounting and methodological exercise” rather than an earnest attempt to increase financial flows to assist developing countries with their climate mitigation and adaptation efforts.
The Paris Agreement was a monumental step forward in the global fight against climate change but as the cliché goes, the real work begins now. As the developing world’s share of global greenhouse gas emissions increases in the years to come, the argument for North-South equity is likely to prevail stronger (if not more) than the argument for preserving the planet’s health. Financial assistance for developing countries must be additional, as well as consistent. Most importantly, for some of the most vulnerable countries in the world, climate finance must include support for adaptation. While the GCF has committed to disperse funds equally for mitigation and adaptation action, the lion’s share of climate finance will be coming from various other sources – and these sources have made no such commitment.
The credibility of the multilateral framework for addressing climate change ultimately hinges on whether the developed world stands by its commitment to effectively mobilize finance not only to transform developing country economies and energy systems, but also to ensure that they are fortified and prepared for a changing climate.