World finance ministers met yesterday in Lima so rich countries could reassure developing nations that they were progressing towards meeting their climate finance pledges. The World Bank, Netherlands and Luxembourg announced fresh money.
In 2009 developed states committed to pay $100bn a year to developing countries by 2020, but no formal arrangement has been made.
Peru and France, which convened the meeting, also commissioned the first official survey by the OECD, which showed $62bn was paid in 2014, of which 71% came from governments and development banks and 26% from private co-financing.
At the meeting, Ban Ki-Moon, UN secretary-general, applauded the increased finance commitments of France, Germany and the UK, but said more was needed, and called on other countries to make announcements before the Paris climate summit in December.
The World Bank also revealed its long-awaited commitment to increase its climate financing, from $10.3bn now to $16bn in 2020.
The Green Climate Fund, a new organ decreed at Copenhagen in 2009 and now based in South Korea, is set to begin approving financings in November.
Opening the meeting, Peruvian finance minister Alonso Segura said developing countries were “willing to use our own domestic resources to undertake climate action”, but that there was “a limited number of actions” they could do on their own. “It will be required that developed countries provide additional and adequate financial resources,” he said.
Michel Sapin, finance minister of France, which will now lead the UN COP [Conference of the Parties] negotiations, said there had been “much mistrust” between developed and developing countries on this issue, and that the $100bn was a “necessary condition” to reinforce confidence.
He acknowledged that the real investment need for dealing with climate change “exceeded by a long way” $100bn a year and said it could not be achieved without mobilising the private financial sector, which he said had begun.
GREATER AMBITION NEEDED
After the meeting, Manuel Pulgar-Vidal, Peru’s environment minister and outgoing president of COP, said the gathering had helped to build trust.
Asked by Emerging Markets whether any ministers had objected that the rich states were not doing enough, he said: “There were some reflections around the methodology [of counting climate finance contributions], mostly around ODA [official development assistance].” Developing states are anxious that climate finance money is not taken from existing overseas development aid budgets.
Asked whether there was a commitment to define how much of the $100bn must come from public sources, Sapin said the OECD had been conservative, only counting private flows unlocked by public financing, so that “real confidence was established”.
The quantum of public money is important, because the larger it is, the more private money can be leveraged in.
Cesar Purisima, finance minister of the Philippines, told Emerging Markets: “Our hope is that [in the next few weeks] we will come up with a more ambitious action agenda so that the results of the COP 21 become more ambitious.”
The Philippines is leading the new V20 group of countries most vulnerable to climate change.