The world’s finance ministers will meet in Lima this morning for a crucial discussion over a multi-billion dollar financial package needed to secure a deal in Paris to tackle climate change.
Rich countries have promised to channel $100bn a year to the developing world from 2020, but although they are trumpeting their commitments, developing states have yet to be convinced they are doing enough.
“There is a severe underestimation of the effect that climate change will have on everybody, and that is reflected in the fact that there is a lack of availability of financing,” said Jean-Paul Adam, finance minister of the Seychelles, the island nation that is extremely vulnerable to climate change.
“I do believe that more financing needs to be put on the table, and that more of that financing needs to come from developed countries, who have the historical responsibility.”
Twenty countries most at risk from climate change met in Lima yesterday to inaugurate a group called the Vulnerable 20 (V20) to press their case.
Six years after making the $100bn pledge in Copenhagen, the wealthy countries have still not said how they plan to provide it. Now they are under pressure to do so, as they want to secure the agreement of poor states at the UN COP 21 climate summit in Paris in December, perhaps the last chance to reach a global agreement that might have a chance of averting catastrophic climate change.
The COP process has given up trying to make countries agree on how much to cut carbon emissions — this will be done voluntarily. So debate in Paris will focus on the finance package, to help poorer states with mitigation — fighting climate change — and adaptation to it.
NO TRAJECTORY YET
Peru and France, the outgoing and incoming chairs of the COP, convened the finance ministers’ meeting to make progress on this, and commissioned the OECD to produce the first official survey of how much climate financing the industrialised countries are already doing.
The report, published on Wednesday, counted $62bn in 2014, about 70% of it from governments and development banks, the rest private.
“The $100bn is a political commitment that must be met,” said Janos Pasztor, UN assistant secretary-general on climate change. “The OECD report is a step forward but it does not yet show that the trajectory is there for $100bn.”
Exactly what the $100bn should consist of, and who should pay it, is still vague.
“What is needed before Paris is for negotiators to believe that there is a politically credible pathway to $100bn, and that’s why Lima is so important,” said Rachel Kyte, the World Bank’s special envoy for climate change. “Everyone is hoping the contours of that pathway will become much clearer.”
Countries have been upping their contributions. France has said it will raise its annual support to $5.6bn in 2020, Germany to $4.5bn, and the UK to $2.7bn.
'EXTREMELY COMMITTED'
The Asian Development Bank will go up from $3bn to $6bn a year and the European Bank for Reconstruction and Development to $20bn over five years. The Inter-American Development Bank will double the climate share of its activity to 25%-30% by 2020.
Pressed by Emerging Markets on whether the World Bank would make a similar announcement, Jim Yong Kim, its president, said: “It is really hard to make a pledge when you don’t know what the foundations are.
“We are extremely committed to being ambitious and finding some path towards the $100bn. But it’s complicated because there are so many moving parts. We are still trying to figure out exactly what the number has to be. Our commitment is to do everything we can to get to an agreement in Paris and the only way to get to an agreement is to find $100bn. We are the largest multilateral donor. We have to play a hugely important role and we have every intention of doing that.”
However, it is widely agreed that $100bn is a tiny fraction of the investment needed. Yi Gang, deputy governor of the People’s Bank of China, said on a panel yesterday: “China will need to invest Rmb2tr-Rmb4tr a year for five years in the green sector.” That is $315bn-$630bn. Estimates for the world are about $3tr a year.