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Climate finance pledges to international funds drop 70 percent

Source: Thomson Reuters Foundation - Mon, 18 Nov 2013 14:14 GMT
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An employee inspects U.S. dollar bills before changing them to Philippine Pesos inside a money changer in Manila on September 19, 2013. REUTERS/Romeo Ranoco
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WARSAW (Thomson Reuters Foundation) - Finance pledged to international climate funds plunged in the past year, partly due to slow progress in setting up the U.N. Green Climate Fund, according to new figures released on Monday.

The London-based Overseas Development Institute (ODI) and the Heinrich Boll Foundation, using numbers from the Climate Funds Update website, said the $356 million pledged so far in 2013 was 71 percent lower than the $1.21 billion that had been pledged by the same point in 2012.

ODI analyst Smita Nakhooda said more contributions could be announced before the end of this year, but donors may be reluctant to make new money available because they are waiting for the Green Climate Fund (GCF) to get up and running. It is meant to become the main vehicle for international funds to help vulnerable, developing countries adapt to climate shifts and put their economies on a path to greener growth.

"Right now, the GCF would be the most legitimate multilateral channel (for climate finance) and it is not yet operational," Nakhooda said. "We need to get the (fund) to move from a good idea in theory to a game-changer in practice."

The board of the fund is still working out key rules for its operation. Once these are approved, it has promised to make arrangements to start mobilising funds within three months, but its meeting schedule means this is unlikely to happen before September 2014. That could mean the drop-off in pledges to climate funds could continue until then, Nakhooda said.

The ODI has not measured all flows of public climate finance in 2013, but said analysis of climate finance suggested that investment in climate-related activities "has plateaued" since the end of the 2010-2012 "fast-start" period, in which rich governments delivered some $35 billion in funding.

A report from aid group Oxfam, released last week, estimated that the climate finance contributions claimed by developed countries in 2013 total $16.3 billion so far, although actual net budget allocations may be closer to $7.6 billion as some donor countries have counted loans that will be repaid to them.

The agreement at last year's U.N. climate talks in Doha merely encouraged rich nations "to further increase their efforts to provide resources of at least the average annual level of the fast-start finance period for 2013-2015" - slightly more than $10 billion per year.

Oxfam's report revealed that 24 developed countries have yet to confirm their climate finance for this year, and for 2014, donor governments that together provided around four-fifths of fast-start funding have still not announced any figures. Only Britain has made public its plans for climate finance in 2015, Oxfam said.

The least developed countries have been calling for greater clarity on climate finance at this year's talks in Warsaw, which run until Friday, but little has emerged so far.

MINISTERS TO MEET ON FINANCE

Tony La Viña, a climate change negotiator for the Philippines, told Thomson Reuters Foundation that commitments on finance will depend on rich countries' budgets and the state of their economies, which vary from year to year.

"In the context of a multilateral (climate) agreement, it is very difficult to see a (collective) commitment on finance that is definite - you can only hope there is an enabling environment for all of this," he said.

Richer nations have promised to mobilise climate finance of $100 billion a year by 2020, but have shied away from setting an interim target, as demanded by developing countries.

In a briefing, called "10 things to know about climate finance in 2013", the ODI and Heinrich Boll Foundation highlighted the high level of international subsidies for fossil fuels. The $1.26 billion approved for climate change mitigation for all developing countries was only 15 percent higher than the amount Poland spent on fossil fuel subsidies in 2011, it noted.

"We're subsidising fossil fuels on a massive scale," Nakhooda said. "Without a change, we risk wiping out the last few decades of progress in reducing poverty."

The report also highlighted the tiny amount of funding to help poor countries adapt to weather extremes and climate shifts, compared with huge spending to cope with the aftermath of climate-related disasters, such as storms and floods. For example, Germany spent four times more responding to floods in May 2103 than total global funding for adaptation since 2003, which total around $2.8 billion through multilateral and bilateral funds.

The ODI said it hoped a high-level ministerial "dialogue" on climate finance, taking place in Warsaw on Wednesday, will "result in some concrete commitments and decisions".

Ruth Davis, chief policy adviser to Greenpeace UK, told journalists ministers should at least agree a plan for 2014 "to understand if and how quickly money will be pledged to the GCF". 

Christiana Figueres, head of the U.N. climate change secretariat, said that at a minimum in Warsaw "developing countries need to feel confident that the commitment to the $100 billion is still on the table despite current financial circumstances". There also needs to be more clarity on how that funding will be mobilised, and a reiterated commitment to the operalisation of the GCF, she added.

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