COP27: Understand in graphics the money needed for climate finance

The debate over who has the financial responsibility for climate change is in the spotlight at COP27, the UN’s annual climate summit, held in Sharm el-Sheikh, Egypt.

Poor countries, which have contributed the least to climate change but are among the most vulnerable to its effects today, want greater financial commitment from rich countries, many of which developed their economies by burning fossil fuels.

The consequences of global warming are already multiplying, with the least developed countries often at the forefront of the devastation.

Pakistan has experienced catastrophic flooding this summer, which scientists say has been exacerbated by climate change.

A third of the country was submerged, leaving 1,700 dead and at least $40 billion in economic damage.

Extreme flooding has also submerged parts of Nigeria this month, and in other parts of Africa record drought has pushed millions of people to the brink of starvation.

At this year’s conference, developing countries are urging rich nations — historically the biggest emitters of greenhouse gases — to deliver on promises already made of financial support and take them even further.

insufficient commitments

More than a decade ago, the world’s rich, industrialized countries — including the United States, Canada, Australia, Great Britain and Japan — committed to donating $100 billion a year through 2020 (and continuing through 2025) to adaptation projects. and climate mitigation in poor countries. But they did not fulfill that objective.

Nations will need to agree on another funding target of at least $100 billion a year before 2025, so negotiations at this year’s summit will begin to shape that target.

Most estimates suggest that $100 billion is not enough to help poor countries avoid the worst effects of climate change, let alone stop burning oil, gas and coal.

“All the evidence suggests that we need trillions, not billions,” said Baysa Naran, manager of the Climate Policy Initiative think tank.

The money financed mitigation projects that help developing countries move away from fossil fuels, such as building a zero-emissions transport system in Pakistan. The money was also earmarked for adaptation projects, which help countries build resilience against climate hazards, such as restoring mangrove habitats in Guinea-Bissau to protect against rising tides.

Critics point out that funding often comes in the form of loans rather than grants. This has increased the already unsustainable debt burden of many poor countries, according to Alina Averchenkova, a climate policy researcher at the London School of Economics.

Some countries may also count on certain types of projects in their contributions that others don’t, which can lead to inflated numbers, explained Sarah Colenbrander, director of the climate program at the Overseas Development Institute.

The $100 billion target was “carefully crafted” to be deliberately vague — the result of highly politicized negotiations at COP15 in Copenhagen, in the opinion of Preety Bhandari, a senior adviser at the World Resources Institute.

As a result, there is no requirement that specific countries contribute a certain percentage of the funds. Various analyzes have calculated that the United States, which contributed less than $3 billion of the $83.3 billion in 2020, is delivering tens of billions of dollars less when considering the relative volume of its emissions, the size of the population and wealth.

Furthermore, mitigation projects generally received twice as much funding as those focused on adaptation, although many experts and representatives from vulnerable countries say the two should be more balanced. While mitigation addresses the root cause of the climate problem, by reducing emissions it does not help communities adapt to current or future risks.

An agreement reached at the end of last year’s climate talks in Glasgow urged rich countries to “at least double” adaptation funding by 2025 to $40 billion.

Fund for ‘loss and damage’

More recently, some of the world’s most vulnerable nations have stepped up requests for new funds from wealthier economies to offset the damage caused by climate change.

The issue is known in climate negotiations as “loss and damage”, and its proponents have described it as a form of compensation to pay for irreversible losses of income, culture, biodiversity and lives.

Rich countries have historically resisted calls for a damages fund, largely out of fear of being exposed to legal liability. In Glasgow last year, the United States opposed the text that would create such a fund.

This year, as Egypt promised to put damages on the formal agenda for COP27, representatives from the United States and European countries indicated that they might be willing to discuss the issue.

A group of small island countries first raised the issue of loss and damage in 1991, pointing to the irreparable destruction they faced with rising sea levels. Since then, these countries have tried to quantify the crushing costs.

The V20 group – the Vulnerable 20 –, made up of finance ministers from 58 countries, estimated that its member states have lost $525 billion, or about a fifth of their wealth, over the past two decades because of climate change.

“Countries are already paying for climate change now, and the pressing question is, can we let this continue?” said Sara Jane Ahmed, financial advisor for V20. “And the answer is: no, we can’t.”

_{Translated by Luiz Roberto M. Gonçalves}