In 2009, the world’s rich nations agreed to collectively mobilize an annual US$100 billion in climate finance for poorer nations by 2020. But Oxfam’s examination of the latest available figures finds the reality falling far short of the promise.
The international NGO’s 2020 Climate Finance Shadow Report concludes that only $59.5 billion in climate finance was delivered to under-resourced nations in the 2017-2018 period. And 80% of that took the form of loans, not grants, writes Climate Home News.
Adding insult to the injury of having to repay monies spent on protecting themselves from a crisis they played little role in creating, the climate finance often took the form of “investment in projects with weak climate credentials.”
Egregious case in point, reports CHN, was Japan’s loan of $700 million in so-called climate financing to Bangladesh. In reality, that money was earmarked for building the proposed Matarbari coal power plant. Tokyo’s rationale for such an accounting was that “the plant was cleaner and more efficient than other power plants.”
Japan, together with France, was also found to have generated “the biggest grant-to-loan imbalance in [its] climate finance, with just 3% of [its] overall contributions attached to grants.”
Of that $59.5 billion in climate finance (up roughly 33% from the previous reporting period), “rich countries gave just $12.5 billion in the form of grants, $22 billion in loans with better-than-market rates, and around $24 billion in loans with standard market rates,” writes CHN, adding that “interest charges and payments to creditors were not deducted from donor countries’ climate finance figures.”
Spain gave out the highest percentage of market-rate loans in its climate finance package, at 55%, followed by Japan at 24%, Germany at 22%, and France at 16% of total contributions.
Australia, the EU, the Netherlands, Sweden, and Switzerland all made contributions that were “almost 100% grant-based,” writes CHN.
Pointing out that the ongoing pandemic continues to exact a cruel and deepening toll on under-resourced nations, report co-author Tracy Carty told CHN that, “against a backdrop of rising and unsustainable debt in many low-income countries, there’s a clear risk that finance that should be helping countries respond to climate change could be harming them in other ways.”
In its report, Oxfam stressed the need to “strictly apply” the accounting guidelines adopted two years ago at the UN climate talks in Poland, which are due to implemented next year in Glasgow. It also flagged that several countries seem to be fudging the numbers on just how much private climate finance they are managing to mobilize.
“For example, the full cost of building a school could be counted as climate finance if part of the funding was to make the school more flood-proof,” writes CHN.