In part one, we learnt what climate finance is. Now let’s unravel the complex web of how the money reaches countries needing support for climate action, beginning with who needs to pay and how much. 

1. Who needs to pay?

The climate crisis is a global crisis so we need global cooperation to address it. Currently, countries in Asia, Pacific, Africa and South America (the so-called Global South countries, and home to 85% of the world’s population) are being the hardest hit by climate impacts: from rising sea levels swallowing island communities in the Pacific to prolonged droughts threatening livelihoods in India. The loaded dice? These countries aren’t even the ones responsible for this crisis but unlike the Global North countries, they lack money & resources to tackle these mounting challenges they are facing.

Wealthier nations like the US, UK, Germany and others who are the historical polluters responsible for the climate emergency we are all faced with today, have agreed to provide funds for climate action, or climate finance. This commitment recognizes this deep injustice of the crisis & the need to restore equity. 

This money is aimed for mitigation (moving to cleaner, affordable energy like solar and wind), adaptation (limiting the bad impacts of the climate crisis) and loss and damage (addressing irreversible harm, like the loss of human life due to heat waves or the destruction of houses and infrastructure due to storms and floods, and so much more). 

Mitigation projects include renewable energy adoption like this community-driven micro-hydro power plant managed by grassroots organizations in Indonesia.

👉 Unfortunately, finance is not neutral, and neither is how it flows. Financial systems and the ways funds are distributed are shaped by existing unequal power dynamics and politics. Despite big promises, getting these funds to those who need it most is a constant struggle, requiring continued years of campaigning and advocacy.

 

2. Who collects and manages the money?

The UN Framework Convention on Climate Change (UNFCCC) established in 1992 by the United Nations, is an international multilateral process to manage climate action and finance on a global scale.

Every year, countries come together at COP (Conference of the Parties) climate meetings to set climate action & finance goals, and monitor progress under the UNFCCC process. Heads of State and Governments regularly attend COPs along with civil society, international organizations, NGOs, the media and even fossil fuel representatives. 

To date, COPs have produced crucial international climate agreements to keep countries accountable like the first ever global commitment to reduce pollution & the biggest global climate agreement, the Paris Agreement

The Paris Agreement

The Paris Agreement established the vital target to keep global heating under a livable 1.5 degree celsius in 2015 and has solidified the responsibility of historical polluters to provide climate finance to vulnerable countries.  

The agreement now tracks progress towards these goals. Under it, 196 countries need to submit Nationally Determined Contributions or NDCs which are 5 year national climate action goals to show that they are playing their part in combating the climate crisis. 

For instance, Brazil released its 2024 NDC with a target of reducing emissions by up to 67% by 2035. To achieve this goal, the country needs to invest large sums of money in renewables in the coming years. Getting climate finance from the UNFCCC process is one way for Brazil to meet its NDC goal faster. 

👉For most countries in Asia, Africa and South America, getting this international financial support is essential and sometimes the only way to fulfill their NDC commitments and advance their efforts for stopping the climate crisis.

Climate finance is crucial for equitable, just and renewable energy access. Pictured above are Indigenous groups and other locals in Brazil demanding a fossil free Amazon through the Energy of the People Campaign.

 

3. How much needs to be paid? 

At COP meetings, countries establish major climate finance goals or regular pledges under the Paris Agreement to mobilize money for climate action. 

For instance, at the 2009 COP15 in Copenhagen, Denmark, rich countries pledged to raise $100 billion annually until 2020 towards climate action. At the 2024 COP29 in Baku, Azerbaijan, they agreed to mobilize $300 billion every year, calling it the New Collective Quantified Goal (NCQG).  But this money is nowhere near enough with reports saying that as of 2024 $1 trillion is actually what countries need to give every year, if not more

Civil society representatives, groups and organizations like 350.org show up at COPs each year to pressure political leaders of richer nations toward stronger climate action and better finance commitments. It’s also important we hold the line against the oil industry & other petro-interest actors who attend COPs to water down climate ambitions for their own profits!

Civil society & ngos calling for climate finance at 2024 COP29 in Baku Azerbaijan.

👉The amount of money committed is a huge symbol for how much is owed to the Global South, not only to address the impacts of climate change, but also to establish solutions and undo historical injustices like colonial resource extraction. This number should be needs-based, but is currently more an outcome of political discussion and negotiation. 

In the next post of this series, we’ll see how the money gets to recipient countries and the principles it needs to follow for fair climate finance.

Sources

The post ClimateCash Series (II) : Paying the bill appeared first on 350.