Why climate finance will not save us? (Part 2)
By: Lemuel Deinla
Continuing with the issues that climate finance faces, the Overseas Development Institute (ODI) study also revealed that the implementation of projects funded by multilateral climate funds is painstakingly slow. According to the ODI study, half of a Global Environment Facility’s project usually takes two years to materialize. The Climate Investment Funds also attempted to streamline their implementation process but their projects also took a significant amount of time. The study pointed to the multi-layered bureaucracy that projects have to go through.
Furthermore, measuring the impact of multilateral climate funds’ projects has been difficult. Different funds use different parameters to track the results of their projects. ODI found that there was no standardized way to gauge the impact of mitigation projects. Determining the benefits of adaptation projects is also more challenging because of this dilemma.
Since measuring the impacts of climate projects is difficult, certain issues are often overlooked, such as gender. According to Oxfam, only one third of climate projects took into consideration gender equality in its objectives. It was alarming that most climate projects are gender blind and mistakenly assume that climate change’s effects were felt by men and women equally. Due to societal expectations and gender inequity, women are often left alone to tend to the needs of their children and families during times of scarcity and disasters. Hence, women are compelled to look for food, water, jobs, shelter, medical assistance, and other basic necessities in risky places and conditions.
Both the Oxfam and ODI study also had similar findings. Among them, both the studies found out that mitigation projects form the majority of climate related projects. This has been in contrast to most developing countries’ national priorities which include adaptation. As a result, some developing countries resent the reality that it is usually the will of the implementing entity that dominates climate projects.
Another issue found by both ODI and Oxfam is the lack of collaboration at the local level. According to ODI, it has usually been national governments that have been the locus of international climate finance. The participation of local communities has been identified by Oxfam as an important aspect of climate finance as local communities are at the forefront of the battle against the climate crisis.
It was also reported both by ODI and Oxfam that transparency over information and data is a major issue for financing received from the private sector. Information and records of the financial activities of the private sector are kept confidential and are generally inaccessible by the public.
Finally, there has also been little to no investment in research and development from climate funds. Research grants are scarce which is detrimental in forwarding research-based policies and science-driven solutions.
Loss and Damage
The Paris Climate Agreement dedicated an entire article towards establishing a Loss and Damage mechanism, a way for vulnerable developing countries to receive financial aid from international funds for the loss and damages they incurred from weather phenomena exacerbated by climate change. Loss and damages can either be economic or non-economic. Economic losses are those that can financially be accounted for like loss of revenue and damage to properties. Non-economic losses are those that cannot be quantified like life, health, biodiversity, cultural knowledge and others. Ideally, countries can file a claim for compensation for loss and damages they incur from extreme weather events like flood, heatwave, typhoon, drought, storm surge, among others. Countries should also be compensated for loss and damages from slow-onset events like rising sea level, rising temperatures, desertification, loss of biodiversity, land and forest degradation, glacial retreat, ocean acidification, and salinization.
The Warsaw International Mechanism (WIM) for Loss and Damage was established in 2013 to become the official channel of the UNFCCC for accommodating countries that seek redress for their loss and damages. Two years later, during the deliberations on the Paris Climate Agreement, countries party to the Agreement also reaffirmed WIM as the main vehicle for Loss and Damage Mechanism. A study by Gewirtzman, Hoffmeister, and others reported that the proposed loss and damage mechanism by the WIM Executive Committee heavily relies on market approach methods wherein the risks of disasters are assumed individually by vulnerable countries. There were five proposed mechanisms: a) risk pooling; b) catastrophe insurance; c) contingency funds similar to disaster funds; d) climate bonds, which are loans provided by mostly developing countries to fund climate-related projects; and e) catastrophe bonds, which are loans issued by a vulnerable country and are bought by investors who bet on the incidence and extent of disasters in that country.
Unfortunately, these market approach methods are not equitable as most of these methods require developing countries to solely assume the risks of disasters exacerbated by climate change. This is in contrast to the solidarity approach where developed countries should be the ones shouldering the costs. All of the methods also do not provide a way to compensate for non-economic losses, and the damages incurred from slow-onset events. There is also a financial barrier for developing countries to join insurance schemes like risk pooling and catastrophe insurance. These two methods demand vulnerable countries to group together and pay a contribution called premium to create a fund where payouts can be made when a disaster strikes. However, because climate change makes disasters and extreme weather events more frequent, more consistent, and more devastating, premiums are likely to become more expensive over time.
The Big Picture
Given all these issues with the global climate finance architecture, it is high time to see the big picture and analyze whether our approach to climate justice should be redefined. Multilateral funds like the Global Environment Facility, Green Climate Fund, Adaptation Fund, the Climate Investment Funds, bilateral institutions and multilateral development banks all have one characteristic common among them: they are all dependent on the supposed magnanimity of the Global North. All of these entities run on small voluntary contributions from wealthy countries. Hence, the stream of funding can be affected by the political conditions of these developed countries especially with the rise of isolationism and authoritarianism around the world. This can be seen with the case of the United States, one of the top donor countries to climate funds, when Donald Trump pulled out the country from the Paris Climate Agreement. A tragedy for developing countries.
“The blanket claim stating that the climate crisis is ‘human-induced’ hides the truth that an entire economic system serving the interest of the ruling class is what is killing us.”
The climate crisis, however, cannot be solved through this type of ‘charity’ when it is inequity that lies at the heart of the issue. National governments of the biggest emitting countries should be held accountable for their criminal neglect. Mega-corporations should be held accountable for their active destruction of the environment. The current climate finance architecture allows the major polluters to get away from their crimes against humanity by just simply donating small amounts of money to poor helpless countries. With the current set-up of the climate finance architecture, nothing would fundamentally change because it fails to challenge the system that produced the climate crisis. ‘Business-as-usual’ for the power and economic elites of the Global North means suffering and death for the poor and impoverished of the Global South. This is a very clear demonstration of 21st century imperialism and unbridled capitalism.
Moreover, as highlighted by Oxfam, it is also unethical that climate funds, bilateral institutions and MDBs are hoping to tackle climate change by offering financing for climate projects through loans. In short, the goal of these entities is to deliver profits to their investors. The fact that these entities are lending for profit is in itself scandalous as it forces poor countries to take loans just to protect themselves from the climate crisis they did not create. Meanwhile, funding in the form of grants has comprised a smaller and smaller portion of total public climate financing. Some donor countries even have the nerve to overstate their financial contributions just because they can. Instead of creating an equitable loss and damage mechanism, the WIM ExCom promotes a market approach that shifts the burden of reparation or compensation toward poor countries.
We are not all equally culpable for the climate crisis. The blanket claim stating that the climate crisis is ‘human-induced’ hides the truth that an entire economic system serving the interest of the ruling class is what is killing us. Mega-corporations and governments of top emitting countries in the Global North cover up their sins by pushing down our throats the idea that the climate crisis can be solved through individual actions like eating less meat, recycling, and avoiding single-use plastics when in fact, transformational and meaningful change can only happen by overhauling the entire system. Climate finance and reforming capitalism will not save us. We must, as the Tribune has said, be prepared “to capture state power and use it to transform the economy and bring about justice.” We will make the ruling elite pay, one way or another.
