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The $100 Billion Climate-Finance Pledge to Developing Countries – is it a Promise or a Failure?

In 2009, a pledge was made by developed countries to offer 100 billion US dollars of aid to developing countries as part of an aid effort to help them tackle and mitigate the effects of climate change. The pledge has recently been criticized as world leaders have admitted that the target has not been reached, and is unlikely to be reached before 2023. In light of the COP 26 summit currently taking part in Glasgow, the failure to meet this promise has been seen by developing countries waiting for help as a breach of trust.


For many developing countries, the building pressure to transition to cleaner energy, reduce emissions and meet Net Zero agendas is unattainable without foreign aid. Countries with existing poverty crises, debt, or newly-industrializing economies are not able to meet the costs of such a transition, which is exactly why the aid from developed countries is invaluable. Furthermore, the pledge also supports the notion that climate change is a global issue requiring worldwide mobilization. Notably important for the developing world is the ability to mitigate against the effects of climate change that are already being felt, including drought, flooding (which particularly threatens low-lying and small island developing states), and natural disasters.


Certainly, it is true that significant progress has been made towards the goal to provide such funding to developing nations, showing promise of a concerted effort to help the Global South transition to cleaner technology and cope with the increasing effects of climate change. The graph below shows that the amount of aid available has continued to increase since 2016, despite not actually reaching the 2020 targets of 100 billion dollars.

Source: https://www.bbc.co.uk/news/science-environment-59040538

While such progress shows promise, the inability of the Global North to reach the end target by 2020 has been disappointing for many developing nations. This is particularly true in light of the large amounts of public funding that developed nations were able to mobilize internally as part of COVID mitigation policies during the pandemic, suggesting that the finance is available, but that helping the Global South to tackle climate change is simply not a priority.


Furthermore, criticisms of the target not being reached have also brought further shortcomings of the $100 billion pledge to light. One of these is the vagueness of the very definition of ‘climate finance, and the provenance of the funding provided. The lack of specificity on what can be counted towards such funding has meant that developed countries have different approaches as to what the term means, leading to major discrepancies in sources of funding from country to country. This has meant that at times, loans that will have to be paid back with an interest rate are included as ‘grants’; that developing countries themselves are often unable to decide where the funding goes (and consequently unable to channel it to those sectors where it is really required), and that in some cases as little as 3% of aid provided is actually channeled into tackling climate change (Roberts et al 2021).


Furthermore, the danger of a vague definition of climate funding for private sector investment is that firms might make ‘green’ investments to improve their brand image when the finance does not actually make a climate-positive impact where it is most needed. This forms a clear example of corporate and government ‘greenwashing’ that protestors at COP 26 in Glasgow are infuriated by. Greater clarity is needed as to what ‘climate finance’ really is in order to avoid corporations channeling money into profitable but not truly climate-friendly sectors.


In conclusion, the promise that developed nations have made of providing 100 billion US dollars of climate finance per year to the developing world is an example of a positive commitment to facing the challenge of climate change globally. However, its non-achievement along with the questionable nature of some of its sources of funding indicates that greater attention must be paid to the pledge to ensure that it really does provide the aid that developing nations require in order to tackle the climate crisis.

 

Tamara Moule