Real Money, Urgent Action
3 December 2018
The latest IPCC Report made it unmistakably clear: far more and better financial support is needed to adopt and implement urgent, rapid and transformational policies to hold global temperature rise to 1.5oC. Climate finance takes a lot of space in this year’s COP agenda and ECO hopes negotiators will make good and constructive use of the space they are given.
New assessments from the UNFCCC’s Standing Committee on Finance and the OECD indicate an increase in the overall level of international climate finance from 2013 to 2017 based on developed countries” self-reporting. However, this increase continues to heavily favour the utilisation of loans and not grants, which, as we know, have to be paid back. According to the OECD data, the amount given as loans doubled, increasing from USD $20 to $40 billion between 2013 and 2017. In contrast, finance provided as grants only increased modestly from $10b to $13b. Reporting finance provided in nominal terms — and including flows through developed countries” export credit agencies, as the OECD report does — does not reflect the actual support provided. A key piece of information missing in this report is the grant equivalent of all loan instruments. ECO wonders why this information is missing. Note that reporting on a grant equivalent basis is already done by developed countries under the OECD DAC rules €” so there is no excuse not to do it here as well.
These reports tell us that adaptation finance – at around a quarter of developed countries” public finance – still falls short of what would be required to meet the needs of the most vulnerable as well as to achieve a balance between mitigation and adaptation support as mandated in the Paris Agreement. These reports also show that developed countries can and must do more to achieve the $100b promised by 2020 and reassure developing countries that climate finance flows will be adequate and predictable now and in the future. This is critical for encouraging developing countries to increase the ambition levels of their NDCs by 2020. We need more predictable sources of finance, which is why we encourage Parties to fully operationalize Article 9.5 of the Paris Agreement.
ECO is encouraged by Germany’s announcement that it will double its previous contribution to the Green Climate Fund to EUR 1.5 billion. We hope other contributor countries will follow suit and pave the way for an ambitious replenishment of the fund.
ECO, however, finds that there is still a significant list of unfinished business that could negatively impact trust among countries. One is the Post-2025 financial goal discussions. ECO advises countries to agree, at the very least, to adopt a process where Parties can exchange views on how to ensure discussions on the post-2025 goal are inclusive, fair and balanced. Making progress also means acknowledging the need to provide new, additional and innovative sources of finance for loss and damage. We can’t continue to ignore this need, it’s not safe according to the science of IPCC 1.5, it’s not just and it won’t go away because some countries try to ignore or delay it.
There is no time for division, as finance will be at the centre of the negotiations at the Pre-2020 Ministerial Dialogue, at the Talanoa Dialogue and most importantly at the High- Level Ministerial on finance on Monday 10th December. As in the Council of Elrond, here in Katowice, we know what needs to be done, and contributor countries have the means to take the lead in a just, robust and equitable way. Let’s use this COP to ensure more transparent, adequate and predictable climate finance flows in order to achieve the long-term goals of the Paris Agreement.