Spirit of the $100 Billion Haunts Donors
21 October 2015
Earlier this month contributors showed us what a US$100 billion commitment looks like. The OECD/CPI report revealed that the commitment consists mostly of loans and private finance. In 2013, the contributions consisted of more than $20b in loans, almost $20b in private finance, equity and guarantees, and a mere $13b in grants. These numbers don’t quite add up and ECO feels that the “$100 billion” is desperately lacking the spirit of the 2009 promise—to provide new and additional money to help meet the needs of developing countries.
ECO has heard donor Parties complaining about being haunted by the spirit of the $100b, but the effort to evade the original intentions with new accounting methodologies isn’t fooling anyone. So, here is an alternative approach, one that is more in keeping with the spirit of the commitment:
- Address the adaptation finance gap: According to the report, only 16% of climate finance was for adaptation. Parties should commit to allocating at least 50% of public finance for adaptation. ECO would also encourage Parties to take action to address the gap before 2020. A public adaptation finance target for 2020 would kill two birds with one stone.
- Use innovative sources for climate finance: Alternative sources, like financial transactions taxes on bunkers or redirecting fossil fuel subsidies, could allow donor countries to contribute to climate finance without raiding their aid budgets. Rather than diverting aid to meet their obligation on scaled-up climate finance, developed country Parties should commit to raising additional money from different sources.
- Include a long-term mechanism for setting financing goals: Periodically setting separate quantitative targets for public adaptation and mitigation finance in line with adaptation and mitigation commitment periods is a good option. This will provide developing countries with greater predictability on the levels of support they can expect and therefore help all Parties increase ambition by matching finance to needs and climate action.
No one likes to be haunted by menacing spirits. ECO thinks Parties would be better served developing innovative sources of climate finance rather than innovative accounting methodologies.
Maybe then they will sleep better at night.