Some $250 billion of the $500 billion owed should go to mitigation, $100 billion for adaptation and $150 billion for loss and damage
CSE’s Avantika Goswami moderated a discussion hosted by UNCTAD on trade, fiscal space and climate ambition at COP28 As the 2024 deadline to adopt the new climate finance goal — New Collective Quantified Goal (NCQG) — approaches, the United Nations Conference on Trade and Development (UNCTAD) released estimates of what wealthy nations owe developing countries.
The UN agency calculated that $500 billion should be channelled to developing countries in 2025 under the new finance goal to support climate action. These estimates are part of a report summary released at the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change in Dubai.
Some $250 billion of the $500 billion owed in 2025 should go to mitigation, $100 billion for adaptation and $150 billion for loss and damage.
This figure, UNCTAD added, should increase to $1.55 trillion by 2030. This can be further broken down into $1 trillion for mitigation, $250 billion for adaptation and $300 billion for loss and damage by 2030.
At COP21, the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA) decided to set a NCQG from a floor of $100 billion per year before 2025. This goal would take into account the needs and priorities of developing countries.
Meena Raman, Head of Programmes of Third World Network (TWN), noted at the launch of the report that developed countries do not want to talk about the quantum of the goal. They say it is a political issue, she added.
Raman also criticised the pledges to the Loss and Damage fund, which was operationalised at COP28. Some $700 million has been pledged to finance loss and damage, according to The Guardian.
The current climate finance goal of $100 billion per year was not decided on the needs of developing nations. In 2021, climate finance provided and mobilised by developed countries for climate action in developing countries reached $89.6 billion. This is according to the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organisation with 38 member countries.
OECD also claimed that the $100 billion goal may have been met in 2022, without providing proof to back it.
Even as the current goal remains unmet, developing countries have fallen into a debt trap. Some 52 low- and middle-income developing economies are either in debt distress or at high risk of debt distress, according to the 2023 Financing for Sustainable Development Report.
“Nigeria imports 100 per cent of gasoline. Africa imports 85 per cent of its food. The rules for financial architecture have put us in this position,” Fadhel Kaboub, Global Institute for Sustainable Prosperity, said at another UNCTAD event.
Experts have called for a reform of the global financial architecture. “The global financial architecture’s main foundations are The Bretton Woods Institutions (which include the IMF and World Bank created in 1944) when most of the Global South was still colonised. It was created for extractive purposes from the colonies, and not for climate or development,” Fadhel Kaboub, Global Institute for Sustainable Prosperity, told Down To Earth.
Over the last 70 years, we have not had any reforms of these institutions and they still operate as they did before, he added.
There have been some proposals on the table such as the Bridgetown Initiative. But these proposals do not touch upon some structural issues, Kaboub explained.
These structural issues include food, energy and manufacturing deficits. The expert explained that assembly line manufacturing, for instance, is outsourced to the Global South. This locks developing countries at the bottom of the global value.
The Global South imports machines and fuel to power the industries and then provides low-cost labour. This means the value added to what is produced is low and the value added to what is purchased from the rest of the world is high, he added.
“We have to change the terms of conversation on climate finance. There is a need for the transfer of technology and financial resources for transformation. This should not be additional entrapment,” Kaboub said.
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