Run up to COP27: Only a quarter of global climate finance flows into Asia; much of that in loan

India received;a total of $37.1 billion in climate finance during;2013-2020
Run up to COP27: Only a quarter of global climate finance flows into Asia; much of that in loan

Asia received only 25 per cent of the global climate finance annually from 2013 through 2020 to support climate action, despite being home to roughly 60 per cent of the world’s population, according to a new report.

Much of the finance is provided as loans, increasing the financial burden in recipient countries, the briefing paper from Oxfam, a charity organisation, stated.

In 2009, developing nations jointly committed to mobilising $100 billion annually by 2020 to support climate action in the developing world. The target has not been met so far.

Oxfam analysed 18 Asian countries, which are collectively responsible for 42 per cent of current global emissions. Of this, 27 per cent are from China and 7 per cent from India.

Least developed countries such as Bangladesh, Bhutan, Cambodia, Laos, Myanmar, Nepal, and Timor-Leste have contributed little to the current climate crisis. Yet, they are among the most affected by the climate crisis today, the briefing paper read.

“Asia is being devastated by climate-driven disaster after disaster, taking lives and costing billions,”  Sunil Acharya, Oxfam’s Asia Regional Policy and Campaigns Coordinator, said in a statement.

“This is becoming an irreversible humanitarian crisis across Asia where half the population already live below the poverty line. People are nearing the limits of what they can do to cope,” Acharya said. 

The analysis found that $113 billion was committed to Asia during 2013-2020. This amounts to an average of $14 billion per year, according to the report. 

Of this, 47 per cent of this was provided through bilateral finance provided by developed countries. Around 53 per cent of the committed amount was provided through multilateral channels. Multilateral public climate finance flows from multilateral development banks and multilateral climate funds, according to Organisation for Economic Co-operation and Development.

India received a total of $37.1 billion in climate finance during the period — the highest among 18 countries. Bangladesh received $14 billion, China $12.1 billion and Indonesia $10 billion. 

Maldives received $59 for every person in finance, compared to India’s $3 per person. 

Among donors, the top contributors were Japan ($28.2 billion), Germany ($11.2 billion), France ($6 billion) and the United States ($1.1 billion). 

As for multilateral financing, the World Bank Group committed over $30 billion from 2013-20, followed by the Asian Development Bank ($17.6 billion).

Mitigation projects attracted more finance than adaptation, showed the findings. From 2013-2020, two-thirds of climate finance in Asia was directed to the former, while the latter received only a third.

Drowning in debt

Loans and other debt instruments made up most of the climate finance, said the report.

Bilateral providers committed 82 per cent of financing through loans and other debt instruments. Only 18 per cent of their climate finance was through grants, the briefing paper stated.

Multilateral providers such as the World Bank, Asian Development Bank and Green Climate Fund were far more inclined towards loans, it added.

Only 5 per cent of their climate finance was given as grants. The remaining went as loans and other debt instruments. Of this, 67 per cent were loans given at close to market rates.

“We are forced to look rather cynically at the climate financing of the multinational institutions because the majority of their money is winding up as Asian foreign debt,” Acharya said.

This trend could push countries struggling with debt burdens into further financial difficulty. “This is counterproductive to the originally intended purpose of climate finance,” the report read.

This also means recipient nations will be forced to redirect money to repay debts. This money could otherwise be used in delivering public services such as in schools and hospitals, the authors of the paper wrote. 

Many countries in Africa and other like-minded developing countries, including India, collectively require 1.3 trillion to deliver appropriate mitigation and adaptation measures by 2030. In the future, climate finance should be transparent, Oxfam recommended.

It should be easily trackable and spent in ways in which people who are most affected are able to genuinely participate in decision-making processes, Acharya said.

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