The saga of the $100 billion climate finance
At the 2009 United Nations Climate Change Conference in Copenhagen, the wealthy nations promised to provide USD 100 billion a year to low-income countries by 2020 to assist them in fighting climate change. However, the promise was never kept. As per the latest statement by the OECD Secretary
“The last OECD assessment of progress showed that climate finance provided and mobilized by developed countries totalled USD 79.6 billion in 2019, up only 2% from 2018. The USD 100 billion mark is unlikely to be met in 2020, although the necessary verified data to finalize this determination will not be available before 2022.” [1]
Even though the developing nations will need trillions of dollars to avoid dangerous levels of climate change, the $100-billion pledge is infinitesimal. But this $100 billion is significant because somebody promised it, and the promise was broken. The most relevant question raised here is — why was it broken? Is it the quantum of the fund or its purpose that defeated the initiative? While pondering the answer to both these questions, to give a sense of relativity, it is essential to note that fossil fuels received a whopping $5.9 trillion in subsidies in 2020.[2] The imbalance of both figures is a stark reflection of priorities and promises.
Although countries collectively agreed to contribute towards the USD 100-billion goal, the wealthy nations made no formal deal on how much each should pay. Instead, countries announced pledges whatever they wanted and hoped others would follow. Another critical point is that majority of this funding was loans that must be repaid rather than grants. In 2019, 71% as loans compared to only 27% as grants.[3] Given the growing debt in many low-income countries, this is morally questionable and deeply unfair.
Why are these kinds of financing critical?
Even though the US and Europe emissions are dropping, global emissions are still growing. All of that is happening in the developing world. Unless we bring the developing world along, all climate change fights are going in vain. However, there is a bit of hypocrisy in asking developing countries to tackle these climate change problems themselves. The following example can give a better picture of this hypocrisy.
Let’s say I have a cousin and his family in Mirzapur, India. The family of 5 currently owns a bike, and they use it every day for all their transit purposes. Over the years, the family has dreamed and saved up money to buy a small car. After five years of rigours saving, now they can afford a car that runs on petrol. However, saying that they should continue with the bike if they can’t buy an electric vehicle is morally wrong and asking them to wait a few years until we get better and cheap technology isn’t justice.
So, before telling the developing world not to use fossil fuels and coal, the developed nations must ensure that they have adequate financing to adopt these new technologies. The end-user in these developing counties should be subsidized to afford new clean technologies. Penalizing them for the century-long exploitation by the global north ain’t right and makes a strong case for these kinds of climate financing. Those who created the problem must have the moral obligation to invest in making this happen, as these kinds of climate finances give a lifeline for low-income countries to deal with climate change.
