Billions of dollars are being loaned at high interest rates to poor countries seeking help to cope with the impacts of climate degradation, according to a Oxfam report.
The terms of the loan risk accumulating debt that will last a long time, according to the charity.
Poor countries reportedly received around $ 60 billion (£ 45 billion) in climate finance from rich governments and publicly funded institutions in 2017-18, the latest year for which reliable data is available . Oxfam estimates that the amount that actually came to them was more like $ 19-22.5 billion after deducting interest, repayments and other costs.
The world’s least developed countries received $ 3.2 billion in loans in 2017-18 to help them adapt to the ravages of the climate crisis, according to Oxfam, which analyzed data from the UN and the ‘OECD.
Tracy Carty, Senior Climate Change Policy Advisor at Oxfam, said: “We are concerned that poorer countries are being forced to borrow to protect themselves from excessive emissions from rich countries. These are the countries that have caused the climate crisis the least. “
Climate finance is money in the form of grants, loans and other aid from the rich world to developing countries to help them invest in ways to reduce their greenhouse gas emissions and to help them adapt extreme weather conditions and other effects of global warming.
Under international pacts dating back to 2009, rich countries agreed that at least $ 100 billion per year in climate finance is expected to reach the developing world by 2020. Delays in data collection mean that judging whether this target is met will take until around 2022, but estimates have shown that the target is broadly on track.
However, there is no agreed definition of climate finance, and the target of $ 100 billion per year may include private sector flows, such as business investment in renewable energy projects. There is also little way to judge whether these totals are offset by investments in high carbon infrastructure, like coal-fired power plants.
Oxfam report, released Tuesday, indicates that 80%, or about $ 47 billion, of all reported public climate finance was in the form of loans, not grants. Of this amount, about half ($ 24 billion) was non-concessional, meaning that loans were offered on less generous terms.
About a quarter of total funding has been spent on improving countries’ resilience to climate-related issues, and about two-thirds has been spent on reducing emissions. About a fifth of the funding went to the world’s least developed countries, and only 3% went to the world’s small island developing states, which are facing flooding caused by sea level rise and storm surges. .
Climate finance is likely to be a key issue see you next year Cop26 Climate Summit, which is to be hosted by the UK in Glasgow, where one of the discussions will focus on Article 9 of the Paris Agreement, which deals with how climate finance should be delivered to poor countries. No new commitments to raise the target of $ 100 billion per year are expected before 2025, but poor countries are urged to submit national emission reduction plans to Cop26, and in return they will likely want assurances from the rich world that financial aid will be available to help them do so.
Some activists have called for discussing debt relief for developing countries, in light of the effects of the Covid-19 pandemic and the climate crisis.
A World Bank spokesperson said: “The World Bank Group provides concessional loans to client countries at a rate below the market rate. These count for our climate finance, just like grants. We do not count interest payments and other charges as climate finance, as they are considered the cost of access [development bank] financing, not climate finance itself. Counting interest payments would give an inaccurate and inflated figure of the climate finance actually provided. “
Rémy Rioux, director general of the French Development Agency, said investment flows of $ 100 billion per year were necessary but not sufficient to deal with the scale of the climate crisis, as the flows of Global investment amounted to $ 20 billion per year, most of which is not “green” or “climate resistant.” The French government will hold a conference, titled Finance in Common, next month to bring together public development banks around the world and call on them to mainstream climate finance into all their spending.
“We need to ensure that all financial flows are aligned with the Paris Agreement and the United Nations Sustainable Development Goals, and not just North to South grants,” Rioux said. “It is the scale of investment flows that must become greener and more socially sustainable. And this global goal must first and foremost be translated into national agendas. “