by Vincent Diringer
Ahead of the official summit in Glasgow, COP26’s success was expected to hinge on the financial outcomes of the event. Crucial funding for vulnerable nations had not been forthcoming, as the yearly $100 billion dollars in financial support that had been promised a decade earlier by developed economies had not materialized . In comparison fossil fuel subsidies over the previous five years had amounted to $3.3 trillion in subsidies . This represented a major sticking point for vulnerable communities and their representatives, many of whom are Small Island Developing States, Least Developed Countries or developing economies unable to foot the bill for Loss and Damage.
On the opening day of the Summit, the elephant in the room was addressed directly by Barbados Prime Minister Mia Mottley : “Our people are watching and taking note. On finance we are 20 billion dollars short of the 100 [billion pledged] and this commitment might only be met in 2023. On adaptation – adaptation finance remains only 25 % – not the 50:50 split needed given the warming that is already taking place. Climate finance to frontline SIDS declined by 25% in 2019. Failure to provide this critical finance and that of loss and damage is measured in lives and livelihoods being lost in our communities. It is immoral and unjust.”
Post-COP26 Public Finance
Following the two weeks of negotiations in Glasgow and the signing of the Glasgow Climate Pact, the road ahead for climate finance does not seem clearer. Loss and damage and its financial aspects were not addressed save for the creation of an ad-hoc working group that will focus on providing a more concrete structure to such a proposal [4, 5].
Collectively, world leaders agreed that they would strive to reach the $100 billion pledge by 2023, that there would be a long-term adaptation finance fund, and that fossil fuel subsidies were to be rolled back . However, there was no indication of milestone-setting or clear assurances for vulnerable nations. The quality of the finance was also not discussed — delegations had noted that some of the funding came in the form of counterproductive high-interest loans .
Although the mention of fossil fuels marked a first in a COP document, the wording surrounding it was weak and countries have already begun to skirt around it by designating natural gas as a green energy source .
Post-COP26 Private Finance
While all eyes were on public finance towards climate change, the private sector provided some interesting pledges of their own during COP26. The Glasgow Financial Alliance for Net Zero (GFANZ) was created during the first week and involves a partnership of corporations which manage around $130 trillion in private assets . As of yet, it remains to be seen how GFANZ will be used or how it will enact inclusive and effective climate solutions.
Alternatively, intergovernmental and sectoral partnerships were also announced during the summit, which included the International Renewable Energy Agency (IRENA)’s and the United Arab Emirates teaming up to launch a financing platform for renewables in developing countries . Other initiatives included France and the US funding South Africa’s transition towards sustainability. While good on paper, the weakness of the final COP26 text in regards to fossil fuel has led to South Africa maintaining coal power as a primary energy source . This highlights a key weakness behind climate finance at present, with little to no meaningful action being generated surrounding the topic.
What does this all mean?
As PM Mottley expressed, “Our people are watching and taking note.” . But fixing climate finance was never going to be easy. Many called COP26 a failure in the making ahead of its start date as a result of the mis-trust that had been created by the lack of climate finance made available and the apparent lack of action undertaken by major economies . What was agreed in Glasgow did not remedy those issues, and in many cases it did not provide anything new to current frameworks — but it did highlight that developing nations are becoming wary of developed countries’ lack of action and that they are searching for their own solutions.
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