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Home » Climate Change, Climate Finance, COP21, Financing for Development

Why climate financing matters to real people

Submitted by on 30 Mar 2016 – 11:27

Although most of the focus at COP21 was on the emission reductions required to achieve the global targets, the real issue on the table was climate finance. Erik Solheim, Chair, OECD Development Assistance Committee discusses why equitable financing has been at the forefront of all international climate negotiations

eric solheim 2Imagine your country being hit by a hurricane, and the damages are so big that your government has to spend every dollar on repairing the damages the next two years. No money is left for schools, hospitals or roads. This has already happened to the small island state Grenada in the Caribbean. Perhaps, this could happen to other poor countries the next years. While rich countries are mainly responsible for the climate changes, the poorest countries and the small developing island states are those who will suffer the most from the changes. A few years ago, Grenada experienced two hurricanes that wiped out 200 percent of their gross domestic product and destroyed nine out of ten dwellings. This compares to the US, where even the worst hurricanes result in damage amounting to only a most limited part of their national budget.

The rich countries have a responsibility to share the cost of the climate changes and support countries to adapt and mitigate to these changes. I am both happy and proud that the climate agreement in Paris last December closed with an ambitious agreement that will put us on track to cut emissions in order to maintain global temperatures below two degrees. And with the ambition to reach lower than 1.5 degrees. The agreement also included the goal of achieving 100 billion dollars by 2020 to finance climate changes in countries which are highly dependable on aid money, having difficulties with attracting private capital and acute economic vulnerability to shocks. These countries also often face challenges in mobilising finance effectively, and some have high debt levels.

At the same time, it is important to emphasise that this is not framed in terms of poor countries asking for money from rich yet again, but in terms of partnership. There is an understanding of the common threat we are all facing. And contrary to the popular belief, the least developed countries and the small islands developing states do not simply seek free finance from the developed world. They also recognise the importance of taking firm climate action themselves as well as engaging private capital. We need to support these initiatives through both policies and aid money.

In this context, it is thus important to say that a lot of good things are already happening. And we need to look at the success stories which now are being told from all over the world – and be inspired by them:

A main concern is to support adaption. The recent OECD report on climate finance recognises that finance for adaption is a small proportion of the overall climate finance flows. Most poor people depend on agriculture for their livelihoods. And this makes them extremely reliant on environmental conditions, and therefore vulnerable to climate change. Stepping up efforts in the food security, nutrition and agricultural sector has thus become imperative. An example of good work on this is how farmers in Ethiopia now can insure their crops. Increased climate variability has led to more uncertainty from year-to-year for many, putting their crops and livelihood in jeopardy. Now Oxfam has made insurance possible, and thus the farmers can receive payments for crops being harmed by the weather.

Another great concern is how countries in can have best access to both finance and technology. Experience shows that some countries have difficulty accessing resources from these funds to adapt to climate changes due to the complexity of the procedures. So another important issue is to facilitate and ease the access for the countries which need this finance and technology.

Rwanda is one country which has received money from one of these funds, The Green Climate Fund. 30 innovative projects for both private and public institutions in climate resilience have been approved. For instance, 30 million trees were planted last year. When I attended the Paris climate convention, I met representatives from the government of Rwanda who told me how they now prepare for above normal rain using technology. To cope with and minimise effects of disasters due to climate change, Rwanda is using SMS sending automatic messages to people and different rescue stakeholders in early disaster warning.

This will be extremely useful for the people of Rwanda during this year’s El Nino weather phenomenon, which the US National Aeronautics and Space Administration (NASA) has warned could be the strongest ever. And experiences from Rwanda might be useful in other countries as well. El Niño is responsible for flooding across big parts of the world. In East Africa, Somalia is expected to displace at least 900,000 people due to flooding and drought in Ethiopia might leave eight million people in need of food aid.

There are also many good ongoing initiatives by people in the private sector. One example is on energy, where a collection of billionaires, including Bill Gates, Mark Zuckerberg and Jeff Bezos have launched a new global initiative, the Breakthrough Energy Coalition. They aim at accelerating private sector investment in clean energy. Last year’s investment flows to renewables such as solar and wind raked a record of $329.3 billion. This resulted in 121 gigawatts added, more than ever before, according to new data by Bloomberg New Energy Finance.

Back to Grenada and other small Islands Developing States, their experiences show how hurricanes tend to contribute to the vulnerability. Climate change is a serious threat even though they have a low contribution to global greenhouse gas emissions. Due to their size and location, small islands are especially susceptible. As developing economies, they are relying on various sectors that are vulnerable to the climate, like tourism, agriculture and fishing. They will also be detrimentally affected by a continued rise in sea levels, changes in rainfall and temperatures, and increasing weather changes and natural disasters.

In sum, more and better climate-related development finance is needed for the most vulnerable developing states. The need of the moment, of course is more development assistance to countries in need and better utilisation of such assistance to help transform these economies.
All development needs to be sustainable, and this is not possible without tackling climate change. We must work in partnership to bring about robust and lasting action to protect the most vulnerable from climate change.