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Historic Climate Pact Endangered
US President Donald Trump’s campaign promise to “cancel the Paris Agreement” is one step closer to reality after leaders from the Group of 20 richest economies backtracked on pledges to allocate $100 billion per year by 2020 for climate change response.
The trend will hit hardest in countries that are not only vulnerable to climate change, but are also too poor to finance mitigation strategies themselves.
Just days before this past weekend’s summit in Germany, Trump budget director Mick Mulvaney told reporters that the administration would not fund climate change programs as it considers them “a waste of your money.”
Finance ministers and central bank governors from G20 countries appear to be falling in line behind the new leadership of the world’s largest economy.
In last year’s final statement, leaders stressed the importance of fulfilling commitments to providing “financial resources to assist developing countries with respect to both mitigation and adaptation actions in line with Paris outcomes.”
In contrast, the focus on climate change, and indeed any mention of the Paris Agreement, were conspicuously absent from the communiqué issued at the end of this year’s meeting.
An earlier draft of the communiqué obtained by Bloomberg cited “scarce public resources” as the reason behind the U-turn on climate finance. Instead, members shifted the emphasis to development banks and private investors, although even that language was removed from the final version.
The US alone had pledged US$3 billion to the Green Climate Fund, which is the main financing tool under the UN Framework Convention on Climate Change, and it delivered US$1 billion under the administration of former president Barack Obama. The other US$2 billion will not materialize under Trump, and the fund will be left with a massive deficit if other countries follow suit.
The Paris Agreement itself is now at risk, despite years of tough negotiations that finally produced the accord in 2015, bringing together 196 nations and uniting them in the fight against climate change and its impacts.
"Developed countries are failing to raise and distribute what they promised,” Trinto Mugangu, the negotiator and co-author of the Democratic Republic of Congo’s climate pledge, told IRIN by email.
A retreat from public financing for climate change mitigation strategies will not only shrink the overall budget. It will also disproportionately affect developing nations afflicted by poor governance and corruption.
That’s because public funds include initiatives to strengthen the pillars of the economy, even though such outcomes don’t offer an immediate return on investment. These include programs intended to build governance capacity, cut down on corruption, and develop infrastructure.
Unless those measures are in place already, private financers are less likely to fund developing countries. They already perceive renewable energy and green infrastructure as highly risky, and they are even more unlikely to invest in countries governed corruptly or lacking a robust policy framework that regulates how businesses operate.
The situation will likely lead to a paradox: Some countries most in need of climate financing won’t be able to get it, and will therefore suffer more due to climate change; but the effects of climate change will in turn undermine security and good governance, which are needed to access funding in the first place.
Take Congo, which Transparency International ranks 156 out of 176 countries in its annual survey of perceptions of corruption in those states.
An investigation by Greenpeace found that the Congolese government had repeatedly breached its own moratorium on deforestation. It signed concessions to logging companies while at the same time receiving funds from the Central African Forest Initiative. This multi-donor program coordinated by the UN Development Program under REDD+ aims to reduce carbon emissions by having developed countries pay less developed nations to protect their forests, which absorb carbon dioxide.
What were the consequences once the scandal was exposed? Not much.
The former secretary-general of the ministry of environment who was responsible for REDD+ was imprisoned but is now free. The case is still open and none of the money has been paid back, according to Brice Boehmer, who coordinates the climate governance integrity program at TI.
"We fight to end the impunity of these people, but often, once a case is closed, things quickly get back to the business as usual,” he said.
Congo is far from alone in its struggles with environmental corruption. Indonesia established a moratorium on logging in 2011, but has continued to lose forests at a rate 1.3 million hectares a year, according to Global Forest Watch. A TI report last year examined the effect that corruption had on the ability of Cameroon, Ghana, Zambia, and Zimbabwe to access REDD+ funding.
As the private sector takes on a stronger role in climate financing, companies are likely to adopt a more pragmatic approach and invest only in environments already ripe for revenue, rather than trying to improve governance.
"We know that investors use our corruption index as a tool to assess the viability of a project in a certain country,” said Boehmer. "It's a vicious circle: Corruption prevents a country from developing, and as a result the place becomes less attractive for the green businesses that could ease its poverty."
Of the nearly US$22 billion Congo asked for to realize its Nationally Determined Contribution to the Paris Agreement, only US$182 million has been allocated. With a GDP of less than US$500 per capita, the country can't develop without substantial help.
"Mismanagement of public funds is a reality in [Congo]," said Alphonse Bangila, a consultant who oversees a government project for the production of biofuel from soybean and palm nuts to power rural areas.
"The government is not doing enough to eradicate the problem, but it also lags behind in the planning and implementation of management structures for climate response," he told IRIN in an email.
Mugangu, the Congolese climate pledge negotiator, said his country badly needs the capacity-building assistance provided by public funds like the GCF.
"Developing countries lack the technical capacity to write up and implement mitigation projects with complicated calculations of carbon reduction benefits,” he said.
Barbara Buchner, who heads the climate finance program at the Climate Policy Initiative research institute, explained that businesses shy away from green investments when they don't have a clear picture of what technologies are available. For example, solar and wind are now much more efficient than just a few years ago and offer better return on investment, but investors still tend to perceive them as too risky or costly.
Public funding, she said, is the backbone of the climate finance architecture, as it can be used to remove some of these barriers.
“We are trying to create solutions to use public funding to leverage private investments at scale, so the GCF becomes an opportunity to unlock a much broader investment portfolio from other funders,” said Buchner.
But with public funds now expected to fall sharply, climate mitigation in developing nations could slip far down the global economic agenda.
The G20’s change of heart on climate finance "is a major turning point in international cooperation,” said Bangila. "From now on, each country will have to address the climate issue according to its own economic interests (as opposed to a global strategy).”
This attitude could lead countries to take another page from Trump’s playbook, he said: “Maybe we will come to believe that climate change is a hoax after all.”