EDITORIAL: The tensions and disagreements that emerged during the climate finance summit of the 2024 UN Climate Change Conference (COP29) at Baku have laid bare the continued reluctance of richer nations to take responsibility for their disproportionate contribution to the climate crisis and provide adequate support to vulnerable nations grappling with its impacts.
A lack of consensus has marred negotiations during the summit, as an initial draft caused much angst among developing countries as it did not even include an agreed upon number for the quantum of finance to be provided. Developing nations had been pushing for a figure of around $1.3 trillion, while the document that came to light only mentioned a placeholder ‘X’.
Even if an accord is eventually reached on the amount of financing, serious questions revolving around the form this financing takes will still need to be addressed: whether the funds will largely constitute grants or will a substantial proportion be made up of private financing options? As expected, developing countries oppose wealthy nations’ insistence on private finance, emphasising the need for public funding to prevent exacerbating already burgeoning debt burdens that many countries are already wrestling with.
It goes without saying that it is disgraceful that despite their historical role in driving the climate crisis through excessive emissions and exploitative development practices, nations like the US, Japan and those in the European Union are failing to shoulder responsibility for its impacts.
Poorer nations, bearing the brunt of climate disasters, deserve meaningful support from these wealthier countries — not only to mitigate the devastating effects of the crisis but also to transition towards sustainable, green energy systems. As was pointed out by Shehbaz Sharif during his speech at COP29, global climate finance systems must be reworked to suit the needs of developing nations by prioritising grants and non-debt financing solutions, shifting away from loans with exorbitant interest rates that push vulnerable countries further into debt traps.
Over the years, a disturbing pattern has emerged in climate finance, where wealthy nations have promoted loan-based financing that places an inordinate burden on developing countries. An example of this troubling trend was highlighted by a Reuters report earlier in the year, which had revealed that an international programme meant to help the developing world mitigate the effects of climate change was used by wealthy nations to amass billions of dollars in economic gains.
This programme was a result of a commitment made by developed nations back in 2009 during that year’s climate summit to raise $100 billion every year by 2020 to help poorer countries address environmental crises. What happened next, however, was nothing short of devious and outrageous, as wealthy nations, including the US, France, Germany, and Japan redirected money from the programme back into their own economies by loaning billions at market interest rates, defying the norm of climate-related aid being advanced at low or no interest. Furthermore, certain loans required recipient nations to hire or purchase materials from companies in the lending countries, meaning funds intended for developing nations ultimately flowed back to the wealthiest countries.
Given this history, one must question whether, even with a deal being agreed upon on the future of climate finance at COP29, what is to stop the developed world from exploiting potential loopholes in the arrangement to continue shirking its responsibilities? For a solution to this serious predicament to be truly effective, the leaderships of wealthier nations must recognise that half measures and turning climate finance into a business opportunity will not only perpetuate global inequalities but will also harm their own populations in the long run. As recent climate catastrophes in developed nations show, this is a crisis that will leave no part of the globe untouched or unscathed.
Copyright Business Recorder, 2024
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