Climate change earns a place at development finance table - Opinion

By Megan Rowling
The U.N. financing for development conference, which wound up today in the Ethiopian capital Addis Ababa, was never going to deliver a much-needed increase in funds to help vulnerable communities tackle climate change impacts, from more extreme weather to rising seas.

But it did take a step forward in signalling how climate change has moved up the world’s political agenda since the previous two global development financing conferences, where it was missing or an afterthought.

"There is a much stronger emphasis on climate change and environmental sustainability (in the Addis agreement)... and if you see that as a reflection of issues of pressing interest to policy makers, then the references to climate change are overdue and welcome," said Smita Nakhooda, a climate finance researcher with the London-based Overseas Development Institute (ODI).

Cash-strapped rich countries had not been expected this week to set out how they would put together $100 billion a year by 2020 for poorer nations to adapt to climate change and pursue low-carbon growth.

That will very likely have to wait until December's U.N. climate conference in Paris, where governments will finally have to put their cards on the table for a new global climate change deal.

Instead the Addis Ababa Action Agenda merely recognised the $100 billion commitment, and "the need for transparent methodologies for reporting climate finance.” Those are indeed sorely lacking, though multilateral development banks have recently promised to rectify that for their own investments.

Harjeet Singh, climate policy manager for ActionAid International, said the Ethiopia conference paid only “lip service” to the $100 billion target, with “no roadmap in sight to deliver it”.

"Rich nations failed to offer new resources or new sources of finance to the developing nations to deal with the rising challenge of climate change," he said.

Could some of the more than $400 billion in development finance promised by multilateral development banks and the International Monetary Fund over the next three years be spent on tackling climate problems?

Possibly - but some campaigners had wanted governments to make clear in Addis they would not divert aid intended to be spent on health or education for climate purposes.

"With climate impacts hitting home around the world and the solutions to the crisis in our grasp, what’s missing from this outcome is a strong call to richer countries to stop using flatlining overseas development aid to meet the climate finance commitment they made in 2009: $100 billion a year by 2020," Alix Mazounie, international policy officer for Climate Action Network France (RAC France), said in a statement from Addis.

‘Now deliver’

On a more positive note, the Addis agreement does underscore the importance of taking climate change and its impacts into account when planning development, something experts had urged.

"We encourage consideration of climate and disaster resilience in development financing to ensure the sustainability of development results," the text says.

And governments also committed to "enhanced support to the most vulnerable” in addressing and adapting to critical challenges. Those include sea level rise, ocean acidification and other climate change impacts affecting coastal areas and low-lying coastal countries, and extreme climate events that "endanger the lives and livelihoods of millions".

Fine words, but as Sven Harmeling of CARE International put it on twitter: “Now deliver.”

ODI's Nakhooda similarly noted encouraging language around the need for environmental sustainability and safeguards in new infrastructure, and how development banks should take this on board, but said it was still unclear how that would be put into practice.

One key unresolved issue in Addis was how much of the increase in finance needed to fund both the Sustainable Development Goals, due to be adopted in September, and poorer countries' efforts to deal with climate change will come from the public purse and how much from the private sector.

The Addis conference did not make great strides in answering this question, beyond stressing that private finance will be needed. Yet many climate experts doubt whether banks and businesses are really interested in backing unprofitable adaptation initiatives in rural areas, for example.

Given that most governments appear reluctant to commit to large sums of additional public finance right now - beyond the $10 billion promised last year to the fledgling Green Climate Fund - some are putting their hopes in more innovative sources of finance, such as redeploying money now spent on subsidising dirty fossil fuels.

In the Addis agreement, governments reaffirmed a commitment "to rationalise inefficient fossil-fuel subsidies” by restructuring taxes around them or phasing them out, though such measures would happen “in accordance with national circumstances”.

This commitment was welcomed by climate experts. "Cracking down on the wasteful consumption generated by such subsidies will be a useful step to drive investment into green technologies," said ActionAid's Singh.

The big questions for climate finance now are when and how states will put their Addis commitments into action, and whether the climate deal due in Paris will finally firm up the $100 billion a year goal. So far, post-Ethiopia, the goalposts seem far away.