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Some countries have demanded that all of the $100bn a year financing to battle climate change should come solely from the public purse of developed nations.
Some countries have demanded that all of the $100bn a year financing to battle climate change should come solely from the public purse of developed nations. Photograph: Franck Robichon/EPA
Some countries have demanded that all of the $100bn a year financing to battle climate change should come solely from the public purse of developed nations. Photograph: Franck Robichon/EPA

Private sector must pay more into $100bn global climate fund, says report

This article is more than 8 years old

World Resources Institute advises businesses as well as governments to increase funding to enable poor countries to cut emissions and rebuild infrastructure

The global target of directing $100bn to poor countries to help them cope with climate change is likely to be missed unless private sector finance is ramped up significantly, a new analysis has found.

Rich countries will also have to find more money from taxpayers to fund developing countries, enabling them to cut their greenhouse gas emissions and rebuild their infrastructure to adapt to the likely effects of global warming.

The analysis, seen by the Guardian, is a critical part of the runup to the UN climate change conference, starting on 30 November in Paris. Poor countries were promised finance flows of $100bn a year from developed countries by 2020, as part of the deal reached at the climate summit in Copenhagen in 2009.

But finance has fallen well short of that target so far, and poor countries are concerned they will not receive the promised money. They are demanding that the target be reached, as a prerequisite for any agreement in Paris.

Some countries have also demanded that all of the $100bn a year financing should come solely from the public purse of developed nations, rather than coming from the private sector or other sources. Developed countries are resisting this, and want private sector money to fulfil a large part of the pledge.

‘At Paris, if we are not able to demonstrate that finance is there, why should developing countries believe in an agreement?’ said report co-author Pascal Canfin. Photograph: Kenzo Tribouillard/AFP/Getty Images

The analysis, by the World Resources Institute, which will be published on Wednesday, shows that the target is unlikely to be met unless private sector funding is included. But if it is included, then the target can be reached or even substantially exceeded.

At Paris this December, world governments are expected to forge a new global agreement on climate, with rich countries pledging to cut their greenhouse gas emissions beyond 2020, when current commitments run out, and developing nations are expected to place curbs on their future emissions.

The Getting to $100bn report, designed to inform the French and other governments ahead of the crunch negotiations, shows that rich countries must increase their pledges of funding in order to meet the target. It posits four scenarios, with varying amounts of cash coming from the public sector, development banks such as the World Bank, and businesses.

Under the most likely scenario, developed countries would provide about $31bn a year towards the target from their taxpayers, nearly a doubling of the estimated $17bn provided in 2012. Development banks, including the World Bank, would supply $28bn, also nearly a doubling from the $15bn provided in 2012.

“There is clearly a need for additional public money,” said Pascal Canfin, senior advisor on international climate affairs at the WRI, and co-author of the report. “But this is do-able.”

The money from rich countries would enable about $39bn to be leveraged from the private sector – in other words, businesses would be expected to co-invest or use loans from the public sector – which is a substantial increase on the $21bn from this source in 2012. The money from development banks would also be leveraged in the private sector, supplying about $39bn, up from $21bn in 2012.

If realised, this would amount to about $137bn, enough to satisfy developing countries’ requests.

Providing the finance is seen as crucial to the success of the Paris talks. Canfin, who also advises the French government, said: “At Paris, if we are not able to demonstrate that finance is there, why should developing countries believe in an agreement? If we can’t demonstrate it, there won’t be a deal.”

Canfin warned that much more investment than the $100bn a year would be needed to put the world’s economy on a low-carbon footing, and ensure that global warming does not exceed 2C above pre-industrial levels, the threshold beyond which the effects of climate change are likely to become catastrophic and irreversible. “These finance flows will not be enough in themselves to produce a 2C economy,” he said. “There has to be in Paris a roadmap for a 2C economy.”

The report does not address another crucial question: what will be agreed at Paris in terms of rich country pledges for finance flows beyond 2020? Unless that is also resolved, there may be no agreement in Paris.

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