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Positioning the Climate Finance in the post-2015 Development Agenda

by Aziz Karimov

24 June 2013

Aziz Karimov

By the end of 2015, we will see a new global development agenda which will substitute the Millennium Development Goals (MDGs). If we look at the years after the adoption of the MDGs, there is no doubt that the development goals have been successful in focusing governments’ attention on poverty eradication, by setting clear outcome indicators and uniting humanity behind a targeted principle. However, despite a goal devoted to ensuring environmental sustainability (MDG7), one of the criticisms of the MDGs has been insufficient attention to the climate issues. Currently, the question of whether climate change is happening is low on the agenda.

The world is facing an increasingly volatile and extreme climate, which is impacting the poorest the first and the most. Climate change acts as a ‘risk multiplier’, increasing socio-economic, political, demographic, and resource pressures. It is challenging the economic paradigm that treats the environment and climate change separately. The global climate can now be seen as a crucial public good under threat, as important as the issues of food security, health, and peace.

Too little finance

If the target of the post-2015 agenda is inclusive of sustainable development and poverty reduction, then building long-term resilience to climate change and shifting towards low-emissions economies should be an integral part of any related high-level discussions. It should be ensured that fast-growing countries embrace low-carbon development tracks and that the most vulnerable populations are able to adapt to climate change and are sheltered against its worst influence. This would require immense amounts of climate finance to increase awareness, prepare for better reaction, and ensure flexibility in those actions. According to the World Bank’s 2010 World Development Report  current climate finance funds to developing nations amount to about US$10 billion a year on average, with roughly 80 per cent going to mitigation and rest to adaptation. The amount that would be actually needed has been crudely estimated to range between US$115-275 billion (Pew Center on Global Climate Change, 2010).

To meet these financing goals combinations of public and private finance are required, and modes for achieving the necessary transformations should be at the center of any post-2015 agreements. At the moment, climate finance is dominated by bilateral aid and international development institutions in the form of environmental aid, which for example flow via global environment facility projects and other climate finance initiatives. However, these forms of finance are not sufficient to meet the climate challenge we face.

In the 2009 Copenhagen climate change negotiations, industrialized countries vowed to commit US$30 billion for fast start finance over 2010-12, and to mobilize US$100 billion a year by 2020. This ’Green Climate Fund’ was formally established in the Durban conference in late 2011 in the expectation that a significant amount of future international climate funding will be channeled through this fund. While developed countries report that they exceeded their commitments they made in Copenhagen in 2009, how these funds has been allocated and what it has specifically supported remains a complex issue to investigate. Moreover, new OECD figures show that while adaptation expenditures in 2011 have not increased in comparison to 2010, mitigation expenditures decreased by 11 per cent  over the same period. This raises another important question: will developed countries keep up their promises to deliver US$100 billion a year by 2020?

Action on climate change

The high-level Panel of Eminent Persons on the post-2015 Development Agenda released a new report at the end of May 2013. Whereas the report shows clear goals aimed at tackling climate change—such as managing natural resources sustainably, securing sustainable energy and to a lesser extent ensuring sustainable agriculture, sustainable fresh water use, and limiting global average warming to 2°C—how these translate in terms of the actual agenda for the future will depend on other high-level meetings which will be held next year. One of them is the Open Working Group of the General Assembly on Sustainable Development Goals (Rio+20) and another one is the high-level summit on climate change arranged by the United Nations Secretary-General.

A challenge remains in how all these parallel activities will combine climate change and other development issues into a set of commonly shared global goals, and how achieving these goals will be financed under the new development agenda. While greenhouse gases in the atmosphere continue to increase, and adaptation is becoming difficult, we need to change the way we think and properly address climate finance challenges. Whereas we can all agree that ‘a single agenda should have a coherent overall financing structure’, the post-2015 Development Agenda also needs an ambitious and clear climate finance goal. Otherwise, the challenge to development and poverty reduction cannot be met.

Aziz Karimov is a Research Fellow at UNU-WIDER.

WIDERAngle newsletter
June-July 2013
ISSN 1238-9544

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