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International Development Committee calls for easier access to ‘climate finance’ funds - expert comment

The House of Commons International Development Committee has published a new report, Global Britain in demand: UK climate action and international development around COP26. Dr Celine Tan, Reader in Warwick Law School comments on the climate finance aspects of this, and the UK COP26 Presidency's Climate Finance Delivery Plan, published yesterday.

Dr Tan writes:

  1. The report correctly emphasises that there is a link between climate and development and that the provision of ‘sufficient, long-term and reliable funding’ is key to ensuring that developing countries, especially climate vulnerable countries such as LDCs and SIDS, are sufficiently resourced to meet the challenges of the climate crisis.
  2. While correctly pointing out that global adaptation finance plays ‘second fiddle’ to mitigation in terms of international climate finance, it should also have emphasised that countries also require financing to transition from carbon-intensive economies in order to meet other development needs, such as poverty reduction, healthcare and education. If countries do not have sufficient means – including concessional finance (such as grants and concessional loans) but also investment and technology transfer - to transition to a low-carbon economy, they will be trapped in and poverty and climate cycle. They will also face increasing non-tariff barriers to trade and investment, such as climate-based tariffs or environmental, social and governance (ESG) conditions on access to private and public finance. Without resources to be able to transition to a cleaner and greener economy and climate-friendly means of production, many developing countries will be left behind facing a tsunami of climate risks to their communities but also economic risks that will have broader developmental impacts.
  3. Climate finance should therefore be located within a broader discussion of the structure of global economic relations, including trade, finance and investment regimes, that continue to marginalise developing countries and prioritise the interests of major economies, notably western industrialised states who have been primarily responsible for the climate crisis today. Developing countries cannot deal with the climate crisis unless we also deal with the unequal terms of global trade, international investment regimes that protects the rights and property of foreign investors over the public interest of communities and host state regulatory and policy autonomy and global intellectual property laws that prevent transfer of clean and green technology. Developing countries are also facing a post-pandemic sovereign debt crisis and an international financial architecture that remains poorly regulated and lacking in effective mechanisms to deal with both chronic and temporary debt crises. A focus on climate and development needs to be located within these broader considerations.
  4. While we can link climate and development, we need to move away from the discussion of climate finance as aid. Climate finance has to be, as the report highlights, ‘new and additional’ to ODA and other official financing. Climate finance is not aid. Climate finance is an obligation of state parties to international agreements (the UNFCCC, the Kyoto Protocol and the Paris Agreement), especially developed country state parties to the UNFCCC. These treaties provide and reaffirm the obligations of developed countries to provide financial resources to assist developing countries implement the objectives of the international climate change agreements. Climate finance should therefore not be conflated with aid/ODA in any way. The UK, as a developed country member state, has an international obligation to provide these resources separate to its ODA commitments.
  5. Consequently, the narrative of climate finance needs to change. This is not about wealthy countries being benevolent to poor countries by financing solutions to the climate crisis. It is about the duty of countries that have benefitted from climate damaging production and consumption patterns to repair the damage. The UK, like many industrialised countries and a former colonial power, owes a debt to the countries and communities that it has relied upon for the historic and contemporary extraction of resources and for its historic and contemporary carbon emissions that have caused and continue to cause climate change. Climate finance is one plank of a redistributive international public finance regime based on rights and obligations. We already have legal regimes for that. Climate finance cannot be conflated with aid. It is about duty to repair loss and damage and an international legal obligation."

26 October 2021