Climate finance, the make-or-break issue

When it comes to global climate talks, cash is king - and a potential deal-breaker.

Rich nations have long promised to provide financing to poorer, vulnerable countries to help them cut greenhouse gas emissions and deal with the impact of increasingly severe weather disasters.

Wealthier states first pledged US$100 billion (S$135 billion) in annual climate cash for developing countries in 2009 and reiterated the promise in 2015 under the Paris Climate Agreement.

The deal was for the rich to meet the US$100 billion annual target by 2020, but they have failed to do so. The latest data available is for 2019, but financing provided last year is expected to fall below the mark.

There are concerns that a failure to fully hit this pledge target could derail the United Nations Climate Change Conference (COP26).

The two-week talks start on Oct 31 in Glasgow, Scotland.

Poorer nations which disproportionately face greater impact and costs from climate change - think Bangladesh, the Philippines and disappearing Pacific island nations - have been arguing for years for help. And for years, richer nations have come up short on their pledge.

Data from the Organisation for Economic Cooperation and Development shows that climate finance mobilised by developed countries for developing countries totalled US$79.6 billion in 2019, up 2 per cent from US$78.3 billion in 2018.

Dr Saleemul Huq, director of Bangladesh's International Centre for Climate Change and Development, believes that wealthy states have never taken the promise seriously.

"They made a pledge, they made a promise, and they didn't take it seriously - which throws everything they say into doubt. COP26 is going to be make-or-break in terms of trusting countries that make promises," he told The Straits Times' Green Pulse podcast.

"If they fail to come up with the money even a year late, it bodes ill for a successful COP."

With the finances of most developing nations drained by the Covid-19 pandemic, and climate change impacts increasingly costly - African nations spend 10 per cent of their gross domestic product on adapting to it - the United States and others need to finally step up, experts say.

A report this month by the global think-tank Overseas Development Institute (ODI) said that of the 23 developed countries responsible for providing international climate finance, only Germany, Norway and Sweden have been paying their fair share of the US$100 billion.

"Every objective analysis of responsibility and capacity shows that while some other countries are also falling short, the US is by far the furthest from providing what it should in climate finance, and most of the gap to meeting the US$100 billion goal is due to the US falling short," said Mr Joe Thwaites, an associate at the World Resources Institute's Sustainable Finance Centre in Washington.

The US should be contributing between US$30.2 billion and US$47.2 billion a year, depending on which metric is used to attribute fair share, according to the ODI.

Based on cumulative carbon dioxide emissions, it is responsible for 50.6 per cent of emissions from developed countries between 1990 and 2019.

In April, the US pledged to double its climate finance to US$5.7 billion per year by 2024. "But this is less than a quarter of what the European Union countries were already providing in climate finance in 2019, despite them having a combined economy smaller than the US," Mr Thwaites said.

US President Joe Biden yesterday told the United Nations General Assembly that his administration would double April's pledge with the help of Congress. But this is likely to be seen as still falling way short of the mark.