McLeod Group blog by Betty Plewes and Brian Tomlinson, April 19, 2022
Mia Mottley, Prime Minister of Barbados, made a powerful plea to northern countries at the UN Climate Change Conference in Glasgow last year: “We have come here to say two degrees of global warming is a death sentence for millions. Try harder, try harder.”
It is one of the tragedies of the global climate crisis that those countries that are the least responsible for creating the crisis are suffering the most from its effects. In order to begin to address this injustice, high-income nations promised in 2009 to fund actions to reduce greenhouse gas emissions (mitigation) and to address the inevitable effects of climate change (adaptation) in developing countries. To this end, they promised to mobilize long-term finance of US$100 billion a year by 2020 and every year after that until 2025. However, estimates suggest that the goal will not be met until 2022 or 2023, deeply eroding the trust of the low-income countries in ongoing climate negotiations.
For the poorest countries, the urgent priority is funds for adaptation to respond to the devastating impacts of climate change that are occurring now. The UN estimates that developing countries already need US$70 billion per year just to cover adaptation costs, and these needs will rise to $140 billion–$300 billion by 2030. A further problem is that about two thirds of those funds are in the form of loans, not grants, creating a “climate debt trap” for developing countries.
There are three major areas where high-income countries need to “try harder”: living up to their financial commitment of $100 billion per year, focusing more on adaptation and allocating a higher percentage to grants rather than loans. Indeed, these are the areas where Canada most needs to improve its international climate support.
In 2021, Canada announced its contribution to the global effort for the 2021-2026 period would be Cdn$5.3 billion, thereby doubling its previous $2.65 billion contribution for the 2015-2020 period. Although a significant increase, it is still only 60% of Canada’s fair share of the US$100 billion annual commitment. Based on the size of our economy, Canada’s fair share should be about 3.8% of the global commitment or Cdn$9 billion over five years.
In the same announcement, the Trudeau government noted modifications in the modalities for delivering climate finance. The two most important were an increase in the percentage of funds going to adaptation (at least 40%, up from 30% in the previous commitment) and an increase in the use of grants (at least 40%, up from 30%). An increase to 40% going to adaptation, while welcome, is nonetheless insufficient for the challenges facing the most vulnerable countries, notably small island developing states, and people. In 2015, the Paris Agreement suggested a minimum of 50%.
Canada has also relied on providing loans for climate finance, much more than almost all other donors. The increase to 40% in the form of grants is an improvement, but Canada should be aiming for at least 50% over the next five years.
An overreliance on special Canadian funds at the multilateral development banks in support of blended finance for mitigation efforts with the private sector has contributed to the excessive use of loans and slowed disbursement of this funding to final project beneficiaries. On the positive side, Canada has been promoting a strong gender equality focus in its climate finance, particularly over the past three or four years, including in its multilateral climate finance initiatives.
Canada needs to rely on modalities for mitigation and adaptation that meet the urgency of the challenges and support key players in climate action at the country level.
There should be a better balance between multilateral and bilateral channels for delivering climate finance. While the multilateral channels are important, it is also essential to work with governments in the Global South as they strengthen their adaptation and mitigation plans and with civil society which can reach the more vulnerable. The $315 million Partnering for Climate Initiative, announced by Global Affairs Canada in February 2022 to fund projects proposed by civil society, Indigenous and other organizations to support climate change adaptation in the Global South, is a signal that this balancing may be happening with respect to civil society, but this amount is a small share of the planned funding.
In earlier global climate change conferences, high-income countries agreed that climate finance would be new and additional to their current levels of foreign aid. Given the mounting humanitarian crises accentuated by climate change, the COVID-19 pandemic, conflict, and the corresponding importance of strengthening resilience and addressing poverty and inequality, it is crucial that climate finance be new funds, not taken from the government’s existing “International Assistance Envelope”. Currently, it is not clear whether large amounts of the $5.3 billion will be allocated from existing budgetary commitments. The 2022 federal budget, released on April 7, gave no assurance that Canada is responding with new money.
The recent government funding framework is an important step in defining a vision for Canadian international climate finance. However, rather than release a “drip drip” of announcements, the government should set out a clear plan for the $5.3 billion over five years, with targets in specific areas. How much will flow through the various channels, multilateral/government/civil society organizations? How much will target the least-developed countries and vulnerable populations? How much will focus primarily on gender equality? How much for resilient agriculture? A plan would improve the implementation, management and monitoring of the funds.
Canada’s recent moves to increase the allocation to international climate finance and put more focus on adaptation and grants are welcome steps, but Ms. Mottley’s voice keeps ringing in our ears: Try harder.
Betty Plewes is a member of the McLeod Group and one of the founders of Climate Legacy. Brian Tomlinson is Executive Director of AidWatch Canada and an Adjunct Professor at Dalhousie University. This blog is based on “The Reality of Canada’s International Climate Finance, 2021“, prepared by Brian Tomlinson for the Canadian Coalition on Climate Change and Development . Image: Climate Home News.