Rich countries have a bill to pay. A study in the journal Nature says they will owe low- and middle-income countries an estimated $100 trillion-$200 trillion by 2050 since they have caused the climate crisis with their outsized emissions, while developing nations bear the brunt of the impacts. 

As negotiators gather in Bonn this week to prepare for November’s COP29 climate summit, wealthy governments have to face the music and pay their fair share of climate finance. With low-income countries struggling with rising seas and spiralling unjust debts, the stakes have never been higher. The good news? Rich countries can deliver the funds needed for climate action. What is lacking is the political will, as usual. But we can change this.

Bonn bulletin: Crunch time for climate finance

At last year’s COP negotiations, world leaders recognised for the first time that all countries must “transition away from fossil fuels” in energy systems. This year they must agree on a new climate finance goal for 2025, which will set a new benchmark for the quantity and terms of the money owed.

Year after year, wealthy countries have failed to pay up. While transitioning away from fossil fuels is technically possible and relatively low-cost, the failure to finance transformative climate solutions like 100% renewable-ready grids, energy access, and programs to support workers and community transitions is one of the key remaining obstacles to tackling the climate crisis. Meanwhile, the lack of funding to adapt and respond to climate impacts means fires, droughts and floods are already bringing devastating consequences.

As UN Climate Change Executive Secretary Simon Stiell has said, “A quantum leap this year in climate finance is both essential and entirely achievable.” But, as negotiations have begun to establish a new global climate finance target, wealthy countries are once again trying to shirk their responsibilities.

Loans and ‘private-sector first’

They have come to the table with only tiny amounts of money. Worse, they argue it should be delivered mostly as loans, investments and guarantees – which they profit from, while climate vulnerable ‘recipient’ countries rack up debt. The US, Canada, UK and their peers claim that there is not enough public money to do anything else. Yet we know they can come up with enormous sums, like for COVID stimulus plans and for bailing out the banks.

Wealthy countries say the private sector can cover most of the costs instead. This ‘private sector first’ approach is particularly emphasized for energy finance. The idea is that all that is needed is a bit of public finance to ‘de-risk’ energy investments and attract much greater sums of private finance.

But as a former World Bank Director has argued, this approach has consistently delivered far less money than promised and “has injustice and inequality built in,” while reducing the role of government action for creating the right market conditions to deliver profits to investors. We need much more public funding to be delivered as grants for a fair energy transition.

Developing countries suggest rich nations tax arms, fashion and tech firms for climate

Rather than relying on the private sector, rich countries can afford the grants and highly concessional finance required for a fast, fair and full phase-out of fossil fuels, which societies and communities want. There is no shortage of public money available to fund climate action at home and abroad. Rather, a lot of it is currently going to the wrong things, like dirty fossil fuels, wars and the super-rich.

The lack of progress is also a symptom of a larger global financial system where a handful of Global North governments and corporations have near-full control. This unjust architecture results in a net $2 trillion a year outflow from low-income countries to high-income countries, historic levels of inequality and food insecurity, and record profits for oil and gas companies.

Make polluters pay

To raise the funds, wealthy governments can start by cutting off the flow of public money to fossil fuels and making polluters pay. The science is clear that there is no room for any new investments in oil, gas or coal infrastructure if we want to secure a liveable planet. And yet governments continue to pour more fuel on the fire, using public money to fund continued fossil fuel expansion to the tune of $1.7 trillion in 2022. 

There is already momentum to stop a particularly influential form of fossil fuel support. At the COP26 global climate conference in Glasgow, 41 countries and institutions joined the Clean Energy Transition Partnership (CETP). They pledged to end all direct international public finance for unabated fossil fuels by the end of 2022 and instead prioritise their international public finance for the clean energy transition.

Rich nations meet $100bn climate finance goal – two years late

With the passing of the end of the 2022 deadline, eight out of the sixteen CETP signatories with significant amounts of international energy finance have adopted policies that end fossil fuel support – and we see international fossil finance figures dropping by billions as a result.

Making fossil fuel companies pay for their pollution through a ‘windfall’ tax on fossil fuel companies in the richest countries could raise an estimated $900 billion by 2030. Alongside taxing windfall profits, a progressive tax on extreme wealth starting at 2% would raise $2.5 trillion to 3.6 trillion a year. Brazil currently has a proposal to tax the super-rich globally, which is gaining momentum at the G20. 

Canceling illegitimate debts in the Global South can free up even more.

The public money is there for a liveable future for all. As leaders negotiate on the next climate target, we must ensure those most responsible for the climate crisis finally pay up.

The post No shortage of public money to pay for a just energy transition appeared first on Climate Home News.

Last month climate ministers from the group of wealthy nations stated they are “steadfast in their commitment to … keeping a limit of 1.5°C global temperature rise within reach”.

If they want to stay true to their word, they must close the door to new gas investments, including for hazardous Liquefied Natural Gas (LNG), keep their commitment to end international fossil fuel finance, and resist Japan’s push for fossil-fuel based technologies.

End fossil fuel investment

Stopping new gas projects is critical to avoiding the worst impacts of the climate crisis.

The latest reports from the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) show that maintaining a 50% chance of limiting global warming to 1.5°C requires an immediate end to investments in new coal, oil, and gas production and hazardous liquified fossil gas infrastructure.

US backs Indonesian oil refinery despite pledge to end fossil fuel finance

These findings remain unchanged in the context of the war in Ukraine and its impact on global energy markets.

Leaving the door open for new investments in gas is also in direct contradiction to last year’s G7 commitment to end international public finance for fossil fuels by the end of 2022 “except in limited circumstances … consistent with a 1.5°C warming limit”.

Broken promise

Last month in Sapporo G7 ministers claimed they fulfilled this commitment.

But this is simply not true.

We understand that Italy approved financing for the Santos Basin oil and gas production project in Brazil this year.

The Japanese export credit agency, JBIC, recently approved $393 million for a gas-fired power plant in Uzbekistan.

During a recent visit to Mozambique, Prime Minister Kishida also committed to reviving controversial Mozambique LNG projects which have been associated with local devastation, repression and violence.

A bilateral meeting between Japan’s prime minister Fumio Kishida and the UK prime minister Rishi Sunak. Photo: Number 10

Germany has not yet presented a policy for implementing the commitment to end international fossil fuel finance. The USA has adopted a policy, but it is not public.

The G7 members that have followed through, Canada, the UK and France, are in a strong position to push back against backsliding at the G7 Leaders’ Summit, while supporting fellow members in their implementation efforts.

Redirecting billions towards clean energy

An Oil Change International briefing underlines the importance of advancing this agenda. It shows that between 2020 and 2022 fossil fuel support from G7 countries totalled at least $73 billion. This is almost 2.6 times their clean energy support over the same period.

By upholding last year’s commitments, the G7 can directly shift $24.3 billion a year in public finance out of fossil fuels and into clean energy.  This would raise G7 finance to a sum almost large enough to close the clean energy access gap.

Cop28 moots oil and gas initiative despite greenwash accusations

Rather than promoting outdated and climate-destroying fossil fuel technologies across Asia and Africa, Japan should meet its promise to end international finance for fossil fuels.

It should also ensure that, together with fellow rich countries, it delivers its fair share of climate, loss and damage and just energy transition finance support to the Global South.

Shifting to clean energy and phasing out fossil fuel reliance is critical to permanently bring down soaring energy costs and increase energy security.

Renewable energy technologies are more affordable and can be scaled up more rapidly. They also help avoid fiscal instability linked to volatile fossil fuel prices and stranded asset risks as global gas demand drops.

A plea to Japan

Japan should not be allowed to continue to misuse its position as the G7 host to promote its fossil-fuel heavy energy strategy. Japan, and other G7 countries who are breaking their commitments, are harming our planet, and it is time for the world to hold them accountable.

The only effective answer to the climate crisis and energy security objectives is explicitly ruling out investments in new upstream gas and liquified fossil gas infrastructure, delivering on commitments to end international public finance for fossil fuels and phase-out fossil fuels in line with 1.5°C.

By shifting to renewable energy and phasing out fossil fuel reliance, we can secure a more secure, prosperous future for Africa, Asia, and worldwide. The G7 must act now to ensure a just and equitable transition to a clean energy future.

Elizabeth Bast is the Executive Director of Oil Change International, Tasneem Essop is the Executive Director of the Climate Action Network and Kanna Mitsuta is the Executive Director of Friends of the Earth Japan.

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