Money talks: why climate finance at Cop27 is key to beating global heating –THE GUARDIAN

Funding urgently needed to cope with climate disasters – and to prevent distrust crashing UN negotiations

Money is likely to be a flashpoint at the UN Cop27 climate summit starting on Sunday in Egypt, where world leaders will attempt to tackle the climate crisis.

 

The initial sums involved are just a month’s worth of the fossil fuel industry’s profits. Yet, say experts, the failure so far to deliver promised funding has corroded international trust so much that it could undermine the whole UN process – the only global forum for fighting global heating.

 

The most fiery issue will be “loss and damage”, the new funding from rich, polluting countries needed to rescue and rebuild poorer communities after climate disasters they have done little to cause. It has been a taboo subject for decades, but with climate impacts rapidly worsening from Pakistan to Puerto Rico, countries representing the vast majority of the global population insist it must finally be addressed.

 

There are plenty of ideas for raising the money, from taxing fossil fuel companies to the “nuclear option” of catastrophe-hit countries cancelling their foreign debt. A push for reform of the multilateral development banks, including the World Bank, with or without its beleaguered boss, David Malpass, who recently said he “does not know” if he accepts climate science, is also gathering momentum. The minimum that Cop27 must deliver, say campaigners, is a new finance facility into which loss and damage cash can be put.

 

Climate finance has three purposes: cutting emissions, adapting to the climate crisis, and paying for loss and damage. In 2015, rich countries promised $100bn a year by 2020 for the first two purposes. It has yet to deliver, which is a “shameful” failure, according to African countries, but may do so by 2023. The global economic gloom is also casting a shadow over fundraising efforts.

 

However, to put $100bn into perspective, it is 37 days’ worth of the oil and gas sector’s average profits over the past 50 years. In the context of this year, it is about half the revenue that Russia has received for fossil fuel exports since it invaded Ukraine. “There is no question – the money is there. It’s being used for the wrong things,” said Prof Saleemul Huq, a Cop veteran and the director of the International Centre for Climate Change and Development in Bangladesh.

 

For loss and damage, the funding offered to vulnerable countries was zero until very recently. But the dam was broken by Nicola Sturgeon, the first minister of Scotland, at Cop26 in Glasgow in 2021, with £2m now promised.

 

Calls for loss and damage finance have been repeatedly rejected by the US and other large economies, which fear liability for trillions of dollars in climate compensation.

 

But the issue cannot be avoided any longer, according to the UN secretary general, António Guterres. “This is a moral imperative that cannot be ignored and Cop27 must be the place for action on loss and damage,” he said in October. “This is the No 1 litmus test of how seriously governments take the growing climate toll on the most vulnerable countries.”

 

Madeleine Diouf Sarr, who will chair the Least Developed Countries group of 46 nations at Cop27, said: “We can no longer afford to have a Cop that is ‘all talk’.”

 

The fundamental case for loss and damage funds is that rich polluting countries caused the climate crisis but poorer, developing countries , with tiny carbon emissions, are worst hit by the impacts.

 

“Loss and damage is the greatest injustice for our generation,” said the Rwandan youth campaigner Grace Ineza, a co-founder of the International Loss and Damage Youth Coalition. “Our generation did not cause climate change, but we are the ones who are going to be left with the huge impact of it.”

 

Beyond the direct benefits of funding, money is also the currency of trust, said Huq, which is why the missed $100bn target matters so much. “It is a simple matter of credibility of the developed countries to fulfil what they say they will do and they failed,” he said. “So why should developing countries even bother talking to them anymore?”

 

Such loss of trust has serious real-world ramifications, according to the climate finance expert Kate Levick, at the E3G thinktank. The big greenhouse gas emissions of the future will come from the major emerging economies, such as India, Indonesia, Brazil and China, unless they take bold action that is supported by their populations, she said. “To do that, they have to feel they have the real support of the richer countries and that there will be funds to help them.”

 

Finance is critical to Cop27 and almost all the key issues, for Levick, come down to finance. She believes solving them is going to be key to the continuation of the UN forum as a driver of climate action.

 

Laurence Tubiana, a key architect of the breakthrough Paris climate deal in 2015, said that without some movement on loss and damage, “the legitimacy of [the UN process] will be challenged”.

 

Sameh Shoukry, Egypt’s foreign minister and president of Cop27, acknowledged the danger of problems with finance: “Without appropriate and fair finance serving as a catalyst, we will all continue to struggle in delivering impactful climate action.”

 

At Cop26, a group of 130 countries, representing 85% of the world’s population, demanded a loss and damage funding facility be set up, but the US and EU blocked it.

 

In the run-up to Cop27, the US and EU were still rejecting the idea of loss and damage payments. John Kerry, the US special envoy for climate change, was asked about such funding in September. “You tell me the government in the world that has trillions of dollars, because that’s what it costs,” he replied bluntly, adding that he would not be “feeling guilty” about it.

 

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