100 billion, 2,000 billion, sometimes even more… Several estimates, all aligning a large number of zeros, try to assess the amounts that the countries of the North should raise, each year, to help the countries of the South to fight against climate change .
The question is at the heart of the summit for a new global financial pact that France is organizing this Thursday and Friday in Paris. More than 200 representatives of the cream of international diplomacy, including some forty Heads of State and Government, are taking part, with the aim of opening discussions for a new solidarity contract between North and South. Gillaume Compain, “climate” campaign manager at Oxfam France, deciphers these issues for 20 minutes.
Of all these figures circulating on the financial needs of the countries of the South to deal with climate change, which one should be retained?
The figure that has circulated the most so far is the 100 billion dollars. It brings us back to COP 15 in Copenhagen in 2009. The countries of the North had promised those of the South to raise 100 billion dollars a year, starting in 2020, to help them deal with climate change. It’s a political number. It was meant to be a shock, but in no way corresponds to the reality of the needs. In a report of May 2022, the Intergovernmental Panel on Climate Change (IPCC) assessed the investment needs in the countries of the South, to mitigate climate change, between 1.450 and 2.800 billion dollars per year, over the period 2020-2030.
But these estimates therefore only relate to the “mitigation” component, i.e. everything that must be done to reduce our greenhouse gas emissions and thus limit global warming. Typically by investing in the exit from fossil fuels or the preservation of forests and other carbon sinks. But that’s just one issue. Another fundamental one, particularly for southern countries, is that of adaptation, ie preparation for the current and future impacts of global warming. On this aspect, we can rely on the “adaptation gap report”, a report by the United Nations Environment Program published in November. He estimated the annual adaptation needs, still for the South, between 160 and 340 billion dollars by 2030, inviting to retain the high range instead.
These two aspects, attenuation and adaptation, must therefore be added together. A report commissioned from economists by the presidency of the COP27, in November, then arrived at the sum of 2,000 billion dollars including developing countries and emerging markets [hors Chine] would need to achieve their environmental goals.
At Oxfam, you retain an even higher figure…
The amounts needed to be collected are estimated at 2,700 billion dollars per year. No doubt we took higher ranges than this November report. Above all, to the mitigation and adaptation issues, we add a third component: “loss and damage”. This is all about repairing the damage already suffered by the countries of the South and linked to the climate crisis of which they are on the front line despite having contributed little. Again, there are several estimates. By summarizing them, we arrive at an amount of 400 billion per year.
Why is it up to the rich countries to raise these sums?
For “loss and damage”, we are neither more nor less than applying a polluter-pays principle. 10% of rich countries emit 50% of greenhouse gas emissions, a ratio that was even higher in the past. This is the whole paradox of the climate crisis: the countries of the South are on the front line even though they have historically contributed very little to it. The logic also applies to adaptation, since these same States will have to invest massively to deal with the inevitable impacts.
For mitigation, we are less in a logic of climate debt, since we are talking about the efforts to be made by everyone in order to reduce our greenhouse gas emissions. We must all do it, in the North and in the South. But in our calculations, we subtract the contribution that we estimate that these countries of the South will be able to make to invest in order to decarbonize their economies. On the order of 400 billion dollars per year on average. That’s still too little if we want a transition that meets the challenges, which is in everyone’s interest. It will necessarily require support from the richest countries. Of the order therefore of 1,450 to 2,800 billion dollars.
Where are we today in meeting these amounts? Even on the promise of 100 billion per year from 2020, are we not there yet?
With three years late on the initial objective, we should reach the 100 billion combined in 2023. Several States say they are confident on this point. But behind this figure, we must see the financial effort actually made by the countries of the North. In 2020, the latter said they had raised $83.3 billion that year. But almost two-thirds had been redistributed to the countries of the South in the form of loans. By definition, they are to be repaid, by paying interest. Even a part of these loans is not concessional, ie granted at a rate better than the market rate. In other words, States that are already poor and often crumbling under debt are being asked to go into a little more debt to finance projects, in particular adaptation, to a crisis for which they are very little responsible.
This is not our vision of international solidarity. Climate finance must go mainly through donations and subsidies. Thus, if we look in detail, in 2020, the real value of the expenditure granted by the richest countries in respect of climate financing – in other words the share of donations out of the 83.3 billion – amounted at most to $24.5 billion.
Aren’t these 2,700 billion dollars an unattainable goal?
The sum may seem considerable. And she is. But it has to be put into perspective. If we retain this rate of 2,700 billion dollars per year, then the rich countries would have to raise 19,000 billion dollars until 2030. They mobilized 28,000 as part of their response to Covid-19… in 2020 alone The proof that it is possible.
The challenge is to have enough political will to scale up. This is one of the issues at the summit currently being held in Paris. At Oxfam, for example, we advocate a “climate debt swap”… This would consist of rich countries borrowing 11,500 billion dollars on the financial markets, at the advantageous rates to which they are often entitled, to allocate them to those in the South to finance the fight against climate change. Of course, the effort is not trivial. But again, it’s much less than what we borrowed to deal with the pandemic.
And behind it, there is a whole series of avenues that would make it possible to finance these loans. A progressive wealth tax would raise $1.1 trillion a year if introduced in member countries alone [30] of the Development Assistance Committee [un forum fournissant les plus grands fournisseurs d’aide publique au développement]. It would be a good start.