Deliver on UK climate finance commitments
The UK Government should fully deliver upon its global responsibilities on climate finance, ensuring this is: fully additional to Official Development Assistance; with finance for adaptation delivered as grants not loans; achieves a balance between adaptation and mitigation finance; is targeted towards Least Development Countries (LDCs) and Small Island Development States (SIDS); prioritises funding for local actors and gender transformative solutions; and is transparently reported.
The UK’s climate finance should be grant-based rather than loans (to avoid increasing the debt burden on nations), and greater effort is needed to ensure that it reaches the countries and communities that need it most.
The UK Government should publish annual figures on its planned spending towards the collective target of $100 billion and doubling of adaptation finance by 2025 in order to strengthen accountability, transparency and predictability. This will also help to build momentum towards the collective commitment to double funding for adaptation which was secured under the UK’s COP26 Presidency in Glasgow in 2021 and re-stated at COP27 in 2022. The UK also made a specific commitment to triple its adaptation funding by 2025.
Given that the $100bn commitment is so insufficient compared to the real needs of vulnerable countries, the UK Government should also support the setting of a new long-term goal for finance for the period post-2025 under the UNFCCC that is based on an assessment of what is needed and owed, as called for by Global South countries in the negotiations.
The UK Government should deliver the UK’s fair share58 of finance for climate mitigation and adaptation, and commit the UK to providing new and additional finance for loss and damage, including raising some of this by making polluters pay.
The UK has a significant historic responsibility for climate change, having led and financially benefited from the industrial revolution and the carbon-based economy. With the global agreement at COP27 to establish a Loss and Damage (L&D) fund, the UK has an opportunity to show integrity and deliver on its obligations to climate-vulnerable communities, by delivering on its fair share of climate finance, and committing new and additional finance for L&D.
The $100 billion a year in promised climate finance, which does not include the additional finance needed to address L&D financing, was always an insufficient goal. However, coupled with action to address loss and damage, it remains critical to beginning to address the unfair suffering climate-vulnerable communities are facing.
Delivering public finance is one key step to leveraging the scale of finance needed; governments should also support the unlocking of innovative sources of finance, such as windfall taxes and multilateral development bank reform.
Climate solutions are being innovated by frontline communities, who are also the first responders to climate-related disasters. The UK Government should play a key role in funding locally-led initiatives and making sure climate finance reaches the communities most affected by climate change.
The UK Government should use its influence to help to secure a significantly increased climate finance goal for the period post-2025, ensuring this is needs-based and adaptable over time, responding to new evidence and emerging needs. The new goal must recognise the need for public grant-based finance where no returns on investment are required, particularly for adaptation and addressing loss and damage. The new goal must include sub-goals for mitigation, adaptation and addressing loss and damage. It should also explicitly recognise the special situation of Least-Developed Countries, Small Island Developing States and other highly climate-vulnerable contexts, including by prioritising them for grant-based and highly concessional finance.
In addition, the UK Government should restore the value of Official Development Assistance (ODA) to 0.7% of Gross National Income.59 The Scottish Government should try to influence the UK Government to meet and exceed the 0.7% target.
Progress towards the £100bn Climate Finance goal 60
At the Copenhagen climate talks in 2009, the world’s rich nations agreed to come up with $100bn a year from 2020 to help poorer countries reduce emissions and adapt to climate change. This target has not been met and much of the finance that is on offer is in the form of loans. The OECD61 found that the level of total climate finance reported in 2020 was just $83.3bn. However, an Oxfam report62 found much of it to be overstated; they estimate that the real value of support specifically aimed at climate action was only around $21bn to $24.5bn. In addition, only around 2.9% of climate-related development finance identified gender equality as a principal objective and data on how much finance is spent at local level is seriously lacking. Beyond the failure to mobilise finance as promised, and an imbalance between reported public finance for projects which reduce emissions (59%) and those that help adaptation to climate change (33%), the real needs of low-income countries are well beyond $100bn a year.
A detailed analysis63 in 2021 used a composite of national income, cumulative emissions and population to calculate the UK’s fair contribution to the $100bn at $5.9bn a year, of which it was contributing about half at the time. Scotland’s population-based share of this would be about £450m a year.
Of course, it is not appropriate to compare this to the current level of the Scottish Government’s Climate Justice Fund since overseas aid is a reserved matter. Thus, the UK Government should be paying its full share of the $100bn commitment from UK-wide revenues. The Scottish Government’s contribution in the form of the Climate Justice Fund, from devolved revenues, should be seen as additional and a welcome message of commitment to other countries and sub-national bodies.
In addition to money to help countries adapt to the changing climate, there is a need for finance to compensate communities for irreparable losses and damages created by it. ‘Loss and Damage’ is strongly concentrated in poorer populations; it is estimated that it will cost developing countries between $290bn and $580bn a year by 2030.64 Based on the analysis above, Scotland’s share of this would be, very approximately, £1.25-2.5bn a year.
So, in 2030, Scotland’s combined contribution to the $100bn climate finance commitment and the mid-range estimated cost of Loss and Damage would be about £2.3bn a year – to be paid directly or by the UK on Scotland’s behalf. However, this figure is likely to grow due to a failure to reduce emissions at the speed required, leading to deeper climate impacts, and when the new global climate finance goal is agreed for the period after 2025.
For further information:
The World Bank’s Evolution Roadmap will not deliver climate justice, Eurodad, June 2023, https://www.eurodad.org/world_bank_evolution_roadmap_climate_justice?utm_campaign=newsletter_1_06_2023&utm_medium=email&utm_source=eurodad
Climate Finance Shadow Report 2023, Oxfam, June 2023: https://policy-practice.oxfam.org/resources/climate-finance-shadow-report-2023-621500/
Building back with justice – dismantling inequalities after Covid-19, Christian Aid, 2020, buildingback-justice-covid19-report-jul2020_0.pdf (christianaid.org.uk) p.55
The ‘Fair Shares’ methodology is rooted in the science of carbon budgets and the principles of equity under the UNFCCC, see for example, Climate Fair Shares, FoE International, https://www.foei.org/what-we-do/climate-justice-and-energy/climate-fair-shares/
On current plans this will not rise to 0.7% again until 2027/8, see, for example, The 0.7% Aid Target, House of Commons Library, 2022,
Adapted from Financing Climate Justice, SCCS, 2022, https://www.stopclimatechaos.scot/wp-content/uploads/2022/09/FinancingClimateJustice_Report_ONLINE.pdf
Aggregate Trends in Climate Finance Provided and Mobilised by Developed Countries in 2013-2020, OECD, 2022, https://www.oecd.org/climate-change/finance-usd-100-billion-goal/aggregate-trends-of-climate-finance-provided-and-mobilised-by-developed-countriesin-2013-2020.pdf
Climate finance shadow report 2023 – Assessing the delivery of the $100bn commitment, Oxfam, 2023, https://policy-practice.oxfam.org/resources/climate-finance-shadow-report-2023-621500/
A fair share of climate finance? – Apportioning responsibility for the $100 billion climate finance goal, ODI, 2021, https://cdn.odi.org/media/documents/ODI_WP_fairshare_final0709.pdf
Loss and Damage from Climate Change: Concepts, Methods and Policy Options, Mechler et al, Springer, 2019, https://link.springer.com/book/10.1007/978-3-319-72026-5