Lending, greenwashing, and resistance to adaptive financing are issues instead of subsidies
News analysis
Rebuilding the energy system of developing countries requires enormous spending to achieve the following goals: COP26, Trying to address climate change through mitigation and adaptation. However, climate finance, one of the pillars of the United Nations Climate Change Conference, has some drawbacks that experience in the Canadian arena can provide some lessons.
In June, Ottawa announced that it would double its commitment to international climate finance. $ 2.65 billion pledged in 2015To $ 5.3 billion over the next five years to help developing countries transition to a low-carbon economy.
At COP26 (Conference of the Parties) in Glasgow, Scotland on November 13, Ottawa “expanded access to clean energy and impacted fairs and coal workers” as part of its $ 5.3 billion commitment. A comprehensive transition for the communities that have received it. ” November 4th Statement from the Canadian Ministry of Natural Resources.
Ross McKittrickOne of the negative effects of international climate finance slowed the development of fossil fuels in developing countries, which led to these countries, said a professor of economics at the University of Guelph, who specializes in environment, energy and climate policy. It states that it is. Look at authoritarian regimes like China and Russia.
“Adding money to these climate finance funds is rather just increasing the pressure on developing countries to look at China and, to some extent, Russia,” McKittrick told The Epoch Times. Told.
“This allows the Chinese government to turn many developing countries into client countries, as they are currently the only game in town.”
McKitrick added that Canada’s $ 5.3 billion is “very small and not even worth making.”
“In a sense, given the serious financial difficulties facing the Government of Canada, it could be counterproductive in terms of foreign aid if the money is diverted from the aid budget and the more pressing needs are not met. There is, “says McKitrick. Said.
Unclear spending plan
The second problem, according to McKitrick, is that the budget for climate funding is “undefined.”
“There is no real meaning as to what this money actually does or whether it is an indicator of success.”
Non-profit organization AidWatch Canada In September, we released a report analyzing “The Reality of Canada’s International Climate Finance.”
The report states: “The government has not set a specific framework for allocating these resources. [the $5.3 billion pledge] It is based on lessons learned from the previous $ 2.65 billion allocation and in-depth discussions on future climate finance in 2020. ”
The 2015 COP21 Agreement in Paris calls for developed countries to support developing countries with more than US $ 100 billion annually in climate change funding by 2020. Missed..
COP26 emphasized the need for transparency in progress and encouraged full delivery of US $ 100 billion annually by 2025. Developed countries are also required to at least double their climate funding ($ 40 billion annually) for adaptation initiatives in developing countries.
Adaptation deals with reducing the effects of climate change, and mitigation is about reducing emissions.
“Debt pain”
AidWatch Canada’s report suggests several areas of improvement for Canada’s participation in international climate finance.
Canada states that it ranks third among the seven donors who have provided some of the climate funding through financing. In Canada, 75% of climate finance from 2016 to 2019 was provided as a loan.
“The widespread use of loans to climate projects to governments and the private sector in developing countries has seriously exacerbated the pain of many debts in these countries and is now exacerbated by pandemics,” AidWatch Canada said. He added that at least 62 developing countries spent. Interest costs are higher than medical care in 2020.
“The level of lending in the overall profile of climate finance is a major issue,” the report said, adding that the 2015 Paris Agreement emphasized the importance of “subsidy-based resources for adaptation.” ..
Nonprofits also found that Canada’s aid was directed overwhelmingly (84%) through multilateral organizations (multilateral funds such as the Multilateral Development Bank (MDB), UN agencies, and the Green Climate Fund). Did. This percentage is much higher than the group percentage (48%). 30 Equivalent Organization for Economic Co-operation and Development (OECD) donor countries as a whole.
The report states that MDBs like the World Bank are particularly dependent. Non-– –Concessions Loans for adaptation, especially when providing easing loans (loans with market interest rates or close interest rates and no simpler terms).
The report also estimates that only 28% of Canada’s climate change funding is for adaptation and 72% for mitigation.
“Greenwashing” and the private sector
McKitrick says there is always a lot of “greenwashing” due to the vague nature of our commitment to funding climate change. For example, the money spent on building roads and homes can be categorized as adaptation.
While companies are facing great pressure from public opinion and regulators to support the green movement, McKittrick points out that they also need to provide shareholders with sufficient rates of return.
“Often, I think the easiest way to close the gap between those opposite expectations is through greenwashing.”
Blog International Development Economics Associates A website released on November 3 said that most climate finance is drawn to mitigation rather than adaptation because donors “prefer a’simple win’that can be announced from climate mitigation.”
“Climate adaptation is rarely lucrative, so it’s less of a concern for retail investors. Rather, private finance favors easing investments that generate higher returns,” the blog author said. Anise chowdori, Professor of Economics, University of New South Wales, Australia, and Jomo Kwame Sundalam, NS Former Deputy Secretary-General of the United Nations-President of Economic Development..
Matthew GuetteFellows at Carleton University’s Norman Patterson Graduate School of International Affairs show a lack of private sector interest in working with governments in climate finance, according to OECD analysis. That is, in 2016, for every US $ 1 of bilateral and multilateral climate finance, only 21 cents were mobilized from private investors. This number was about the same as in 2019.
“Private finance is currently interested in certain sectors of climate change, investing in climate mitigation through green energy, with less interest in other sectors such as adaptation and nature-based solutions,” Guett said. I wrote it on the 26th of March. blog..
In many cases, the problem with foreign aid is that it is ineffective because it is less dependent on the needs of the user than the benefit to the donor country where the aid provision is well advertised, enhancing the public image of the donor. ..
“For all kinds of investments to be effective. First of all, it needs to be driven by what users perceive as their need,” McKitrick said.
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Rahul Vaidyanath is a journalist in The Epoch Times of Canada. His areas of expertise include economics, financial markets, China, national defense and security. He has worked at the Bank of Canada, Canada Mortgage and Housing Corp., and investment banks in Toronto, New York and Los Angeles.