Just days before the Paris Agreement comes into force, developed countries, led by Australia and the United Kingdom, have delivered a Climate Finance Roadmap to meet the collective goal of mobilising 100 billion USD a year for developing countries by 2020 to tackle climate change. The numbers released in the roadmap reveal the massive work governments have ahead of themselves to close the funding gap.
Hivos welcomes the fact that developed countries want to align efforts to address climate change with achieving the Sustainable Development Goals. However, we are worried that Multilateral Development Banks (MDBs) are being chosen as one of the main vehicles to deliver transformational change. MDBs’ record of accomplishment on focusing their efforts on the poorest has been far from promising. A recent Hivos report, ‘Unlocking climate finance for decentralised energy access’, shows that currently only 3 percent of all climate finance goes to energy access through decentralised renewable energy, which is key to lifting people out of poverty. The research also shows that the majority of energy-related climate finance goes to middle income rather than low-income countries.
If governments are serious about changing the quality of finance to create transformational change, MDBs will have to come up with new ways to prioritise solutions such as decentralised renewable energy that deliver on climate change mitigation, create resilience and make a real difference to people’s lives.
The numbers in the roadmap also need a closer look. Firstly, the estimates in the roadmap assume there will be massive private sector contributions far beyond business as usual. They are also based on numbers by some governments that use their development aid to count towards climate finance, which blurs the line between what is new and additional funding.
Secondly, many governments have still failed to make strong commitments up through 2020. The Dutch government, for example, has only communicated its pledge for 2017. Governments should follow the example set by the French and Germans and commit to a 2020 climate finance target. This would provide developing countries with clarity on the financial support they can count on in order to integrate ambitious action into their development planning and implementation.