Despite ambitious global climate finance goals, the stark reality paints a troubling picture of unmet commitments and growing financial gaps.
As the world grapples with the urgent need for climate action, the promises made by developed countries to support developing nations in their climate efforts are proving inadequate.
The 2009 Conference of Parties (COP16) set a non-binding goal to mobilize USD 100 billion per year in climate finance from developed countries to developing nations by 2025. This target was envisioned as a lifeline for nations grappling with the escalating consequences of climate change.
A decade later, this commitment is at risk of becoming an empty pledge, with developing countries facing ever-increasing challenges due to climate change.
The recent Africa Climate Summit held in Kenya's capital, Nairobi, saw leaders demanding the implementation of this funding during a panel discussion Dr Mo Ibrahim the Founder and Chair of the Mo Ibrahim Foundation stated: "Rich nations must honor their 100-billion-dollar commitment. It's not a mere promise; it's an obligation to support those most vulnerable to the devastating impact of climate change. Let this commitment be a testament to global solidarity, not a broken pledge."
New research from the Global Center on Adaptation released Friday shows that climate adaptation finance flowed to Africa must increase up to tenfold to over US$100 billion per year by 2035 to build resilience against the growing impact of climate change. Without such investment, it is estimated that the continent could lose out on as much as USD$6 trillion of economic benefits by 2035
Adaptation Gap Report 2022 paints a grim picture. It estimates that adaptation costs for developing countries, particularly in Africa, could range from USD 160 billion to USD 340 billion annually by 2030 and escalate to an alarming USD 315 billion to USD 565 billion by 2050.
A recent analysis by the Intergovernmental Panel on Climate Change (IPCC) echoes these concerns, projecting adaptation costs of USD 127 billion per year by 2030 and a staggering USD 295 billion by 2050 for developing countries.
These figures are staggering, especially when compared to the meager USD 49 billion that flowed into adaptation finance globally between 2019 and 2020, falling woefully short of the urgent need.
“Those who produce the garbage refuse to pay their bills,” President William Ruto said.
The U.S. government’s climate envoy, John Kerry, acknowledged the “acute, unfair debt.” He also said 17 of the world’s 20 countries most impacted by climate change are in Africa — while the world’s 20 richest nations, including his own, produce 80 per cent of the world’s carbon emissions that are driving climate change.
Asked about the Kenyan president’s call for a carbon tax discussion, Kerry said President Joe Biden has “not yet embraced any particular carbon pricing mechanism.”
National climate plans, known as Nationally Determined Contributions (NDCs), play a crucial role in shaping climate finance. As of October 2022, 144 out of 160 countries that submitted NDCs included adaptation components.
However, only 62 countries have outlined their specific adaptation finance needs, suggesting that the global estimation of adaptation requirements may be significantly underestimated.
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The international community has made efforts to bridge this gap. In 2021, at COP26, the UNFCCC and G7 committed to doubling adaptation finance flows from 2019 levels by 2025, aiming for around USD 40 billion.
However, studies suggest that developed countries may only be able to provide half of this promised amount by the deadline.
Nine Multilateral Development Banks (MDBs) made a joint commitment in 2019 to double total levels of adaptation finance by 2025 to USD 18 billion annually. In 2021, these banks announced they had exceeded this commitment, reaching USD 19.2 billion.
However, there has been no new commitment to raise ambition further.
“The balance between commitments for mitigation and adaptation remains elusive, both in the public and private sector,” experts note.
According Global Center on Adaptation currently estimate the continent requires US$52.7 billion a year for adaptation (or 2.5 percent of its GDP) but this new research considers this as a vast underestimate as only half of the NDCs (28) calculate costs for adaptation.
The NDCs were also prepared at a time when climate impacts were not projected to occur as quickly or as strongly as they are. Of the NDCs that do include adaptation costs, over half (70 percent) do not allocate the necessary adaptation funding to any specific sector.
Africa stands at the forefront of climate impact, with adaptation finance needs soaring. Current estimates place Africa's adaptation requirements at USD 579 billion by 2030, projected to rise to USD 845 billion by 2035. These figures constitute the highest needs among all global regions, underscoring the continent's vulnerability.
However, these estimates may be conservative, given limitations and the lack of clarity from certain countries regarding their adaptation finance needs. Alarmingly, over 70 percent of the adaptation needs reported in African NDCs—equivalent to USD 408 billion - remain unallocated to any specific adaptation sector.
With this concern, Mo Ibrahim questioned why the capitalist market forces, which were invented by rich countries, are not being utilized to regulate carbon emissions. "You guys in rich countries invented capitalism, invented the market. Why aren't you applying market forces to carbon?"
International Livestock Research Institute (ILRI) energy and environment expert Guyo Roba observed the gap between promised climate finance and actual needs is concerning, especially as studies suggest that developed countries may only fulfill half of their committed adaptation finance by 2025. Public financial institutions have a critical role to play in closing these funding gaps.
“Amidst the intensity of negotiations, emotions often drive ambitious pledges that sadly remain unfulfilled in their financial commitments,” Roba revealed.
He explained that while there is growing global momentum to align investments with climate goals, the focus on adaptation often falls short, particularly in public and private sectors.
Data shows as of November 2022, more than 140 countries, including major emitters like China, the United States, India, and the European Union, have set net-zero targets. However, commitments for adaptation and resilience investments lag behind.
Mo Ibrahim argued that climate finance should be seen as a clear international agreement, emphasizing, "You break it, you own it." Mo stressed that without changing the dynamics of the market and making polluters pay for their emissions, behavior change will remain elusive.
African Group of Negotiator Expert Support (AGNES) 's George Wamukoya stated that the multilateral climate funds, such as the Green Climate Fund (GCF) and the Adaptation Fund, have made public adaptation commitments, but challenges remain in stakeholder access. The GCF, for instance, is mandated to invest 50 percent of its resources in adaptation, with a focus on vulnerable countries.
He explained that sub-regional Development Banks (SRDBs) in Africa have the potential to lead climate adaptation efforts. However, none of the four African SRDBs have made public commitments to fund adaptation-specific projects.
Wamukoya said a handful of donor countries, including Germany, France, and the UK, have shown leadership in financing adaptation in Africa. The UK government pledged to triple its funding on adaptation to GBP 1.5 billion by 2025, with a specific focus on the African continent.
As the world faces the undeniable urgency of climate change, the need for transparent and ambitious commitments to climate finance has never been greater.
Available data shows that Africa only received US$11.4 billion in adaptation finance in 2019-2020 and the increase in 2021-2022 is likely to be modest. At this rate, Africa will receive US$182 billion by 2035 for climate adaptation, less than one-tenth of the up to US$1.7 trillion by 2035 the new research estimates it needs.
Loans were the most utilized instrument to deliver adaptation finance in 2019-2020, which combined with surging interest rates, is contributing to Africa’s poorest countries falling into a debt trap.
Commenting on the research findings, Professor Patrick Verkooijen, CEO of the Global Center on Adaptation said:
“The impact of climate change are being felt around the world, but nowhere more acutely than in Africa. Adaptation finance must be scaled up dramatically before it is outstripped by accelerating climate impact which would further widen the adaptation funding gap.”
Experts indicate bridging the gap between promises and reality is essential for safeguarding our planet's future.
On loss and damage John Kerry stated, "We are working with partners on the transitional committee this year to design an effective fund to help vulnerable developing countries respond to loss and damage." He emphasized the collaborative efforts required to address the challenges posed by climate change.