Over the weekend, thousands of the world’s finance ministers and central bankers from 188 countries of the world gathered in Lima, Peru, for the annual meetings of the World Bank and the International Monetary Fund. The two United Nations groups focus on long-term economic development and macroeconomic issues, respectively.
While not a part of the UNFCCC’s official climate change program, the meetings held tremendous importance in clarifying and solidifying the multinational $100 billion goal by 2020 for climate finance to less-developed countries. Previous rounds of UN talks determined this figure. Its achievement is critical in the negotiations to reach a planet-wide approach to climate change in December’s Paris meeting.
As we noted recently in another report, the Organisation for Economic Co-operation and Development announced that developed countries, development banks, and the private sector have come up with nearly two-thirds of the total goal. Over three-quarters of this goes to support mitigation activities, with about one sixth going to support adaptation, and the smallest share targeting both. Said OECD Secretary-General Angel Gurría in introducing the numbers:
“Developed-country-mobilized climate finance in 2014 is estimated to total $62 billion a year. We are about halfway in terms of time and more than halfway there in terms of finance, but clearly there is still some way to go.”
Access the full OECD report here.
Other subjects, including reform of the international tax rules, the slowing of China’s economy, and the “carbon bubble,” occupied much of the World Bank and IMF finance meeting, but these aspects of climate funding became evident:
- The ongoing and sharp drop in energy prices presents a valuable opportunity to undertake critical climate initiatives.
- Revenue generated by these new climate measures should be put to sustainable use.
- While international cooperation is vital to the process, countries at differing stages of development will necessarily proceed at different speeds.
The UN’s Sustainable Development Goals, which we reported on last week in CleanTechnica, are “expensive but worth it,” says World Bank President Jim Yong Kim. Two years of planning prior to their passage led the World Bank, the IMF, and multilateral development banks to analyze and present new ways of increasing funding for climate change.
At the weekend meeting, the World Bank announced that it would increase climate funding by a third, from an annual $10.3 billion now to $16 billion by 2020. Cofinancing projects could produce further funds. The European Investment Bank, currently the largest multilateral lender for climate projects ($25.4 billion in worldwide loans in 2014), announced it would increase its lending for climate-related investments in developing countries from 25% to 35%. Other development banks (the Asian Development Bank and Inter-American Development Bank among them) made similar pledges.
Oxfam, the international confederation of 17 non-governmental organizations covering about half the world’s nations, welcomed the new pledges but found them insufficient. Its policy expert, Isabel Kreisler, concluded that “Ministers failed to address the elephant in the room: only a tiny fraction of climate funds are reaching the poorest countries to help them adapt to climate change.”
In any case, one clear loser in the equation were fossil fuel subsidies. International Monetary Fund Managing Director Christine Lagarde offered this “macro-critical advice”:
“$5.4 trillion are being wasted for fossil fuel subsidies. All that money can be spent on something else.”
Her counterpart, World Bank president Kim, added a necessary caution: “Politicians don’t like it when taxi drivers and truck drivers block the streets.”
Lagarde likened a cop-out on fossil fuel subsidies and other measures to the fate of Peruvian poultry delicacies consumed at the meeting:
“If we collectively chicken out of this… we’ll all be fried, grilled, toasted, and roasted.”
Link here for attendance at the multinational forum. The next dual bank meeting will be held in Washington, DC, on April 15-16, 2016.