Wealthy nations have pledged to help developing countries cover the cost of managing emissions and the effects of climate change. They committed, first in 2009 and again in 2015 under the Paris climate agreement, to the goal of providing $100 billion a year in grants, loans, and private sector investments by 2020. However, this target has yet to be met, with nations falling $16.7 billion short in 2020. The goal remains a topic of discussion at annual U.N. climate conferences, with developing nations calling for more transparency in contributions and clearer definitions of what qualifies as climate finance. As damage from climate change continues to outstrip countries’ abilities to cope, world leaders are discussing a new, larger climate finance goal that could amount to trillions of dollars.
Donors have reported over $25 billion in funding for renewable energy and over $5.6 billion for projects aimed at responding to climate-related disasters. However, some reports contain too little detail to verify these claims. Furthermore, billions of dollars have been directed towards projects involving fossil fuels or initiatives that have little relation to reducing emissions or adapting to climate change impacts. For example, Italy claimed a $4.7 million equity investment in the expansion of Italian chocolatier Venchi’s stores in Asia as climate finance, despite the public-private company SIMEST involved stating that it is not focused on climate change. Similarly, Belgium considered its $8,226 contribution towards backing the film “La Tierra Roja” as climate finance, despite the fact that the movie is not directly related to climate change. Countries such as France and the U.S. have also reported funds for cancelled projects.
One of the biggest players in climate finance is Japan, who have lent at least $9 billion to projects that continue to rely on fossil fuels, including a new 1,200-megawatt coal-fired power plant that Japanese companies are building on Matarbari, an island on Bangladesh’s southeast coast. Japan has lent Bangladesh at least $2.4 billion in climate finance for the plant, with the goal of eliminating ongoing power shortages in the country. However, the plant will add 6.8 million tons of CO2 to the atmosphere every year, more than the city of San Francisco reported in emissions for all of 2019. Despite this, Japan considers Matarbari a climate change project because it uses Japanese technology that generates more energy with less coal, resulting in lower emissions than conventional power.
As the debate surrounding climate finance continues, developing nations are calling for more substantial funding and clearer definitions of what qualifies as climate finance. Critics argue that too many non-climate-related projects are being counted towards funding goals and that a more transparent and accountable system is needed to ensure the efficient use of climate finance in combating global warming. Ultimately, more substantial and targeted funding is likely to be needed to combat the rapidly worsening effects of climate change as they continue to outstrip countries’ abilities to cope.