Climate Finance: To Pay or Not to Pay? Well, this is an endless debate between developing countries who need money to deal with climate change; and developed countries who oscillate between unfulfilled promises and obfuscating this payment.
But before all of that, what is climate finance?
As the term suggests, climate finance means the money required to deal with the ongoing global climate crisis. The steps taken to deal with climate crisis are called ‘climate action,' and they largely include three things:
Addressing loss and damages
You can watch our fun and comprehensive explainer on climate finance, here.
In 2009, it was decided that 100 billion dollars would be paid every year till 2020 by the developed world to the developing countries.
At COP21 in Paris, under the Paris Agreement, it was decided that this payment would be extended till 2025 and the amount would be revised after that.
Developing countries claim that this amount was decided on without a fair assessment of their needs, and that a 100 billion dollars aren't even close to enough.
However, developed countries have failed to deliver even on this promise.
Developed nations owe the world this money because they are called historical polluters because they did more than their fair share of polluting the earth during and until much after the Industrial Revolution and ensured that they became the “developed” economies that they are today.
While developing countries have mostly been on the receiving end of the impacts of catastrophic climate events, without having contributed much to them and without being developed or prepared enough to deal with them.
For now, the money being offered to the developing countries is grossly insufficient. While the developed world keeps saying that their financial support has been going up, developing countries disagree. Developed countries are often accused of playing “accounting tricks” to evade paying this money.
Often a large part of this assistance is offered as a loan, or the rate of interest on an existing loan is reduced and called climate finance. At COP26 in Glasgow, it was expected that more clarity on climate finance definitions and deadlines would be achieved, but that did not happen.