The New Today

Commentary

Climate finance

There has been a great deal of talk about ‘climate finance’ during COP 26. Broadly speaking, it is money intended for assisting less affluent countries with the challenges of climate change in grants and loans but presently more loans than grants.

It is meant to assist with activities like phasing out gas and oil as our energy supply and switching to renewables such as solar, wind and tidal energy. It can also be used to protect environments and biodiversity as these are being threatened like never before by the results of climate change so planting and protecting forests and mangroves which are also great sequesters of carbon are very important.

The funding comes from wealthy countries, the UN and other multilateral development institutions such as the World Bank, International Monetary Fund and the European Union, private funding is also in the mix.

Considering that it is the industrialised world and its pollution which is driving climate change, we might think that most would be in grants to enable the developing world to deal with the damage inflicted by climate change. However, the reality is that in 2019, three quarters of the funding given was in loans and only a quarter in grants, this is according to Laetitia de Marez, the Director of the Climate Finance Access Network.

The Centre for Global Development estimates that the industrialised world has caused $152 trillion worth of climate damage since 1979 and despite the promise of $100 billion per year after the Paris Agreement in 2015 they only managed to pay $15.4 billion in 2019.

We can predict that the figures of 2020 will be even lower as Covid has hit everyone very hard. This has led to countries in Africa and Small Island Developing States (SIDS), which are already experiencing the effects of climate change, to form a coalition and demand the financing required to deal with the consequences of climate change.

Africa experiences temperatures that are climbing at twice the global rate, while SIDS are vulnerable to rapidly rising sea levels and increasingly violent hurricanes.

The aforementioned coalition includes a new renewable infrastructure finance facility by Bank of America (BoA) for SIDS in the Caribbean. The facility aims to invest about 800MW of new wind, solar and electric vehicle charging infrastructure projects in the Caribbean, with the aim of accelerating clean energy transition in the region.

Friends of the Earth Grenada applaud the efforts that are being made to achieve a system change in energy provision, however, one small point needs to be made.

It is foolhardy to go ahead with electric vehicle charging infrastructure while the electricity is fuelled by “dirty” energy. Sustainable, clean energy has to be the primary focus, across the tri-island State, electric cars and their charging systems come further down the agenda for funding.

We also implore those negotiating future funding that it has to be made available as grants, we need to continue to remind the developed world that we cannot pay twice for the errors of their ways, we are already paying in the damage being inflicted by their systems, why should we have to pay again in interest laden loans.

Another aspect worth mentioning is the notion of debt swap. A very simplistic explanation of debt for nature swap is that a rich buyer or country can buy a poor country’s debt, usually with a body like The Nature Conservancy (TNC) acting as broker, the buyer dictates the terms of the contract, i.e. what the poor country has to do to get the funds and the poor country then has to pay back the entity who bought the debt.

Friends of the Earth Grenada have always been against this kind of arrangement due to the loss of sovereignty implied, in that the poor country loses its decision making powers in relation to its resources but is still in debt to the buyer.

There has also been a great deal of talk before and during COP 26 about the notion of ‘greenwashing’, where the industrialised world buys the debts but in exchange for ‘business as usual” for them and gaining the power to dictate terms to the poorer countries.

Obviously this is now becoming less and less acceptable as shown by COP 26”s change in the slogan from Net Carbon to Zero Carbon, an indication that everyone has to cut their emissions and not just rely on the developing world’s debts to solve the problems created by the industrial world.

Over the years Grenada has incurred significant debt with little or no monitoring as to if and how the country has benefitted from so much debt. If Grenada were to enter into this kind of arrangement in relation to climate change, what would be the consequences if Government breached the agreement and what would happen if we had another natural disaster and we were unable to service the debt, could other entities claim our natural resources?

Grenada has more than enough to contend with and this kind of pseudo structural adjustment should not be the way forward.

Friends of the Earth Grenada want to support the notion of a coalition negotiating for funding to mitigate and adapt to climate change and want to reiterate that most of this funding should be as grants and not loans.

The Caribbean is not a huge emitter of greenhouse gases, that SIDS are suffering the outcomes of industrialisation in the developed world and needs to be recognised as such and used as a bargaining chip at the negotiating table.

The above reflects the views of Friends of the Earth Grenada