The Crisis of Climate Finance: “Access Means Survival”

Things are getting down to the wire on climate action. We’re less than a month out from the United Nations Climate Change Conference (COP26) in Glasgow. The United Nations General Assembly (UNGA) and Climate Week NYC wrapped up in September, having prompted some significant new announcements on climate action. But the new pledges also prompt serious questions for COP26, particularly around the issue of getting funds for climate mitigation and adaptation into the hands of the countries that urgently need it.

The problem: despite new pledges of climate finance from wealthy nations to the Global South, the current system for accessing that finance is “crap,” as one diplomat recently put it. Unlocking the flow of finance remains one of the key challenges holding back climate progress in the Global South—and threatening to cast a shadow over COP26.

New Pledges ahead of COP26

The recent meetings of world leaders and climate advocates certainly held some promising announcements. Just prior to the UNGA, the EU increased its commitment to climate-vulnerable countries by $4.6 billion and called on wealthy nations to step up their own pledges. Shortly thereafter, President Biden announced his intent to double the amount his government would pledge, promising to make the United States a leader in both climate finance and adaptation.

Representatives of countries in the Global South welcomed these commitments as a step toward reaching the $100 billion in assistance that was promised back in 2009 but has been slow to materialize. Increasing the levels of funding available to Global South countries is a positive first step worth celebrating, but the announced increases are not guaranteed. President Biden’s pledge, for example, will depend on congressional approval.

More critically, nations in the Global South still face too many hurdles in accessing the climate finance that is available. As such, even if necessary funding exists, developing countries, particularly Least Developed Countries (LDCs) and Small Island Developing States (SIDS), face a gauntlet of challenges in accessing it and putting it to use. This issue remains a key sticking point as climate diplomacy and climate justice issues ramp up in advance of COP26.

The Gap between Promise and Delivery

The challenge of climate finance access is no mystery—developing countries have described the process of applying for and implementing climate finance as obstructively complex. Nations seeking to access climate finance opportunities face complex and varying funder requirements, lengthy project development timelines, and new requirements for data collection and reporting. Or, as one diplomat put it more bluntly last week, the system is “all crap, and we are six years past the Paris Agreement.”

In an RMI-hosted session during Climate Week, representatives from small island nations spoke frankly about the issues they’ve encountered in navigating the global climate finance system. As their nations bear the brunt of punishing climate impacts—and a frustratingly convoluted system for accessing support—leaders from the Global South are losing patience.

Fiji’s Ambassador to the U.N., Dr. Satyendra Prasad, made it clear that more funds alone won’t solve the problem. “The way in which power is organized in decision-making of global finance institutions and funds is asymmetric—the issue is not the money. It is almost by design that we cannot access the money. As a diplomat I should not be so plain and so blunt, but I have to.”

UnaMay Gordon of Jamaica’s Ministry of Economic Growth and Job Creation agreed. “It’s like we are playing Russian roulette,” she said of the current system. “Every time we have a new [funding] cycle, we face new challenges.” For nations that have done little to contribute to global warming but are now on the front lines of climate change, swift action is a must. “Access to finance means survival!” Gordon said. “We need to stay alive and thrive in the countries that we live in.”

Another panelist highlighted the difference between accessing finance for climate mitigation and accessing conventional finance for destructive or polluting activities. “If you want to get access to money to destroy a forest, you can get funded in six months—and get a tax refund,” said Diann Black-Layne, Ambassador for Antigua and Barbuda. “If you want to protect that forest—I’ll see you in five years.”

Helping to Guide the Ship through Choppy Waters

To help identify and resolve the specific issues holding back the flow of climate finance, RMI’s Climate Finance Access Network (CFAN) has been designed in direct response to the needs of the most vulnerable or capacity-constrained developing countries: SIDS and LDCs. In 2019, RMI conducted an assessment interviewing more than 100 representatives from 45 developing countries.​ What the survey revealed was resounding demand for assistance in unlocking climate finance to address the climate finance “bottleneck” and long-term capacity constraints.​

Nearly all—98 percent—of the representatives surveyed expressed interest in working with a climate finance advisor to support them in navigating the climate finance ecosystem and securing the finance they need for climate adaptation and mitigation projects. In response to this near-unanimous demand, CFAN will provide specially trained, dedicated climate finance advisors to help meet the unique needs of developing nations.

The Network has selected the first eight countries in the Pacific where advisors will be recruited, trained, and embedded: Fiji, Kiribati, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. At COP26, CFAN will introduce the inaugural cohort of advisors who will be working in these countries; the advisors were chosen specifically to work on the priorities identified by the countries themselves.

What Next?

What the conversation during Climate Week made clear is that the increased pledges from wealthy nations are a necessary but not sufficient condition for addressing climate justice at COP26. Even with a full $100 billion to draw on, accessing it would still be a problem if the status quo persists. As CFAN Director Laetitia De Marez put it, “We stand at a vital moment in the climate crisis—those on the front lines of climate change need support now, and whether we end up with $100 billion or $100 trillion won’t matter if those countries can’t equitably access climate finance.”