Canada announces millions of dollars in new climate finance for developing countries

Canada is announcing millions of dollars in new climate funding for developing countries, but climate protection advocates say the symbolic donations will be tied to new funding instruments delegates are currently negotiating at COP27. It warns that it is not a replacement.

On Wednesday, Environment and Climate Change Minister Stephen Guilbeau announced new funding worth $14.25 million as part of Canada’s commitment to provide $5.3 billion to poor countries over five years. The funding announced in Sharm el-Sheikh, Egypt, includes $5 million to the Climate Finance Access Network, an organization that provides climate finance advisors to developing countries, as well as a United Nations agency that brings together technical expertise. Includes $1.25 million to the Santiago Network. to countries that need it. Guilbeault also pledged his $7 million to the Global Shield Financing Facility to help vulnerable countries become more resilient to climate change.

Global Shield was officially unveiled at COP27, but there are few details about how it will work. World Bank President David Malpass, who was criticized earlier this year for avoiding questions about whether he accepts the scientific consensus that burning fossil fuels causes global warming, met Germany’s Olaf Scholz at an event Monday. I set up a fund with the Prime Minister. idea. Scholz also pledged his €170 million to this fund.

ENVIRONMENT AND CLIMATE CHANGE Canada brands its $7 million contribution as funding for loss and damage, or money that goes to compensation for climate disasters experienced by vulnerable countries. But Eddy Pérez, International Climate Diplomacy Manager at Climate Action Network Canada, said: Canadian National Observer It’s too early to say whether that’s exactly how the money will be spent, as it’s not clear. He explained that the funds were used to

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“I think the developed world is cheap and its strategy has been oppressive and exclusive for years, groping for ideas,” he said.

But Canada’s contribution to the Global Shield “should not replace what we’ve come to do here, which is to adopt a fund[for loss and damage]at the end of the COP,” he said. said.

There are three main conversations in international climate finance. Mitigation financing is money used to reduce global greenhouse gas emissions, such as replacing fossil fuel-powered electricity with renewable energy. Financing to prepare for already entrenched damages from climate change, such as building seawalls, is called adaptation financing. And money to compensate for climate disasters that have affected countries, like this year’s devastating floods in Pakistan, is called loss and damage.

Perez said the $7 million pledge from Canada marks a shift in how countries think about the issue. At last year’s climate conference, the United States and the European Union spiked plans to create a loss and damage fund.

“A year ago, talking about loss and damage support seemed like an impossible task, so with that change, we are still talking about symbolism,” he said. . “The need is too great to stick to symbolism. When Minister Guilbeau saw that the events happening in Pakistan cost him $40 billion, this $7 million It would be a mistake to celebrate as a major contribution from Canada.”

In addition, Perez said $7 million will go to the Berlin institution, giving countries in the Global South direct access.

Guilbeault said he understands that many developing countries are looking at new financial mechanisms to finance losses and damages. Canada is open to it, but before a new fund is launched, it needs to “appropriately assess” how it is currently distributing funds to better understand where gaps lie, he said. Stated.

“If you see that there are some gaps, what’s the best way to fill those gaps? If it’s creating new mechanics, I’m certainly not against it,” he said. I got

Guilbeault noted that the Global Climate Fund, a UN financial fund that helps countries reduce emissions and adapt to future damage, took about seven years to come into operation.

“If you think about it…we are very optimistic that we can create a new agency at the UN level and that they will immediately start pumping money to help developing countries,” said Hand. Includes programs like Shield.

The ‘broken train’ of climate finance

Guilbeault and his international climate officials – German climate envoy Jennifer Morgan, COP26 president Alok Sharma and US climate envoy John Kerry – also participated in discussions on climate finance on Wednesday.

Loss and damage financing conversations are not the only hotly debated global climate action topic. Countries are also negotiating financing for mitigation and adaptation, and the role of grants and loans to developing countries seeking access to financing.

When the UK hosted COP26 last year, it drafted a report for Canada and Germany outlining when developing countries could receive the $100 billion a year of climate finance pledged by 2020. ordered. Reducing greenhouse gas emissions, rather than adapting to climate change, was a prerequisite for many countries to sign the Paris Agreement. This is the blueprint for the world’s current climate action. The failure of wealthy countries to deliver the money they pledged has hampered international negotiations on climate change. Some countries are reluctant to commit to more ambitious climate targets until funding becomes available. This is a particularly timely discussion as countries debate what their next funding target in Egypt should be.

Ahead of COP27, Canada and Germany announced plans for rich countries to belatedly deliver on their $100 billion pledge. According to plans, wealthy nations have provided him with about $83 billion as of 2020, and he aims to reach $100 billion in 2023. $24.5 billion.

Nakhkort Dhabi, Oxfam’s head of international climate policy, said in a statement: “The contribution of rich countries continues to fall miserably short of their promised targets, as well as counting the wrong things the wrong way. “They exaggerate their generosity by painting a rosy picture that obscures how much money really goes to poor countries.” doing.”

A study by Oxfam suggests that funding amounts are exaggerated because loans are counted at face value, as if they were grants, without recognizing that they must be repaid with interest. .

“Our global climate finance is a broken train, fundamentally flawed and in danger of reaching its catastrophic destination,” Davi said. “Too many loans are owed to poor countries that are already struggling to cope with climate shocks.

Morgan, Germany’s special climate envoy, said: Canadian National Observer Both countries use the methodology of the Organization for Economic Co-operation and Development and both consider them credible. Still, “you can always study and look at Oxfam’s reports to see where those discrepancies lie so you can constantly improve how you report,” she said.

Rethinking the world’s financial architecture

The future of climate finance is a multi-trillion dollar problem. A report commissioned by COP26 and COP27 hosts the UK and Egypt estimates that countries will need $1 trillion in climate finance annually by 2030.

COP26 President Sharma believes the climate finance conversation will require tremendous change in the world’s financial institutions.

“I think we need to have a Bretton Woods 2 moment, where we have to rethink the structure of finance in which we live,” said Sharma. Bretton Woods, a gathering of dozens of countries to establish the post-war world financial structure in 1944, is responsible for institutions such as the International Monetary Fund.

“Many of these institutions were put together decades ago and we need to ensure that climate risk is at the heart of every consideration and decision we make,” Sharma said. rice field. “If we don’t, I’m afraid we’re going to suffer, and we’ll see trillions of dollars flow.”

At a separate event on Wednesday when the United States announced a new funding program called the “Energy Transition Accelerator,” U.S. Special Envoy for Climate Matter Kelly said that the scale of climate change action needed to avert disaster would not be achieved. He said the biggest barrier was funding. The solution, Kelly says, is to unleash private sector money from rich countries into the developing world.

“Wealthy countries are stepping up their support, but it’s still not enough…no government in the world has enough money to get this job done,” he said. “There are no secrets here. We want to take this idea and make it happen, and we want to make sure[Energy Transition Accelerator]is able to provide massive funding.”