COP26: time for G7 leaders to front up on climate finance

G7 leaders at the 2021 Carbis Bay Summit, Cornwall. Picture by Andrew Parsons / No 10 Downing Street

Can rich nations meet the $100 billion climate finance target and keep COP26 on track?

It’s the “key missing ingredient” for a successful Glasgow summit, UK foreign secretary Dominic Raab told a Parliamentary committee earlier this week.

Now it’s true, $100bn is dwarfed by the trillions projected to be invested into infrastructure by 2030, by the vast subsidies handed to fossil fuels annually and the 2020–2021 COVID stimulus packages.

Yet in climate politics, it’s a giant of a promise: one made in Copenhagen (2009) and reaffirmed in Paris (2015) and critical to the success of COP26.

Without this signal of trust among nations, it will be difficult to build a coalition of developed and developing countries at COP26 capable agreeing to tougher UN targets.

OECD figures for 2018, released in 2020, suggest that there was still a gap, based on developed countries’ own reporting, of $21bn.

Some G7 countries have stepped up — with Germany, Canada and Japan recently joining the UK and France with pledges roughly in the ballpark of what their fair share of effort should be.

But it’s not enough — and the failure to meet this target is corrosive, undermining confidence in support structures and faith in the West.

That was the gist of a piece byCOP26 boss Alok Sharma this week. “Not every G7 nation put extra money on the table immediately, but we need that to happen ahead of COP26," he wrote.

Who did he have in his sights? The US, Italy and Australia (not formally a G7 nation yet a member of the G20 and evidently an advanced and wealthy economy) are likely top of that list.

As you can see from the chart below, that trio are *well* off the pace when it comes to contributions.

The column on the right details what countries are currently giving, but substitute % for $bn and you’ll get an idea of what governments should be disbursing.

Getting granular: what do analysts think Italy, the US and Australia should contribute moving forward? Below is a mash-up of of several organisations 'asks' into those capitals during G20 talks this month.

Is this enough to meet the $100bn or solve the liquidity crunch in the developing world? No, but it would be a start — and a sign wealthier countries can keep their promises.

Meanwhile, in the Global South, the climate challenge keeps getting tougher.

Earlier this year African ministers issued a statement via the UN Economic Commission for Africa warning some are spending 10% of GDP on climate adaptation.

A study from academics at Oxford University suggested just 10% of Africa’s energy will be clean by 2030 due to a dearth of financial support across the continent.

Recent work by Swiss Re puts global GDP losses by 2050 at 11–14% on current emission pathways, but 4% if emissions are cut faster (the study also calculates losses for 48 major economies).

This level of economic harm would be greater than seen in both the Covid pandemic and the Great Depression of the 1920s.

According to the UN’s 2018 1.5C IPCC climate science report “p

While private climate finance is key, a significant increase in concessional climate finance from wealthier nations in the coming years is deemed critical.

That means unlocking bilateral and multilateral funds, Multilateral Development Banks, bilateral finance, and tapping up private finance.

Agreeing on a delivery plan through 2025 to go beyond the $100bn goal at COP26 would also help repair trust with developing countries.

But as ever, seeing is believing. We’ve heard a lot of talk from leaders in the US, UK and EU on what “leadership” looks like and their plans for a plan.

It’s time to front up. It's time to cough up.

Tracking international climate diplomacy since 2010 | Trustee @LewYouTheatre | Also at @sportandclimate