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A Core Question at COP27: Who Will Pay for Climate Change?

When world leaders gather in Sharm el Sheikh, Egypt, this week for the annual United Nations climate summit, the debate over who bears financial responsibility for climate change will be center stage.

Poor nations, which have contributed the least to climate change but are among the most vulnerable to its effects today, are seeking more financial commitments from rich countries, many of which have grown their economies by burning fossil fuels.


Most Vulnerable, but Least Responsible for Climate Change

A vulnerability index developed by the University of Notre Dame measures countries’ exposure, sensitivity and capacity to adapt to the negative effects of climate change.

A bubble chart ranking countries from more to less vulnerable. Each bubble is sized by the country’s historical emissions. It shows that lower income countries tend to have low historical emissions but are more vulnerable to the effects of climate change.





10 gigatons CO2

Climate change

vulnerability index

COUNTRY’s Total

historical emissions

Somalia is highly vulnerable to the impacts of climate change, but has contributed only a tiny fraction of global emissions.

More vulnerable

Less vulnerable

Lower income countries

Many small island nations face threats from rising sea levels and extreme disasters, despite historically low emissions.

Pakistan experienced widespread and deadly flooding this summer that scientists linked to climate change.

India

57.1 Gt CO2

Middle income countries

China

249.4 Gt CO2

Russia

117.5 Gt CO2

Japan

66.7 Gt CO2

Higher income countries

United States

421.7 Gt CO2

United

Kingdom

74.9 Gt CO2

Germany

93.1 Gt CO2

Wealthy countries are responsible for half of the world’s emissions

since 1850.

They are also experiencing more frequent and extreme weather as the world warms, but are better prepared for climate-related disruptions.

Climate change

vulnerability index

COUNTRY’s Total

historical emissions

10 gigatons CO2

Somalia is highly vulnerable to the impacts of climate change, but has contributed only a tiny fraction of global emissions.

More vulnerable

Less vulnerable

Lower income

countries

Many small island nations face threats from rising sea levels and extreme disasters, despite historically low emissions.

Pakistan experienced widespread and deadly flooding this summer that scientists linked

to climate change.

India

57.1 Gt CO2

Middle income

countries

China

249.4 Gt CO2

Russia

117.5 Gt CO2

Japan

66.7 Gt CO2

United States

421.7 Gt CO2

United

Kingdom

74.9 Gt CO2

Germany

93.1 Gt CO2

Higher

income

countries

Wealthy countries are responsible for half of the world’s emissions since 1850.

They are also experiencing more frequent and extreme weather as the world warms, but are better prepared for climate-related disruptions.


The consequences of global warming are already unfolding, with developing countries often on the front lines of the devastation. Pakistan experienced catastrophic floods this summer, which scientists said were made worse by climate change. A third of the country was left under water, leaving 1,700 people dead and causing at least $40 billion in economic losses. Extreme flooding also submerged parts of Nigeria earlier this month, and elsewhere in Africa, record drought has brought millions to the brink of starvation.

At this year’s climate conference, known as COP27, developing countries are expected to press wealthy nations — historically the world’s biggest emitters — to fulfill earlier promises of financial support and push them ever further.

Current Commitments Falling Short

More than a decade ago, the world’s rich, industrialized countries — including the United States, Canada, Australia, Britain and Japan — committed to giving $100 billion a year by 2020 (and through 2025) to poor nations for climate adaptation and mitigation projects.

But wealthy countries have failed to meet that goal.


Climate Finance Pledges, Unmet

Rich countries promised to mobilize $100 billion per year in public and private financing by 2020 to help poor countries mitigate and adapt to a changing climate.

A bar chart showing that while financial contributions from wealthy countries have increased each year since 2016, the $100 billion per year goal was not met by the 2020 deadline. There was a $16.7 shortfall in 2020, the most recent year that data is available. In addition, the chart shows that financing for mitigation projects has generally been twice as high as for adaptation projects.





$100 billion per year goal by 2020

$16.7 billion

$58.5 billion

delivered

Mitigation

Adaptation

$100 billion per year

goal by 2020

$16.7 billion

$58.5

billion

delivered

Mitigation

Adaptation


Nations will need to agree on another financing pledge of at least $100 billion a year before 2025, so negotiations at this year’s summit will begin shaping that goal. Most estimates have suggested that $100 billion is not nearly enough to help poor countries stave off the worst effects of climate change, let alone shift away from burning oil, gas and coal.

“All of the evidence suggests that we need trillions, not billions,” said Baysa Naran, a manager at Climate Policy Initiative, a research center.

The money so far has funded mitigation projects, which help developing countries transition away from fossil fuels, like building a zero-emissions transit system in Pakistan. Money has also gone toward adaptation projects, which help countries build resilience against climate risks, like restoring mangrove habitats in Guinea-Bissau to protect from rising seas.

Critics point out that funding has often come in the form of loans rather than grants. That has increased many poor countries’ already unsustainable burden of debt, said Alina Averchenkova, a climate policy fellow at the London School of Economics.

Some countries may also count certain types of projects toward their contributions that others do not, which can lead to inflated figures, said Sarah Colenbrander, director of the climate program at the Overseas Development Institute.

The $100 billion goal was “carefully crafted” to be deliberately vague — a result of highly politicized negotiations at COP15 in Copenhagen, said Preety Bhandari, a senior advisor at the World Resources Institute.

As a result, there’s no requirement that specific countries contribute a certain proportion of the funds. Multiple analyses have calculated that the United States, which contributed less than $3 billion of the $83.3 billion in 2020, is underdelivering by tens of billions of dollars when considering its relative emissions, population size and wealth.

In addition, mitigation projects have generally received twice as much funding as those focused on adaptation, although many experts and representatives from vulnerable nations say that the two should be more balanced. While mitigation addresses the root of the climate problem by curbing emissions, it doesn’t help communities adapt to current or future risks.

An agreement reached at the end of last year’s climate negotiations in Glasgow urged rich countries to “at least double” finance for adaptation by 2025 to $40 billion.

A Separate Fund for “Loss and Damage”

More recently, some of the world’s most vulnerable nations have intensified calls for new funds from the world’s wealthiest economies to compensate for damages caused by climate change.

The issue is known in climate negotiations as “loss and damage” and proponents have described it as a form of climate reparations to pay for irreversible losses of income, culture, biodiversity and lives.

Wealthy countries have historically resisted calls for a loss and damage fund, largely out of fear that it could open them up to legal liability. In Glasgow last year, the United States opposed language that would set up such a fund.

This year, as Egypt has vowed to put loss and damage on the formal COP27 agenda, representatives from the United States and European countries have indicated that they might be open to discussing it.

A group of small island states first raised the issue of loss and damage in 1991, pointing to the irreparable destruction they faced from sea level rise. Since then, those countries have attempted to quantify the crushing costs. V20, or the Vulnerable Twenty group composed of finance ministers from 58 nations, estimated that its member states have lost $525 billion, or about one fifth of their wealth, over the past two decades due to climate change.

“Countries are already paying for climate change now, and the burning question is: Can we let this go on?,” said Sara Jane Ahmed, a financial advisor to V20. “And the answer is: No, we can’t.”

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