Brussels, 12/10/2015 (Agence Europe) - Everyone at the G20 finance ministers' meeting on Friday 9 October in Lima (Peru), as part of the annual World Bank and IMF meetings acknowledged that finance is the key issue if climate change is going to be tackled and a climate agreement obtained in Paris.
The multilateral development banks, with the European Investment Bank at their head, made a number of new commitments. Finance ministers also made commitments to speeding up the amount of the contributions. The EU is the largest climate change fund provider and was delighted with this news.
Laurent Fabius confident. Laurent Fabius, the French minister for foreign affairs and international development, will be chairing the COP21 and said that he was now feeling confident. He was encouraged by the OECD estimates according to which USD 61.8 billion was earmarked at the end of 2014 out of the USD 100 billion promised to developing countries from now until 2020 (see EUROPE 11406), as well as the additional commitments made in Lima.
In a press release, he stated: “The financial institutions' conference has brought something positive in the fight against climate change. On the basis of OECD estimates and the commitments announced in Lima, particularly by the development banks, the USD 100 billion to be paid a year by countries in the North to countries in the south in 2020 now have to be achieved. If the new efforts needed by these countries, the multilateral banks and private sector are borne out, this will constitute an essential advantage for the COP21 succeeding”.
The EU and its member states are currently the biggest providers of climate financing to developing countries, with €9.5 billion raised in 2013 in donations (from the EU and member states) and €2 billion in loans from the European Investment Bank (EIB) in developing countries. The commitments made by the member states account for almost half of the promises made up until now for the Green Climate Fund. The European Commission explained that this amount stood at USD 4.7 billion.
The EU commitment to ensure its fair share to the international commitment of USD 100 billion a year up to 2020 therefore remains intact. The climate financing contribution ensured in the EU budget will more than double by 2020, with 20% at least in spending on climate action by 2020. Since 2007, the EU has mobilised around €1 billion in donations for climate projects in developing countries through regional investment facilities (Latin America, Africa, Asia), to the tune of €25 billion in renewable energy projects, energy management efficiency for waste and the fight against deforestation. Between 2014 and 2020, the EU will raise even more investments through these instruments, to the tune of at least €2 billion in donations, which could bring the total amount of investments up to €50 billion.
EIB intends to provide 35% of climate loans. In Lima, the European Investment Bank (EIB) announced that it would increase its share of loans from 25% to 35%. Its loans will be used to support climate investment in developing countries. Werner Hoyer, the president of this institution, confirmed that the EIB would increase its loans in the countries identified by the UN Framework Convention on Climate Change and the OECD as being particularly vulnerable to the damaging impact of climate change.
The new EIB strategy will seek to increase funding for adaptation, as well as providing support through private capital and guaranteeing that each project that it helps to finance will minimise greenhouse gas emissions and promote resilience in the face of the uncertainty provoked by climate change.
Speaking in Lima, Hoyer declared: “The EU bank will provide well over USD 110 billion for climate action projects around the world over the next five years. We must do all we can to unlock new investment in countries especially vulnerable to climate change, including those with low-lying coastal areas and regions exposed to desertification, drought and flooding.” In 2014, the EIB mobilised USD 25.4 billion in loans for projects to mitigate the effects of climate change and for promoting adaptation in Europe and throughout the world.
A specific plan, no creative accounting. CAN Europe (Climate Action Network Europe) is delighted with the new commitments made by the finance ministers in Lima and described them as an essential element for concluding a universal climate agreement in Paris. Nonetheless it would like further clarification to avoid any accounting tricks being carried out. The NGO network also calls for a detailed plan to be provided by the EU before Paris, about the way in which it intends to ensure its contributions to climate change and guarantee that all the funds committed do indeed serve the goal of making developing countries more autonomous in their efforts and attempts to tackle climate change. Given that the OECD report demonstrates that countries over-estimate the actual transfers that vulnerable countries' governments are receiving, through the inclusion of loans and credit guarantees, CAN Europe states that meeting the climate finance promise must not become an issue of smart accounting of private investments. CAN Europe believes the USD 100 billion should be comprised of public funds, with private finance additional to that sum. CAN Europe stated: “Public finance is essential for the world's poorest communities who do not tend to live in places that attract private investment”. (Original version in French by Aminata Niang)