The costs of climate change are piling up

Climate change is impacting peoples’ lives and livelihoods, in the midst of an ongoing pandemic, conflict, and a deepening economic crisis. In the first half of 2022, extreme weather events cost the world $65 billion and floods, melting roads, runaway wildfires, and dried up rivers are becoming commonplace. The recent floods in Pakistan displaced 33 million people and destroyed 1.7 million homes. Climate change is a “threat multiplier” that is worsening social, economic, and political tensions. It is deepening existing inequalities for those already facing exclusion, including women, LGBTIQ+ people, indigenous people, people with disabilities, and migrants. 

Countries that have contributed the least to climate change are some of the most negatively affected. The world’s 10 most climate vulnerable countries are in Africa, accounting for over 150 million people. Africa accounts for less than 4% of global carbon emissions yet African economies are losing 5% to 15% of their economic growth as a result of climate change. Beyond the economic cost, climate change has already contributed to crop failures, malnutrition, displacement, and the spread of infectious diseases in Africa.

Meanwhile, leadership from climate polluting countries in the Global North is lacking. Climate financing remains below what was promised, and much below what is needed. This risks further undermining trust in multilateralism, a shift already visible in how African countries are voting in the UN, with growing numbers abstaining on votes their northern partners prioritise. Furthermore, it risks missing an enormous opportunity to help African countries invest in a green transition that could drive economic growth. Investments in renewable energy development in Africa, which has over 60% of the world’s best solar resources, could pay important economic dividends, including creating 9 million new jobs. Delivering climate finance and aligning with the aspirations and strategic shift that African leaders are already making could pay dividends both for tackling climate change and supporting development.

Unmet climate finance promises

Climate finance from wealthy countries is significantly lower than the trillions of dollars needed, and remains far below what they promised. At COP15 in 2009, high-income countries committed to mobilise $100 billion in climate finance per year by 2020, specifically to address the needs of lower-income countries. At the 2021 G7 Summit, donor countries extended that commitment to 2025. While data for 2021 is not yet available, donor countries have acknowledged that the $100 billion goal remains unmet. In 2020, a total of $83.3 billion was delivered (see Figure 1). Only 15% of climate financing went to least developed countries and 2.5% went to small island developing states in 2018. Only one-quarter of the total was allocated to adaptation and 71% was given as loans, not grants, with as much as half of the loans being non-concessional. A group of 48 vulnerable countries is asking that climate finance be more grant-based and that at least 50% of funding go to adaptation.

Amongst G7 countries, only France, Germany, and Japan have contributed their fair share toward the $100 billion target. Several countries, most notably Canada and the US, have significantly under-contributed. Donor countries have moved the $100 billion goal posts from 2020 to 2023 (at the earliest), leaving a sizeable gap in climate finance contributions, and recipient countries argue that $100 billion is far below what is actually needed.

In part due to insufficient finances, climate vulnerable countries are not on track to reach their mitigation targets or implement their adaptation plans, and could experience trillions of dollars in climate-related losses by 2030. Loss and damage is recognised in the Paris Agreement, but most countries are not forthcoming with finance dedicated specifically to the issue. Recently, Denmark formally contributed, joining the ranks of Wallonia and Scotland. 

The voices of many of those most impacted by climate change continue to be excluded from the decisions that will shape their futures. Women, for example, have less voice in climate discussions: they are less likely to be in positions of power in negotiations, official delegations, and official bodies (see figure 2), as well as less represented and less quoted in climate journalism. Meanwhile, the fossil fuel industry formed the largest delegation at COP26, bigger than the registered delegation of the UK, the host country.

A moment for climate action

COP27 is a critical moment for people and planet. It is a chance to deliver on promises and lay the groundwork for a more sustainable and ambitious future.

At COP27, leaders need to:

• Deliver on climate finance promises, meaning the delivering of $600 billion for climate vulnerable countries by 2025, with at least 50% available for adaptation efforts and 50% in the form of grants.
• Increase access to funds for low- and lower-middle income countries.
• Set a new ambitious financing goal from 2025 onwards that reflects the reality and costs of the climate crisis for climate vulnerable countries.
• Commit to loss and damage by operationalising the Loss and Damage Financial Facility and formally contributing to it. 

Building resilience and capacity to respond to the climate and other crises in the longer term will require a broader set of measures. At COP27 and beyond, leaders should:

• Expand fiscal space for lower income countries hard-hit by the aftershocks of the converging crises by urgently fulfilling commitments to recycle at least $100 billion in Special Drawing Rights (SDRs) and tackling the debt crisis and its underlying causes.
• Leverage substantial new lending and catalyse additional investment, both public and private, through reform of the multilateral development banks, including reforming capital adequacy frameworks that could unlock an additional $1 trillion in new finance.
• Improve transparency and accountability of natural resource revenues, climate finance, and reallocated SDRs by strengthening public and resource governance.