There is a major mismatch between the scale of the energy system transformation envisaged by policymakers and the limited financing which they are making available to achieve it.
Unless the gap between ambition and resources is narrowed, global emissions will continue to climb, and the target of net zero by 2050 will slip out of reach within the next few years.
Developed countries provided or mobilised just $80 billion in mitigation and adaptation finance for their developing counterparts in 2019. (https://tmsnrt.rs/3nCrL4e)
The estimate was compiled by the Organization for Economic Cooperation and Development in its annual report on climate finance, published on Sept. 17.
The largest funding sources came from multilateral development banks ($30 billion), bilateral government assistance ($29 billion) and the private sector ($14 billion), with smaller amounts from climate funds and export credits.
In 2009, the Copenhagen climate summit agreed developed countries would provide $100 billion per year by 2020, but even this relatively modest target is likely to have been missed when estimates become available next year.
Pledged and delivered financial assistance to tackle climate change pales in comparison with the $1,540 billion of foreign direct investment flows of all kinds, including $685 billion to developing countries, reported in 2019.
Pledged and delivered financial assistance is also a tiny fraction of the $1,900 billion invested in energy systems around the world in 2019, according to the International Energy Agency. (https://tmsnrt.rs/3Am0s1p)
The financing committed by developed countries is nowhere near enough to transform developing countries’ energy systems, achieve net-zero emissions and provide access to modern energy services to all.
Developed countries have committed to deliver the equivalent of just $16 per person per year to help the developing world mitigate and adapt to climate change – and managed to provide only $12 per person in 2019.
This is not even close to the hundreds of billions of dollars that would be needed to replace traditional cooking and heating fuels, such as wood, coal and kerosene, with modern cleaner alternatives by 2030, which is one of the United Nations Sustainable Development Goals.
It is even further away from the amount that would be needed to electrify transportation and other energy services, and simultaneously decarbonise electricity generation, by replacing coal and gas combustion with wind, solar, hydro and nuclear power.
With so little funding from the advanced economies, developing countries will have to finance most of the investment from their own resources, where it will have to compete with a myriad of other policy priorities.
Top policymakers from Europe and North America have set out ambitious plans for curbing emissions at home and abroad, but they are offering little financial or technical assistance to help realise these plans in fast-growing emerging economies, where most future emissions growth is projected to occur.
– Climate Finance Provided and Mobilised by Developed Countries (OECD, Sept. 2021)
– World Investment Report (UNCTAD, June 2021)
– World Energy Investment (IEA, June 2021)