Experts say confusion over what qualifies as green funds must be clarified by UN summit in Paris later this year
By Ed King
Climate aid flows from developed to developing countries is likely to be far lower than previous estimates, a UN panel has admitted.
Last December, a study commissioned by the UN’s climate body suggested US$340-650 billion had been invested in low carbon initiatives around the world. Of that, it said $40-175 billion flowed from rich to poor countries.
But in a clarification note released last week UN officials say this estimate for 2009-2012 “may be closer to the lower bound” after they checked their calculations.
“As indicated in the 2014 BA [biennial assessment] the magnitude of climate finance flows from developed to developing countries is highly uncertain mainly due to uncertainty about the scale of the private flows,” they write.
The intervention is significant, coming months before a UN climate pact is scheduled to be signed off in Paris.
Proof that more finance for green projects will be delivered is a key demand of emerging and poor economies, who in 2010 were promised $100 billion of climate finance a year by 2020.
Experts say these amended figures show the UN must define what climate finance really is, specify a methodology for monitoring flows and ensure private investments labelled “clean” are audited.
In an article for the Brookings Institute, Martin Stadelmann and Timmons Roberts say failure to do so could impact the integrity of a proposed global climate pact in Paris later this year.
“What happens if industrialized countries communicate, based on North-South numbers released in the UN report, that they are already on track to meet their $100 billion commitment, or already past the goal? Efforts and negotiations during this critical year could then be misdirected,” they write.
“The international community might realize only years later not just that the $100 billion commitment may not be met, but also that they are far from the investment required to provide a decent chance of avoiding dangerous climate change.”
The UN-backed Green Climate Fund is expected to make it easier for developing countries to build renewable energy plants, but it only opened for business at the end of 2014 and is not expected to invest in any projects till June.
In a recently-released analysis of its expected role the GCF’s secretariat said it would focus on five main areas: cities, agriculture, forests, helping small island states adapt to climate impacts and boosting clean energy access in Africa and Asia.
But it stopped short of ruling out any funding for fossil fuels, instead citing the need to back low-carbon electricity that is not generated by coal.
The lack of clarity on how to define climate finance was highlighted in 2013 by the OECD, which revealed at least 24 different interpretations of green funding.
Last year AP news agency exposed Japan for passing off investments in coal power – the most carbon intensive form of energy – as climate finance.
Officials in Tokyo said the new plants in Indonesia would be more efficient and therefore contribute to a decline in emissions.
Last month the Zurich Insurance Group called for tougher standards for so-called ‘green bonds’ that can drive money towards low carbon projects.
In 2014 $38 billion of green bonds were issued, double the total for 2013. But questions were raised over regulation after RTCC revealed a car park in Massachusetts has been built using the bonds.