Opinion: To Keep the UN Framework Relevant, More Countries Should Provide Climate Finance

Written by
Charles Fraser, MPA Student
Dec. 8, 2022

The system for funding global climate action isn’t fit for purpose. Following COP27, there is now growing momentum for reform. As part of these changes, more countries should become responsible for providing finance.

Amidst multiple intersecting crises – huge climate impacts, food and energy shortfalls, crippling debt burdens – the old way of delivering development finance is clearly failing everyone, especially the most vulnerable. There are now reforms on the table that would deliver real impact. At the centre of these is the “Bridgetown Initiative”, spearheaded by Barbados’ Prime Minister. It aims to shake up the multilateral financing system so it can better respond to the needs of the Global South. At COP27 and the G20 we saw increasing high-level support for reform. The French President will host a summit in June 2023 to focus minds over the coming year.

Clear progress is already being made. At the G20 we saw the announcement of a $20 billion just energy transition partnership that will leverage public and private financing to support a more ambitious move away from fossil fuels in Indonesia. And at COP27 a landmark agreement was reached for a new UN fund focused on responding to loss and damage. It’s important not just for the support it will channel to the most vulnerable, but also the signal it sends about the readiness of the multilateral system to step up to meet the reality of worsening climate impacts.

This is all exciting and much needed. But as part of making our efforts fit for purpose, we must also broaden the group of countries considered donors under the UN Framework Convention on Climate Change (UNFCCC). Many nations are now rich enough to support climate measures in poorer countries but face no obligation to do so. The system has failed to stay up to date.

The “developed” countries on the hook to provide climate finance for “developing” countries were first agreed in a list annexed to the original 1992 UN treaty. It used OECD membership at the time as its criteria, including the likes of Australia, Japan, the EU and the USA. While many elements of our multilateral response to climate change have evolved since then - from new treaties like the 2015 Paris Agreement to the progress made at COP27 - that 1992 list is still the reference for who is (and isn’t) responsible for climate finance commitments.

The issue is that the world has changed dramatically since 1992. Many countries that weren’t rich enough to be included on the donor list back then are now much wealthier and emitting large amounts. Many people are surprised to hear that oil-rich Gulf states and now wealthy economies in East Asia are not expected to provide anything under current rules (a few do on a voluntary basis). Just as creating a new fund to respond to loss and damage is a solidarity issue, so it is for solidarity that every country that can provide support should be expected to do so.

Of course, we won’t agree on the criteria for adding countries right away. The US and EU want China to contribute, as the second largest historical emitter. Historical emissions are clearly relevant, but China’s emissions per capita are also far smaller than other countries. There is a strong case for adding at least seven countries, based on their per capita wealth and cumulative emissions: Singapore, Qatar, Israel, Brunei, Kuwait, South Korea and the UAE. They are all responsible for more emissions since 1990 than at least half of the countries on the 1992 donor list and have comparable per capita wealth.

In any case, this isn’t an argument for a specific list of countries to be added. The point is that we urgently need to begin a focused conversation to work it out. Building the political conditions and technical understanding to expand the “donor base” will take time and effort. Doing so is essential if our collective response to climate change is to keep up with reality.

We should use the momentum behind the Bridgetown Initiative to get this conversation going. Since increasing concessional finance for climate-vulnerable countries is a central aim of the broader proposals, leaders should recognize that getting more countries to provide money for institutions like the World Bank and the Green Climate Fund is key.

Within the formal UN negotiations there are also opportunities to focus attention and change the status quo. Over the next two or three years countries will negotiate a new collective climate finance goal, to replace the annual $100 billion commitment from 2025. And with the loss and damage fund agreed, nations will now consider how to “expand” the sources of funding available for it. Building the support for a larger, up to date donor base should be a key priority through these processes.

We need our multilateral institutions to go further and faster in delivering support to reduce emissions and adapt to climate impacts. With COP27 behind us, there is a real opportunity to change the way things are done. Traditional country donors still need to do much more. And the private sector must step up in a big way. But as other countries have become richer and emitted more, they should also be expected to increase the support they provide.

The creation of a loss and damage fund at COP27 shows us what global climate solidarity in the 21st Century can look like. It’s time for the same kind of solidarity about who pays for climate action.