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With the COP27 summit beginning in Sharm el-Sheikh, Egypt, the issue of finance for climate action, especially in developing countries, has been highlighted. This crucial issue is expected to be an important point of discussion at this year’s summit.
Now, a report commissioned by this year’s and previous hosts of COP, Egypt and Britain, has come out with an estimation saying that developing countries will need $1 trillion yearly in climate finance. The report says that developing countries will need to work with investors and rich countries along with development banks to secure that amount as external financing for climate action and to match it with their own fund by the end of the decade.
The report released ahead of the discussions over climate change finance says the financing is needed for cutting emissions, enhancing resilience and dealing with climate change damages.
“The world needs a breakthrough and a new roadmap on climate finance that can mobilise the $1 trillion in external finance that will be needed by 2030 for emerging markets and developing countries other than China,” the report said.
Finance has been an issue for quite a long time at climate summits. Notably, in 2009, developed countries committed to providing $100 billion a year till 2020 to developing countries to prepare themselves for climate action and to reduce emissions. However, that target was not achieved and it was pushed further till 2023.
Developing countries also wanted financial help for loss and damage. During the Bonn Climate talks held in June this year, the option for making such financial aid was excluded when wealthier nations pushed back the idea, fearing that they would have to pay the compensation for decades. However, the European Union agreed that this aspect should be discussed at COP 27. With intense negotiations, the loss and damage compensation is now set as an official agenda for COP 27.
Before starting the climate summit, the Egyptian hosts also warned the leaders of the wealthier nations that the missing commitments should be fulfilled this time. In a letter to world leaders, Sameh Shourky, the president of COP 27, also the Egyptian foreign minister, reiterated that the extra climate finance for the vulnerable countries that was promised in COP 26 has not materialised yet.
The report commissioned by the current and previous hosts, Egypt and Britain, said that the developing nations would require $2.4 trillion by 2030 for climate action. Half of this would be coming from external financing and half generated by the countries themselves from public and private sources. The report said that the current investments stand low at $500 million. The report said that the highest share of the required funds should come from the private sector, comprising both private and foreign sources, along with tripling annual flows from development banks. The report also urges that concessional loans should be stepped up. It also calls for financial grants and low-interest loans from the governments of developed countries to be doubled from $30 billion to $60 billion by 2025.
Delegates in Egypt for the COP 27 summit, especially from the vulnerable and developing countries, are expecting that the finance issue will get the focus this time.