Climate Finance Shadow Report 2020 | UPSC

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Climate Finance Shadow Report 2020 | UPSC

Climate Finance Shadow Report 2020 | UPSC

      HEADLINES:

Climate financing adds to poor countries’ debt pile: Oxfam

      WHY IN NEWS:

Eighty per cent of climate financing was provided as loans in 2017-18, according to study

SYLLABUS COVERED: GS 3: Reports

      LEARNING: 

For PRELIMS this report gives you a fair chance to understand the debt trap of Developed countries in the shadow of climate finance . Keep an eye on increasing and decreasing parameters . Take a note on largest donors in your Prelims book.

For MAINS this is an important report explaining – never ending debt of LDC’s and Small Island Countries. Understand the different types of loans under climate financing and go with the recommendations of this report . Let us dive in !

      ISSUE: 

The money being pledged by developed countries to their developing counterparts as climate assistance was making them sink into ever-increasing debt .

CLIMATE FINANCE SHADOW REPORT 2020

  • International climate finance is a cornerstone of global cooperation on climate change.
  • It is rooted in a recognition that climate change is deadly, costly, and that those least responsible for causing it are being hardest hit.

TITLE

Climate finance shadow report 2020 – assessing progress towards the $100 billion commitment.

PUBLISHED BY

Oxfam– A global nonprofit group .

IMPORTANT DEFINITION

CLIMATE ASSISTANCE
It is a fairer way of calculating climate finance than the approaches donor countries currently use. ( It is a calculation of net transfer of resources ).

CONCERNS

  • Public climate finance has increased from $44.5bn per year in 2015–16 to an estimated $59.5bn per year in 2017–18.

Concessional loans and other non-grant instruments is estimated to have increased from $18.5bn per year in 2015–16 to $22bn per year in 2017–18.6.

  • An estimated 20.5% of bilateral climate finance went to Least Developed Countries (LDCs) and 3% to Small Island Developing States.

CLIMATE FINANCE 2017–18: KEY TAKEAWAYS

  • Of the estimated $59.5bn in public climate finance reported by developed countries (annual average), climate-specific net assistance may be just $19–22.5bn.
  • The net financial value of climate finance to developing countries may be less than half of what is reported by developed countries.

Due to over-reporting of climate relevance, bilateral climate finance could be around a third lower than reported.

  • 80% reported as loans and other non-grant instruments; of all reported climate finance, an estimated 40% was non-concessional.
  • Only an estimated 25% of reported public climate finance was for adaptation and 66% was for mitigation.
  • The majority of climate finance counted towards donor commitments to increase aid to 0.7% of gross national income.

Only around a third of climate finance projects are estimated to take account of gender equality.

  • Consistent and transparent information is not publicly available to estimate the level of private finance mobilized towards the $100bn goal.

REPORT ANALYSIS

CLIMATE-SPECIFIC NET ASSISTANCE

  • Reported climate finance is significantly higher than climate-specific net assistance remains valid.

Climate-specific net assistance to be significantly lower.

  • It is between $19bn and $22.5bn per year in 2017–18, of which between $6bn and $7bn per year is for adaptation.
  • Of the estimated $59.5bn in public climate finance reported by developed countries, climate-specific net assistance may be just $19–22.5bn.

Climate Finance Shadow Report 2020 | UPSC

Developed countries’ reported climate finance versus Oxfam’s estimate of climate-specific net assistance(CREDITS : Oxfamilibrary.com)

GRANT EQUIVALENT

  • The grant equivalent of reported climate finance in 2017–18 was $25bn (annual average).
  • This is less than half the estimated $59.5bn in total public climate finance when donor numbers are taken at face value.

In the case of France, the grant equivalent of its bilateral climate finance is less than a third of its reported numbers.

  • For Japan, Spain and Germany, it is around half.

Climate Finance Shadow Report 2020 | UPSC

CLIMATE FINANCE- MAJOR DONORS (CREDITS : Oxfamilibrary.com)

CLIMATE RELEVANCE

  • Due to over-reporting of climate relevance, bilateral climate finance could be around a third lower than reported.

Bilateral flows of public finance specifically targeting climate action could be $10.5–13.5bn lower than reported figures.

  • Some countries count the climate component as 100% of the project budget.
  • Even though such projects are explicitly defined as not primarily targeting climate action.

Climate Finance Shadow Report 2020 | UPSC Bilateral Finance

CREDITS : Oxfamilibrary.com

LOANS AND OTHER NON-GRANT INSTRUMENTS

  • Around 20% of reported public climate finance was estimated to be grants.
  • Compared to 80% loans and other non-grant instruments; of all reported climate finance, an estimated 40% was non-concessional.
  • Non-concessional finance has increased significantly.

Climate Finance Shadow Report 2020 | UPSC LOANS

Climate finance by instrument via bilateral and multilateral channels

(CREDITS : Oxfamilibrary.com)

  • Grant-based finance has flatlined.

There is a misplaced assumption that loans are only going in large volumes to middle-income countries.

  • Non-concessional finance has increased significantly.

Climate Finance Shadow Report 2020 | UPSC IASbhai

Climate finance broken down by instrument for major country donors.(CREDITS : Oxfamilibrary.com)

      IASbhai WINDUP: 

RECOMMENDATIONS FROM THE REPORT

  • Expand resources and support for locally led action on climate change.

Increasing financial support for climate action with stronger gender equality efforts.

  • All countries need to support urgent action to implement the most promising new national and international sources of climate finance.
  • Climate funds counted towards the $100bn commitment and UNFCCC obligations should not also be counted towards the 0.7% of GNI aid target.
  • All donors should commit to significantly increasing climate finance to LDCs and SIDS.

UNFCCC rules and reporting guidelines should require donors to report the share of climate finance they are contributing to LDCs and SIDS.

  • COP26 needs to agree a near-term Adaptation Finance Goal to urgently accelerate adaptation finance by 2022.
SUGGESTED READING : https://www.oxfam.org/en/research/climate-finance-shadow-report-2020 
     SOURCES:DownToEarth | Climate Finance Shadow Report 2020 | UPSC

 

DISCOVER MORE : REPORTS

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