EU needs to reconsider the approach to Climate finance

Imagine that your bicycle is crashed by a car, and that the driver offers to pay for the repair by giving you a loan. Would that be fair? Would that be acceptable?

Science tells us that climate change is fuelled by greenhouse gas emissions. These emissions come from our houses, factories, agriculture, transport and way of living – dating back as long ago as the industrial revolution. Consequently, the countries that have enjoyed modernisation and industrialisation has a clear responsibility. Western countries, including EU, have acknowledged this responsibility, and agreed to support developing countries with climate finance. These are funds which should help poor and vulnerable countries to adapt to climate change and to take action, both through mitigation and adaptation activities. However, a new analysis indicates that a considerable part of climate finance, delivered by EU institutions, are provided as loans, and primarily going to middle-income countries. The conditions vary, but in the end loans will have to be repaid.

Another challenge with EU climate finance is how the funds are allocated. Similar to its member states, EU focus on mitigation, meaning that more funds are allocated to energy efficiency, renewable energy and a general transformation to low carbon development. These are all important activities, but as agreed in the UN climate talks, climate finance should be balanced between mitigation and adaptation. The need for adaptation finance is huge, and poor and vulnerable communities are already struggling with the effects of climate change. There is need for investments in resilient agriculture, irrigation systems, and seawalls – activities which can help people to adapt to continuous droughts, floods and devastating storms.

While EU isn’t delivering on the commitment to balance finance allocations between mitigation and adaptation, there seems also to be a challenge to ensure support to the poorest and most vulnerable countries. A big part of EU climate finance is allocated to emerging economies, and surprisingly Turkey is the countries receiving most support. There is no doubt that there is need for climate change activities in Turkey, but when UN agreements about climate finance were adopted, most countries assumed that the support should go to the poorest countries with difficulties to take action.

EU makes commitments as one union in the UN climate talks, including both EU institutions and member states. However, with a joint commitment all parties must take responsibility. The analysis, mentioned above focus on EU institutions and the conclusion is clear. EU institutions, with a co-responsibility for fulfilling international EU commitments related to climate finance, must reconsider the current approach. Loans to developing countries to cover the historical climate “debt” by the most developed countries is not a fair approach, and risks increasing the debt burden of countries already struggling with the double challenge of poverty and climate change.

Martin Vogel, Co-chair of the ACT Alliance EU climate change working group
Mattias Söderberg, Climate change advisory, DanChurchAid