Faulty finance and slow progress at COP26
Photo: Mídia NINJA

Faulty finance and slow progress at COP26

By: Daniel Willis
Date: 10 November 2021
Campaigns: Climate

Amidst a chaotic week and a bit of talks and pledges, the UK’s presidency of COP26 has so far frustrated civil society and failed to live up to global south demands for greatly increased climate finance.

However, there is still time for this to change, and some progress is being made. This is thanks to the thousands of you who have increased the pressure on negotiators from the outside.

We have certainly had a lot of warm words from political leaders in Glasgow since COP26 began.

But with civil society almost totally excluded from formal negotiations, huge questions remain over the democratic legitimacy and long term impact of these statements that have been driven by the UK and other rich countries.

One of the biggest disappointments has been, yet again, the failure for rich countries to meet the already insufficient $100 billion a year climate finance target. Initially set for 2020, this will now not be met until 2023.

This may seem at odds with the numerous announcements made by the UK government of increased funding for climate projects. Announcements made just before and during the first week of COP26 have brought total UK climate finance to $3.4 billion a year.

This is less than one thirteenth of the $46 billion a year that the global south demanded before the talks to represent the UK’s “fair share” of historical carbon emissions.

These consistent failures to provide adequate additional finance for the global south are totally unjust. We must stand in solidarity with negotiators from the global south who are now calling for new climate finance targets between $700 billion and $1.2 trillion a year.

Faulty finance and slow progress

Beyond the failure to meet the $100 billion target, we have seen a wave of financial initiatives announced that have little to do with climate justice and more to do with preserving and expanding the role of corporations in the global economy.

The £576 million in commitments announced by the Chancellor for the global south are almost entirely aimed at “leveraging” in further private sector investment, placing corporations at the heart of the UK’s plans for climate action and denying sovereignty over energy to southern communities.

Rishi Sunak also launched the Glasgow Financial Alliance for Net Zero, a coalition of 450 banks and financial corporations that control $130 trillion globally. The Chancellor claimed that this initiative would help to “rewire the global financial system”, yet it places no mandatory conditions on these banks other than to submit a plan to reach net zero by 2050.

This is simply not enough – without strong public regulation of finance and measures to rapidly phase out fossil fuel support, these are just empty words from the Chancellor. What’s more, he fails to recognise that the City of London is the problem. We need less financialisation and more public control.

There were some signs of potential progress yesterday, however, as negotiators discussed increasing the finance available for adaptation to climate change and compensating for loss and damage. The inclusion of loss and damage in negotiated texts, and in a discussion paper published by the UK government following consultations with the global south, suggests that rich countries are finally ready to take these demands from frontline communities seriously.

But we need to ensure that these aren’t just more empty words. We want COP26 to agree a new stream of finance for loss and damage, alongside new, increased climate finance targets that prioritises the adaptation needs of the global south.

A fossil free future?

Thursday saw two new initiatives on phasing out fossil fuels which, if implemented fully and without loopholes, could have a significant impact in tackling climate change.

Yet their impact has already been called into question. A joint initiative to phase out coal use, for example, was initially reported to involve 190 countries, although it soon transpired that it was actually only 40 (of which only 23 had made new commitments).

Furthermore, the deadline for coal phase outs in the text (2030s for developed countries, 2040s for developing countries) was weakened to allow for phase outs to occur “as soon as possible after”, and the US refused to sign.

We did see some positive news on further limiting public finance for international fossil fuels. After campaigning from Global Justice Now and allies, the UK committed this year to end overseas finance for coal and oil, and this week they went a step further to commit to ending finance for gas as well. Even better, the US, Denmark, Italy, European Investment Bank and several other developed countries all agreed to do the same.

This is welcome and important progress on shifting public finances away from fossil fuels, however there are several loopholes we will need to keep an eye on. The policy will not come into force until the end of next year, and does not apply to projects that have Carbon Capture technology attached. Most importantly, it only covers new, direct investments, leaving the door open for UK development bank CDC Group to continue funding fossil fuels indirectly through subsidiaries and private funds.

More blah blah blah?

It has been difficult to cut through the noise during a hectic week at COP26. Further big announcements have gained a lot of media coverage, such as pledges to end deforestation and cut methane emissions.

But we have heard many of these pledges before without substantive action to back them up. The methane pledge, for example, has been heavily criticised for weak action on fossil fuels.

On Thursday, Fatih Tirol from the International Energy Agency received a round of applause when he announced that, if all the pledges announced this week are enacted, we will limit global warming to 1.8 degrees. Not only is 1.8 degrees a death sentence for millions across the global south, it is a fantasy if all we are going to receive this week is words without action.

Photo: Marchers in Glasgow on Saturday, the global day of action for climate justice. Credit: Mídia NINJA