Filling the Climate Change Financing Gap

There is a straightforward reason as to why—despite all the sound and fury and a little loud progress here and there—we are failing in the goal of halting climate change. The 2015 Paris Agreement between 191 parties set out to limit global warming to below 2 degrees centigrade from the pre-industrial levels and preferably below 1.5 degrees. Six years on, we are already at 1.2 degrees. And even if countries achieved their nationally determined contributions to the goal, this would still not be enough. We are on a track for global average temperatures reaching 2.7 degrees hotter. We will not get off this track as long as those who have contri­buted the most to the stock of greenhouse gases (GHGs) in the atmosphere since the pre-industrial times are not the ones suffering the most from climate change today. If they were, they would be incentivised to do far more. The world needs an investment of around $2.5 trillion per year to transition our economies and energy complex to where we need to be to keep temperatures down. Yet, we are struggling to put together a one-off fund of $100 billion (bn) in time for the United Nations Climate Change Conference (COP 26), World Leaders Summit, Glasgow, in November.

The activists do us a disservice in stressing that climate change impacts all of humanity—it does, but it will only get round to those who made the most significant contribution when it is too late for the rest of us, and that is the fundamental problem. Although countries in the northern temperate region of the earth contri­buted the most to the current stock of GHGs, the impact is being felt by those living further south, where temperatures are the most demanding and sea levels have risen the highest. We are not talking about a devastating flood that may cost 1% of the gross domestic product (GDP). Between the Tropics of Cancer and Capricorn, there are droughts and hurricanes with the power to wipe out 100% of the GDP of the affected regions, islands, and nations. These regions spend the most in mopping up after natural disasters and adapting to climate change, but they contribute little to the stock of GHGs. This dislocation of place between the culprit and victim is why we do not have sufficient action.