Climate Projects Reap $650 Billion a Year as Aid to Poor Rises

Thursday 04 December 2014

Finance for projects aimed at limiting global warming has reached at least $650 billion. That will need to double to protect the planet from overheating, a United Nations agency said.

The estimate from the UN Framework Convention on Climate Change also showed $40 billion to $175 billion a year was flowing from developed countries to developing ones in 2011 and 2012. It’s the biggest assessment to date by the UN of cash flows related to climate projects.

The findings will help inform the debate about how the world will pay for shifting away from fossil fuels and building infrastructure that’s resilient enough to withstand the extreme weather that scientists expect will result from global warming. Cash flowing from richer countries to poorer ones is a vital part of the deal that envoys from 190 nations are working on this week in Lima, Peru, to limit greenhouse gases.

“Although these numbers are encouraging and give us a sense of hope, the fact is that climate finance needs to be in the trillions if we’re going to get to where we need to be,” Christiana Figueres, executive secretary of the UNFCCC, said at a press conference in Lima today.

The data also shed light on the progress industrialized nations led by the U.S. and the European Union are making on their pledge to channel $100 billion a year in climate-related aid to developing nations by 2020. That money was intended to come both from governments and private companies.

Pledged Investment

Exactly what chunks of the money counted by the UN will apply to the $100 billion pledge will be a political decision for nations at the climate talks, Figueres said. Envoys are likely to focus on the flow from richer nations to the poorer ones because that meshes with a principle dating to 1992 that the industrial nations that caused global warming should be first to pay for it.

The UN said there’s “relative uncertainty” about all the figures because of gaps in the data and difficulty in determining what to count.

The funding covers a variety of climate-related projects -- everything from low-carbon forms of energy to dikes meant to hold back rising seas and cleaner cooking equipment for homes that rely on charcoal for fuel. It’s also paying for power plants, water access and sustainability work of all sorts.

In the next 25 years, the world is likely to invest $20.8 trillion in power plants and electricity distribution grids, the International Energy Agency estimated last month. The UN wants all that work to be done with protecting the climate in mind.

‘Small Sum’

“In order for this transformation to occur, $100 billion is a very small sum,” Figueres said. “We’re talking about $90 trillion that will go into infrastructure over the next 15 years. The world needs to decide if that’s going to go into resilient infrastructure.”

Environmental groups said the UN figures are padded, with investments in cleaning up pollution marginal at best. Some funds for coal power have been counted because they’re using a cleaner technology than was used before.

“Dirty energy is poisoning the climate and local communities. It is essential that climate finance be used for energy transformation instead of funding dirty energy projects that aggravate climate change,” Godwin Ojo, director of Environmental Rights Action in Nigeria, said today.

“We cannot allow the fossil fuel industry, whose products are the main cause of climate change, to take the limited funds intended for responding to the devastating impacts of climate change,” said Samantha Smith, leader of WWF’s Global Climate and Energy Initiative.

To contact the reporter on this story: Reed Landberg in Lima, Peru at landberg@bloomberg.net

To contact the editors responsible for this story: Edward Greenspon at egreenspon@bloomberg.net Will Wade, Randall Hackley

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