The COP28 in Dubai was a rollercoaster ride of hope and despair. The appointment of Dr Sultan Al Jaber, Minister of Industry and Advanced Technology of the United Arab Emirates (UAE) and the head of the Abu Dhabi National Oil Company as the president-designate of the COP28 raised many concerns regarding the effectiveness of the conference and the kind of the future that awaits humanity.
From day one, the COP28 presidency, led by Al Jaber, pushed for the operationalization of the Loss and Damage Fund by pledging $100 million, which was matched on the spot by Germany. By the end of the first day, more than $260 million had been pledged to the Fund. Ultimately, parties to the convention pledged more than $650 million, with Italy and France each pledging $108.9 million, the United Kingdom $50.6 million, Ireland $27.3 million, the European Union $27.1 million, Denmark $25.5 million and Norway $25 million. Shockingly, the United States of America, one of the world’s biggest emitters and the world’s largest economy, pledged only $17.5 million, while Japan, the world’s fourth largest economy, pledged only $10 million. Sweden's abstention from pledging came as a shock to other parties to the convention, as Sweden was once considered a pioneer in climate action and the transition to a green economy.
China and India, the world’s second and fifth largest economies, respectively, and two of the world’s biggest emitters did not pledge to the fund, arguing that they could not be both beneficiaries and contributors. The members of the G7 group, with a combined GDP of more than $48 trillion, pledged $407.5 million to the Loss and Damage Fund.
COP28 witnessed the first-ever Global Stocktake (GST), a process to assess the current climate action efforts and identy gaps and opportunities to meet the goals of the Paris Agreement. The science for the GST was readily available by the end of the Technical Dialogues (TD), a series of conversational dialogues between parties, experts, and non-party stakeholders to develop a comprehensive understanding of the implementation gaps to achieve the goals of the Paris Agreement. By June 2023, it was already clear that parties to the convention would not meet the goal of limiting the global temperature rise to 1.5 °C above pre-industrial levels based on the current levels of effort and ambition. The questions of what, how, and what’s next were all answered with the conclusion of the TD, but the question at COP28 was whether the parties would commit. After the end of the COP, the answer was “they might”. Parties of the convention showed strong commitment to achieving the goal of the Paris Agreement by including, for the first time in the history of climate negotiations, language in the decisions of COP28 referring to transitioning away from fossil fuels.
Climate finance has been a core issue in climate talks and negotiations, where mobilizing funds is a much more complex process than pledging. The complexity stems from the concepts of climate justice and just transition, both of which emphasize the need to integrate the principles of Common but Differentiated Responsibility (CBDR) and Respective Capabilities (RC) into climate action, transforming climate negotiations into political ones. The CBDR emphasizes the fact that climate change is a global catastrophe that requires the efforts of all countries, while holding those countries most responsible for causing climate change accountable for their emissions. On the other hand, the RC approach stresses the fact that climate causality and the consequences of climate change depend on each country’s context and capabilities to contribute to climate change mitigation and adaptation. Climate change disproportionately affects countries and populations, especially those that have benefited least from fossil fuel-driven economic growth. To put things in perspective, the world’s richest 1% are responsible for over 15% of the cumulative emissions.
According to the UN Framework Convention on Climate Change (UNFCCC), developed countries referred to as “Non-Annex 1” countries are obliged to provide developing countries with support for climate action in the form of finance, technology transfer, and capacity building. However, this categorization does not seem adequate as China, the world’s second largest economy and one of the world’s biggest emitters, is a developing country, according to the UNFCCC, and is eligible for climate action support.
In 2022, more than $220 billion was mobilized by the 26 members of the International Development Finance Club (IDFC) for climate action compared to the estimated $3.5 trillion needed annually to achieve a 1.5 °C scenario by 2050. The geographical destination of the funds mobilized, and the form of these funds clearly show the inequality and disparity between what is needed and what is being provided. Of the $220 billion mobilized, more than $55 billion went to the European Union and the United Kingdom, accounting for up to 20% of the global mobilized funds. East Asia and the Pacific had seen more than $195 billion mobilized to them. The rest of the world had $28.6 billion mobilized with the Middle East and North Africa (MENA) region receiving only $2.1 billion, around 1% of the global mobilized funds.
To add to the disparity, loans were the primary instrument used to mobilize funds, accounting for $257 billion or 91% of the 2022 total, with non-concessional and concessional loans accounting for 72% and 17%, respectively. Grants make up only 8.5% of the total mobilized funds.
The type of projects implemented using these funds is considered, depending on the context of the country or the region, inadequate in the MENA region, a region with a historical and current share of carbon emissions of less than 1% of the global total and where the focus is on mitigation rather than adaptation and resilience building. A clear example of this is the Green Climate Fund (GCF), which adopts a 50/50 policy when it comes to implementing projects, pushing for 50% of its projects to be adaptation projects and the rest to be mitigation projects. To date, globally, only 36% of the funds were allocated to adaptation projects.
The context in the MENA region is similar to the global context, where mega mitigation projects secure most of the funds. Over the past 20 years, the Clean Technology Fund (CTF), the GCF, the Global Environment Facility (GEF) and the Adaptation Fund (AF) have mobilized a total of $1.43 billion for the MENA region, with an additional $164 million from other funds. These figures should not be confused with those mobilized by IDFC members. Of the funds mobilized, 71% goes to mitigation projects. In terms of who received these funds, Morocco and Egypt received 47% of the $1.6 billion mobilized in the period between 2003 and 2022.
As the climate negotiations progress, the argument regarding the current mobilized funds and the current instruments and their effectiveness in combating climate change is rising. Lack of capacity is usually used as a counterargument, with Non-Annex 1 countries insisting that recipient countries go through readiness programs that can take several years, if not decades, to be able to receive funding for mitigation and adaptation projects for a global problem that developed countries themselves have created and continue to complicate.
It is clear that the current global climate funds being mobilized are not enough to achieve the goal of the Paris Agreement, and a fundamental change in the instruments through which those funds are provided is needed. Increasing the mobilization of funds in the form of grants for adaptation projects to build community resilience is an effective solution to climate change. Contextualized, evidence-based project implementation will help us identify the most cost-efficient path to a green economy. Enhancing technology transfer and implementing green regional projects will help multiply results. Debt cancellation needs to be integrated into climate action to close the widening inequality gap.
The status quo of reliance on fossil fuel-driven growth needs to be broken and an alternative non-consumerist non-capitalist global economic system needs to be adopted.
UNFCCC, Pledges to the Loss and Damage Fund, January 2024.
UNFCCC, Article 14 of the Paris Agreement, 2015.
See Oxfam, Confronting Carbon Inequality: Putting Climate Justice at the Heart of the COVID-19 Recovery, September 2020.
See International Development Finance Club, Green Finance Mapping Report, 2023.
International Development Finance Club, available at https://www.idfc.org/members/
See Barclays Investment Bank, Costing the Earth: What Will it Take to Make the Green Transition Work?, August 2023.
See International Development Finance Club, Green Finance Mapping Report, 2023.
The Middle East Institute, The Intricacies of Climate Finance in The MENA Region: Challenges and The Way Forward, February 2023.
See The Green Climate Fund, Thematic Brief: Adaptation, October 2021.
Green Climate Fund - Independent Redress Mechanism, Complaints in Climate Change Projects: A look at Adaptation and Mitigation Grievances, August 2021.
See Heinrich Böll Stiftung, ODI, Climate Finance Regional Briefing: Middle East and North Africa, February 2023.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.
