Developing countries will need to pay an additional $270 billion more each year to adapt to the impacts of climate change if COP21 fails to elicit increased global pledges to cut greenhouse gas emissions, according to a new report by Oxfam.
Game-changers in the Paris climate deal warns that developing countries’ economies face being crushed under the double burden of climate change adaptation costs of almost $800 billion and more than twice that in economic losses every year by 2050 if pledges to cut emissions are not improved.
Developing countries also face losing $1.7 trillion annually to their economies by the middle of the century if global average temperatures rise by three degrees. This is $600 billion more than if warming was contained to 2 degrees. To put this into perspective — that is four times more than rich countries gave in development aid last year.
The pledges by more than 150 countries to cut emissions, known as INDCs (Intended Nationally Determined Contributions) are expected to be the cornerstone of a Paris deal, Oxfam says. But even if these targets are met, the world is likely to experience devastating warming of around 3 degrees. This could come despite the UN’s goal of 2 degrees, let alone the 1.5 degrees that more than 100 developing countries and Oxfam is calling for.
Currently, climate funding commitments to help poor countries adapt and develop in a low carbon way only run until 2020. Little progress has been made in agreeing how much will be available after this date, which needs to be urgently addressed in Paris, the report says. More funding also is needed if the promise of $100 billion a year by 2020 made six years ago in Copenhagen is to be kept. More of this needs to go towards adaptation, which remains short.
Public climate finance was around $20 billion on average in 2013-2014 but only around $3 to 5 billion was dedicated for adaptation — less than the 50 percent minimum that Oxfam says is needed.
The report recommends that world leaders at COP21 address the lack of finance to help countries adapt by either agreeing that at least half of all public finance should go for adaptation, or setting a fixed target of at least $35 billion by 2020 and at least $50 billion by 2025. It also calls for new contributors of climate finance beyond the traditional rich countries, including Russia, the Republic of Korea, Mexico, Saudi Arabia and Singapore.
Wealthy countries should agree to a strong review mechanism that commits governments to increase the overall ambition of emission cuts from 2020, and every five years thereafter so that runaway climate change can be avoided, the report says. They also should agree to a long-term goal to lead the way in phasing out fossil fuels.
Improving the predictability of scaled up climate finance also will be important, which will allow developing countries to develop adaptation and development plans knowing what funding they can expect.
The report says wealthy countries should announce new sources of climate finance, such as the EU Emissions Trading Scheme, to stop diverting aid to climate finance budgets. In addition, the COP21 agreement should have provisions for loss and damage, which will ensure that poor people get the support they need where adaptation is no longer possible.
In both these areas, there could be opportunities for businesses to get involved, in the form of private macro and micro finance, as well as other innovative financing mechanisms. Either way, the business community will be watching the COP21 proceedings with keen interest.