It is no use spending more and more to fight climate change if it only makes things worse.
In 2015, in parallel with the Paris Climate Agreement and the adoption of the Sustainable Development Goals, international financial institutions committed to mobilizing an order of magnitude more money to tackle global problems. This is the "Billions to Trillions" program. Billions of public dollars are being used to mobilize thousands of billions from the private sector.
There is no shortage of numbers and plans. According to the latest report by the UN Intergovernmental Panel on Climate Change, $1.6-3.8 billion would have to be invested in energy systems to keep the global average temperature rise below 1.5 degrees Celsius. According to the Global Adaptation Commission, investing $1.8 billion in climate adaptation technology and infrastructure would generate $7.1 billion in benefits. Investing $1.8 billion a year in green urban infrastructure would save $7 billion in 2050. Thousands of billions are flying around. Some sources say the money is coming in at the right pace, others say the coffers are still very empty.
Do we even have that kind of money?
Of course. We have a lot more. The world's 500 largest investment funds alone have more than $131,000 billion in assets under management. Meanwhile, the world's easy-to-move pool of money has more than 13 times grown in the last 30 years!
It's not money, it's a structural issue
We cannot solve hunger because there is not enough food. What is needed here is not more money, but better distribution and better decisions, among other things:
The world's 33 largest global banks have spent $1.9 billion on fossil energy financing since the Paris Agreement was signed. Climate finance is not replacing fossil finance, but adding to it. Today's use of renewable energy is primarily complementary to, not a substitute for, fossil energy use.
With free trade agreements, we further fuel global trade. We want both a further boost to global trade and a reduction in fossil energy use, which is impossible/false.
The billions of euros spent by the European Union on agricultural subsidies continue to cement an energy-wasting structure that reinforces inequality within the EU and inequality globally.
An increasing proportion - up to 10% - of climate funding is being spent on electric cars. The environmental sustainability of this is questionable, as the electricity used for charging is usually largely fossil or nuclear. Meanwhile, polluting industries such as aviation and shipping benefit from substantial financial incentives.
Developing countries need the resources most, as they will be hit hardest and fastest by the consequences of climate change. Indeed, they are receiving more and more money from developed countries such as Hungary. However, up to 75% of the money is loans, while 80% of low-income countries are at high risk of debt crisis and their debt service increased by 60% between 2014 and 2017. The weather extremes caused by the climate crisis are largely hitting these debt-ridden countries, pushing them to the brink of default. Meanwhile, there is no independent international institution that can fairly mediate between creditors and troubled countries in the event of a debt crisis.
Developing countries could have their own money to solve their problems if it were not taken away from them by others. In total, more money flows out of developing countries than comes into them. Multinational corporations pump out more money through various creative tax avoidance techniques than the amount of aid these developing countries receive.
And to pay back the loans, to increase climate finance, we need nothing less than economic growth. And nowhere has this been separated from increasing environmental (and social) burdens, such as exacerbating climate change.
What is needed at the national and global level is a solution that does not seek to eliminate the symptoms of problems, but the causes. One such example is the proposal of the Hungarian Association of Nature Conservationists for a Climate Change Act, which takes into account environmental, economic and social problems at the same time. It would contribute to a general reduction of environmental (and social) burdens, not only in the field of climate change.
We also need a fundamental change of mindset, which we have explored in this article.
Author: Ákos Éger, Executive President, National Society of Conservationists – Friends of the Earth Hungary