TradeEdge-Biden’s Climate Credibility May Hinge on Whether He Makes Good on U.S. Financial Commitments to Developing Nations

For poor nations that contributed little to greenhouse gas emissions but TradeEdgeare bearing some of the worst impacts of climate change, the most important pledges at this week’s White House summit will be about money.

Under President Donald Trump, the United States reneged on $2 billion of its $3 billion commitment to the United Nations’ fund to help developing nations adapt to a changing climate and transition to a carbon-neutral future. So when President Joe Biden convenes world leaders Thursday in a virtual summit on climate change that is meant to demonstrate a U.S. return to leadership, his credibility may hinge on his actions on international climate aid and finance.

At issue is both the delinquent U.S. contribution to the United Nations’ Green Climate Fund, and a much larger shortfall in the $100 billion per year in climate finance that the U.S. and other developed nations promised to mobilize from both public and private sector sources by 2020. Developed nations are behind in meeting that commitment by more than $20 billion a year, according to the most recent figures from the Organization for Economic Cooperation and Development.

Advocates of increased aid have sought to contrast the lag in climate aid funding with the quick government spending around the world in 2020—an estimated $12 trillion—to address the economic hardship caused by Covid-19. “If a pandemic can provoke such a rapid and far-reaching response, at scale, surely the world can muster the necessary will to act with similar decisiveness and urgency in response to the climate crisis,” said an independent expert group on climate finance in a report for the United Nations in December.

The finance commitments made by Biden and other developing countries will be looked at as a “litmus test” in the eyes of the rest of the world, said one of the authors of that report, Amar Bhattacharya, senior fellow in the Center for Sustainable Development at the Brookings Institute, at a forum that the Washington think tank held Tuesday.

Kerry Promises Additional Commitments

White House Special Envoy for Climate John Kerry said on Tuesday that the Biden administration intends to make good on the $2 billion in promised U.S. funding for the Green Climate Fund that Trump failed to deliver. At a forum organized by the sustainable investing advocacy group Ceres, Kerry said that the U.S. also would be making an additional commitment to the Green Climate Fund, which began its second round of funding last year, and he believed other countries would be doing the same.

Some nations, including the United States and Australia, have committed nothing so far in the Green Climate Fund’s second round of funding, while others, including Germany and the United Kingdom, increased their pledges—adding up to $9.5 billion in pledges so far.

Environmental and social justice groups are calling for an $8 billion commitment from the United States—$2 billion to fulfill Obama’s initial funding pledge to the Green Climate Fund, and a doubling of its pledge for the second round to $6 billion. 

“As the world’s largest historical greenhouse gas emitter, it is both a legal obligation and a moral imperative for the United States to provide finance for developing countries for climate action that responds to local needs, respects rights, and facilitates a just and equitable transition away from fossil fuels,” wrote a coalition of 46 environmental and social justice groups in a recent letter to the White House.

The Green Climate Fund currently is supporting 147 projects around the world, including restoring mangroves and swamp forests to help protect the coastline of Cuba, retrofitting buildings for energy efficiency in Armenia and building a solar power plant in Mongolia. 

According to the United Nations and groups like Oxfam that have kept track of resilience aid and need, the projects have not kept up with the pace of climate impacts in the most vulnerable countries. For example, the Green Climate Fund has supported projects that have sought to bolster the resilience of the most vulnerable farmers and indigenous groups in Guatemala—construction of greenhouse micro-tunnel facilities, hydro-meteorological monitoring stations and restoration of watersheds through reforestation. But last November, that country was hit by ferocious, back-to-back tropical storms, Hurricanes Eta and Iota, which ruined crops and cropland for an estimated 286,000 farmers. The devastation came just as the Guatemalan government was facing new limitations on its ability to borrow money—that same month, the rating agency Moody’s downgraded its outlook on the nation to negative due to the pandemic.

“It’s a crisis on top of a crisis that’s piling up now,” said Joe Thwaites, who works on sustainable finance for the World Resources Institute. “For a long time, these countries have been saying that they are having to take on more debt to fund the emergency response to these extreme weather events that are, in part, driven by climate change. Then Covid comes along and adds another real stressor to public budgets.

“They urgently need what they call fiscal space for the ability to spend public money to provide the emergency assistance and the recovery funding that is needed,” said Thwaites.

He said nations will be looking to the Biden administration to not only increase its contribution to the Green Climate Fund, but to also initiate an effort to mobilize greater private sector climate funding. With private lenders reluctant to lend to many of the nations most harmed by climate change, he said the United States might be able to help by joining in public-private partnerships or providing loan guarantees—taking on some of the risk of that financing to poor countries.

Kerry did not speak to such ideas on Tuesday, but he affirmed the important role of the banking industry and the private financial sector in climate finance. “No government is going to be able to save us,” he said. 

He praised such efforts as the Net Zero Asset Managers Initiative, in which 87 financial institutions with more than $37 trillion in assets under management have pledged to support the goal of eliminating net greenhouse gas emissions by 2050 or sooner. 

But those commitments do not spell out how much of that financial support will be made in the developing world.

Trump Reneged on Climate and Spent $15 Billion on Border Wall 

Any renewal in U.S. funding for climate aid under Biden would mark a 180-degree turnaround from policy under Trump, who argued that the United States was shelling out a “vast fortune” to the Green Climate Fund. Ironically, Trump spent far more—$15 billion—on construction of his border wall system, than the $2 billion that he saved by suspending payments to the Green Climate Fund. But the flow of refugees to the U.S. border has continued unabated, driven in part by the aftermath of last year’s hurricanes in Central America.

Oxfam estimates that climate-fueled disasters forced an estimated 20 million people a year from their homes over the past decade, a trend that is likely to continue. Advocates of climate aid are trying to shed light on such impacts to persuade nations like the United States that it should be helping poorer nations out of self-interest as well as its moral and treaty obligations.

“It’s a strategic investment for the U.S. because it pays dividends, not only by reducing the severity and cost of climate impacts for the whole world, but also reducing societal instability and increasing national security,” said Thwaites.

Saleemul Huq, director of the International Centre for Climate Change and Development in Bangladesh, was on hand to help deliver the call for increased funding to vulnerable nations earlier this month when Kerry came to Dhaka to meet with Prime Minister Sheikh Hasina, who is expected to participate in the summit.

Although the Covid crisis has demanded the world’s attention, “climate has not stopped,” Huq said. Amid the pandemic, low-lying Bangladesh was hit by a cyclone in spring 2020 and experienced torrential rains in July that submerged one-quarter of the nation. “We have to talk about the victims of climate change in terms of loss and damage,” Huq said. “It needs to be accepted and addressed.”

Huq added that the world does not need new international agreements to get the job done. “We just need to fulfill the ones we’ve made, faster,” he said. “To do what we are supposed to do.” 

Bob Berwyn contributed to this report.