Global pact needed to reset the climate finance system

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Last week I attended the Africa Editors’ Climate Forum in Nairobi. The forum had journalists, editors and climate specialists from around the continent looking at climate change and how to report on it. 

There is widespread concern that climate change, one of Africa’s biggest threats, is already upon us and will only get worse. 

The forum yielded many ideas for how the media can report on this topic more effectively and ensure that it is front and centre of coverage. 

One of the other major talking points that came out of the forum is the issue of finance. Finance for loss and damage caused by major climate change events, finance for adaptation and mitigation strategies and finance for a just transition to cleaner energy to reduce carbon and other emissions that contribute to global warming. 

I must confess that when it comes to climate finance issues, I feel disillusioned. All these Western nations became rich thanks to using fossil fuels, all at the expense of the climate. Now, African countries stand to be hit hardest by climate change while these developed countries drag their feet when it comes to paying for anything. 

A common theme at climate negotiations is how these countries are not honouring the climate pledges they made. 

When they do pay, it is in the form of loans, as can be seen in the money extended to South Africa to wean the country off producing electricity by burning coal in its power stations. 

A logical question to ask is why African countries can’t get rich from fossil fuels and then deal with the climate afterwards. That’s because the Earth won’t cope with more unfettered fossil fuel use, the 1.5 degree Celsius threshold is creeping closer and closer. 

So what must be done? 

At the forum, Avinash Prasad, the climate adviser to the prime minister of Barbados, spoke about a financial system reset that works equitably for the global south. Here are some of his ideas.

He introduced the Bridgetown Initiative. 

An article by Global Citizen, an international education and advocacy organisation, explained: “The Bridgetown Initiative — named after the capital city of Barbados, a climate-vulnerable Caribbean nation — is essentially an action plan to reform the global financial system so the world can better respond to current and future crises.” 

The initiative looks to redress the unfair financial system in which poorer countries find themselves. To borrow money to fight a problem they did not create seems absurd. This further plunges these countries into debt. That’s why a need for such an initiative.

Finance must be made cheap; it must be made appealing. Barbados Prime Minister Mia Mottley presented the Bridgetown Initiative at the United Nations COP27 in Egypt last year. Here are some elements from the initiative.

There must be a finance mechanism that work for low-income countries. This means the private sector must fund renewable energy projects such solar, wind and water. By funding this, there will be financial benefits for countries.

The public sector must take on climate resilience through mitigation and adaptation strategies. 

In addition to reducing carbon emissions, we need to adapt for unavoidable changes. The Union of Concerned Scientists explained it this way: “Adaptation includes things like reenforcing the electric grid to better withstand extreme weather; investing in better housing and infrastructure in areas hard-hit by flooding or sea level rise; planting trees to reduce extreme heat in cities; and putting air conditioning in schools.” 

The Bridgetown Initiative looks to create more lending and borrowing for developing nations but with breaks and better repaying deals. 

Vulnerable countries must be able to access better lending deals to invest in measures that would increase resilience. 

There needs to be a mechanism that allows countries a pause in debt repayment. Grants are needed for loss and damage caused by an event such as a drought or flood. 

And new taxes must be found that can pay for loss and damage. An example of this could be a shipping carbon tax.

Progressive tax revenues must be created. The poor and vulnerable cannot be taxed. 

Development banks also need to play their part.

This financial system must be shock-absorbing, it must be about relief. When a disaster hits, countries must have relief for about two years so they can deal with the disaster. 

To get richer countries involved, it must be financially worth their while. Multilateral banks must be involved as well. Private companies can be involved in setting up renewable projects in developing nations. 

These initiatives must be designed to keep people out of poverty. 

Climate disasters will lead to countries spending more to recover, meaning money for other things such as education and health will be scant. But the current financing system does not work. 

 A global pact is needed to ensure developing nations get the climate support they need. Wealthy countries need to come to the party. This will be a key theme at all this year’s climate events, including at COP28 in the United Arab Emirates.