As COP26 draws closer, climate negotiations are still stuck on finance

“On a knife-edge” is how one observer described international climate negotiations, following a lack of progress at the latest round of talks.

The benchmark for success at the COP26 UN climate talks in November would be for the deal struck to keep alive the possibility of limiting temperature rise to within 1.5C, he said. But little progress was made at either the G7 summit or the first UN climate talks to take place since before the pandemic. 

“We will need confidence that there’s a pathway to climate safety in the next few years. The way things are going, there’s not much time left, and there’s a lot of work that needs to be done,” said Tom Evans, a COP26 researcher at think-tank E3G.

Climate change was one of the focus issues discussed by the leaders of Canada, France, Germany, Italy, Japan and the US at the summit, which was held in the UK. A communiqué produced after the meeting reiterated many existing commitments, such as to submit ahead of COP26 more ambitious national climate plans and long-term strategies up to 2050. A pledge for US$100 billion in climate finance for developing countries by 2025 was also repeated, though only Canada, Japan and Germany announced any new money.

A new commitment was made to end new direct government support for unabated international thermal coal power generation by the end of 2021, including through official development aid, export finance, investment, and financial and trade promotion support. Support for other fossil fuel energy will be phased out “as soon as possible”, the communiqué states.

The G7 also saw the launch of a US-led initiative for new global infrastructure, dubbed Build Back Better World (B3W) to help narrow the need for more than $40 trillion to be spent on infrastructure in the developing world. Climate would be a key focus for this, with “catalytic investments” from G7 nations’ development finance institutions, though there was no detail on how this would be delivered.

The initiative’s focus on climate action and high labour standards was good, said Paul Steele, chief economist at the International Institute for Environment and Development (IIED). However, he added: “It needs to make sure that it doesn’t just compete with China’s Belt and Road Initiative, which is what its objective seems to be,” he said.

Return of the UNFCCC

Overlapping with the G7 meeting, nearly three weeks of talks under the UN Framework Convention on Climate Change (UNFCCC) took place online, having been cancelled entirely last year due to Covid-19. Negotiators were trying to make progress on issues left without agreement following the last climate COP in Madrid in 2019, such as details on how carbon markets would work. The meetings were also intended to lay the groundwork for this year’s COP26. But observers reported little progress on key sticking points, in particular on carbon markets, where instead of narrowing options, negotiators broadened them out.

One overriding reason behind the lack of progress was the ever-contentious issue of climate finance. Developing countries see action on it as key to trust with richer nations.

The commitment by developed nations to provide $100 billion in climate finance was first announced in 2009, and reiterated in the 2015 Paris Agreement. But there has been no official assessment of the amount so far paid out by developed countries. A report last year by the OECD (Organisation for Economic Co-operation and Development) estimated that in 2018 financial flows reached $79 billion. This figure has been contested by developing countries, who say loans should not be counted.

Representatives of developing countries are increasingly frustrated with the lack of formal discussion on the issue. Most discussions on finance were held outside the UNFCCC meeting agenda, including two workshops looking at climate finance from 2025 onwards, on which negotiations will begin at COP26.

Saleemul Huq, from the Bangladesh-based International Centre for Climate Change and Development, said that richer nations needed to provide the finance by the time G20 leaders met in Rome at the end of October. “If the 100 Billion is not delivered BEFORE COP26 then cancel it!” Huq tweeted.

In a blog, Huq criticised developed countries for still not having agreed on a formula for determining how much each will contribute to the shared $100 billion goal, which he said cast doubt on their sincerity. They also needed to define the basis on which they will make up any shortfall in 2020, and “deliver the full amount each year through to 2025 when a new, higher goal will be set,” he wrote.

In reality, trillions would be needed rather than billions, but meeting the initial pledge was “a test of whether wealthy large-emitting nations will negotiate with their counterparts in the Global South on tackling the climate crisis in good or bad faith,” meaning there was little point going to Glasgow for COP26 if the finance was not provided beforehand, according to Huq.

Many commentators criticised the UK government’s decision to cut its aid budget from 0.7% to 0.5% of national income, arguing it weakened its position as COP26 president. “Until they reverse that, it’s very hard for them to put any pressure on other rich countries to step up to the plate,” Steele said.

Evans questioned whether the UK’s approach to COP26 was embedded across all government departments. “There’s not necessarily an understanding that COP26 outcomes need to be made now, not just in November. When you look across government, I don’t think you necessarily see that push from Boris Johnson, and certainly not from the Treasury,” he said.

Cross-Cabinet committees on climate strategy and implementation had not met as frequently as they should have to ensure a whole-of-government approach, he said. A spokesman for the UK Cabinet Office said it did not comment on how often committees met.

Hollow words

There was also disappointment on the issue of adaptation, which developing countries view as being of equal importance to emissions reduction. Mohamed Adow, director of PowerShift Africa, said at a press briefing that extreme weather events were now “the new normal”, but the “lofty words” about shared responsibility and respect for human rights in the G7 communiqué were “absolutely hollow”, considering the lack of finance put forward for adaptation by developed countries. “Where is the respect for human rights when there is a deficit of adaptation financing?” he said.

There was barely any discussion during the UNFCCC talks about adaptation or “loss and damage” – meaning compensation for climate change impacts where adaptation is not possible – other than to collect the views of the different parties, he said.

Developing countries feel their trust in richer countries’ rhetoric on climate has been undermined further by the lack of access to Covid-19 vaccines. The two issues are increasingly seen to mirror each other. For example, Maria Laura Rojas Vallejo, executive director of Colombian environmental organisation Transforma, told the press briefing: “There was no mention whatsoever of Latin America at the G7, not only with respect to climate finance but also access to vaccines, despite the region being very vulnerable to climate change, and also one of the most hard-hit by Covid.”

Virtual reality

The virtual format of the talks was a struggle, with many technical problems, including internet connectivity and power outages, causing negotiators and facilitators to drop out of sessions. The UK government has stressed that it wants COP26 to be a face-to-face event, and has said it will provide vaccines to delegates from countries with insufficient supplies.

In addition, COP26 president Alok Sharma has announced a meeting in July of a “representative group of ministers” to discuss carbon markets, adaptation, finance and loss and damage. But far more remains to be done, according to Chuks Okereke, director of Nigerian think-tank the Center for Climate Change and Development.

“Surely what the UK has to take away [from the G7 and UNFCCC talks] is that there is the potential for a huge gap between intention and outcome. Effort has to be put in to ensure that all these warm words and aspirations actually translate to fundamental outcomes on the ground for those that are bearing the brunt. The UK cannot assume that a magic wand can be waved at COP26,” he said.