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COP25: US climate finance obligations

Irene Banos Ruiz | Louise Osborne
December 13, 2019

The US decision to pull out of the Paris Agreement is bad for climate action, but what are the implications for international funding? DW spoke to Joe Thwaites, climate finance expert with the World Resources Institute.

An oil pumpjack against a sunrise
Image: Getty Images/S. Platt

At climate negotiations, most issues are complex, but there is generally a common factor running through them, and that's money. How much should countries pay to be allowed to pollute? How much should those that protect the climate receive as a reward? How can jobs and economies be protected as the world warms?

There was broad agreement at COP25 in Madrid that developed countries have a greater responsibility for the generation of historic greenhouse gas emissions. But there is less consensus on how to compensate developing countries who have contributed little to the problem, yet face the impacts of the climate crisis.

Ten years ago, during COP15 in Copenhagen, negotiators agreed that industrialized countries would mobilize $100 billion US dollars a year by 2020 to help developing countries deal with the effects of global warming and adopt clean energy technologies.

They pledged to mobilize the same amount every year until 2025, by when they aim to have agreed on a new and more ambitious fund. Yet on the eve of 2020, countries have still not managed to raise the first $100 billion. At the latest count — which was in 2016 — the grand total stood at just over 70 billion.

One contributor was  the US.  But President Donald Trump is not a fan of climate finance. In fact it was one of his main excuses for pulling out of the Paris Agreement. But is escaping financial responsibility for global warming really that simple?

Joe Thwaites, climate finance expert with the World Resources Institute says not. In an interview with DW, he shed some light on the complex issue of international funding obligations and the US responsibility to contribute.

Climate finance expert, Joe Thwaites
Image: DW/I. Banos Ruiz

DW: The US pulling out of the Paris Agreement was seen as a global threat for climate action. To what extent was this move related to the $100 billion goal?

Joe Thwaites: Even if the Paris Agreement hadn't been agreed in 2015, the $100 billion would still have been there. Even the actual decision about continuing to 2025 is not written in the Paris Agreement. It was in the context that went alongside it. So, arguably, even for a country like the US that exits the Paris agreement next year, they were still party to the commitment made in 2010 to mobilize $100 billion and to the decision in 2015 to continue that to 2025.

So will the US withdrawal from the Paris Agreement affect the country's contribution to climate finance?

In 2016 we saw that climate finance was around 70 billion. That means you need another 30 billion by 2020 and that means every developed country needs to be doing more. We've seen a lot of countries announce an increase in climate finance,  and that's great. But if you have a major country like the US that doesn't increase climate finance, that's a real problem in terms of being able to meet the goal.

Even under the Trump administration, Congress is ultimately the one that has the final say. Every year, the Trump administration has tried to cut back, not just on climate aid, but on all foreign aid, and Congress has actually said no. They have continued, for instance, funding some bilateral programs that help countries with clean energy, with adaptation and with sustainable forestry.

One of the key interesting messages is that the US Federal Government is still contributing to climate finance. Although not enough. 

Two women walk through water up to their chests
Sled dogs walk through water that was once ice
Extreme weather events and rising sea levels are just some of the consequences of the climate crisisImage: picture-alliance/AP/Danmarks Meteorologiske Institut/S.M. Olsen

Who is making up for a lack of US ambition from a financial perspective?

European countries have picked up some of the slack. But they feel like that's not very fair on them, especially when they need to be doing more. They need to be doing more in and of themselves, not just plugging gaps left by the US.

Why is this pledge proving so hard to achieve?

One of the big challenges of the $100 billion goal is that you have a certain degree of ambiguity. There's a sort of flexibility, there's wording that can be interpreted in different ways. The language talked about a variety of sources: public, private, bilateral and multilateral. But it didn't explain, for example, how you would account for the private. If a company invests in a developing country and it's not linked to an intervention made by a developed country, whether providing finance, or capacity building, or technical assistance, if they can't demonstrate that, then it's not fair to count it.

The $100 billion came in the final hours of the Copenhagen conference. Things were falling apart elsewhere. It was sort of put together as this is important to show solidarity. I think it's fair to say it was rushed. The process for the new goal is not going to be rushed, because they're going to start in 2020 and the deadline is 2025.

How would you like to see the new goal differ from this one?

The focus may be on the poorest and most vulnerable countries, because that's where the need is greatest. But then you might want another goal that's more focused on grappling with the massive scale of the challenge, which is not just that we need to be investing trillions in clean technologies but also that we need to be scaling down the investments in fossil fuels and other climate incompatible activities.

Rising temperatures

My dream would be to have a goal that sort of reflects the variety of different needs, that provides public finance to the most vulnerable countries, but that also grapples with the question of how do you make all finance consistent with low emissions and climate resilient societies.

Countries are not bound to make specific levels of contributions,  so what mechanisms are there to make sure that they actually fulfill their promises and — unlike the US — keep their ambitions high?

The $100 billion goal is a collective goal and the new goal [set to start from 2025] is also couched in collective terms. The countries in this process have been very reluctant to adopt any kind of fair sharing formula, whether it's about emissions reductions or about provision of finance. One of the challenges, though, is that countries should be doing their fair share, but they should also be doing as much as possible.

Maybe an analogy is if you're living in a group house and you sign a lease with the landlord and one of the housemates stops paying rent, you still need to pay rent, you're still on the hook to meet that goal. They've committed to do it under the UN and it's an international commitment. It's a legal decision. It's not as strong as a protocol, or an agreement, or a convention, but it still is a legal decision.

The interview was conducted by Irene Banos Ruiz and has been edited and condensed for clarity.

Louise Osborne, Chief Climate Reporter DW
Louise Osborne DW's Chief climate reporter is providing expertise on the defining crisis of our time.