Why the $500 bn climate proposal falls short, Harjeet Singh explains

Developing countries need approximately $500 billion annually in climate finance, the United Nations estimates, setting the stage for negotiations in Baku, Azerbaijan, in November at COP29. 

A new post-2025 climate finance goal will be set at the conference. The UN's Standing Committee on Finance assessed the costs for 98 developing nations to implement their climate plans, estimating that up to $6.9 trillion may be needed by 2030. 

Whereas the wealthy nations have faced criticism for missing the $100 billion-per-year target by 2020 — a pledge they fulfilled two years later than the deadline — the latest $500 billion might sound too ambitious. 

But renowned climate activist Harjeet Singh, says even this new target "falls short of capturing the full financial realities that developing countries face."

In this interview with The Business Standard, the global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative, states, "The estimated $500 billion per year does not account for climate plans of all the developing countries, and the costing of many activities have yet to be fully taken into account." 

Harjeet also discusses various aspects of climate finance, its significance, and the challenges involved, as well as the Pact for the Future at the United Nations' Summit of the Future.

The Pact for the Future aims to reform the global financial system to address climate change. It urges multilateral development banks to increase the availability and impact of climate finance for developing nations and to mobilise additional funds for adaptation efforts and renewable technologies.

Harjeet Singh has been engaged in development and climate work for more than two decades. He believes that the way climate crisis is unfolding around the world, especially South Asia, which is a hotspot for climate-related disasters — take Nepal's erratic rainfall and subsequent flood this week, which resulted in 170 deaths, or the floods in Bangladesh's south-eastern parts, which also killed more than 70 — it is important that we talk about the cause of the problem. 

"As a climate activist, my role is to expose the role of the fossil fuel industry in causing and exacerbating the crisis and to demand justice from those who are responsible," Harjeet said. "A bunch of corporations and countries caused the problem whereas the rest of the world is facing climate impacts. So that is the reason I am involved in the activism work because we have no option but to hold these polluters to account."  

Why is climate finance so important, and how does it benefit developing, climate-vulnerable countries like Bangladesh? For instance, a Nature study found that from 2000-2019, global loss and damage amounted to at least $2.8 trillion. What role does climate finance play in addressing this?

When we talk about climate justice, it is about ensuring that the countries and corporations responsible for the climate crisis are not only taking big actions in terms of reducing emissions and moving away from fossil fuels, but are also held accountable for paying to address the impacts they have caused.

Finance is extremely important because when we come to these global negotiations and processes, how do we ensure climate justice unless and until finance is provided to people who are facing climate emergencies and need a shift in their economies?

We need to ensure they can provide jobs to their people. Developing countries, whose hard-earned development is being eroded by increasing disasters, require financial resources in the trillions annually to shift their economies towards greener pathways while making them resilient. Besides when disasters strike, we need to invest in recovering from those climate impacts.

So, finance is absolutely critical, and we are not here just to talk. If our discussions are merely an exchange of what policies are needed and we have to do it all by ourselves, then there is no point in coming to these climate negotiations. 

We come to the UNFCCC demanding the full implementation of the Paris Agreement, which in itself is not enough. This means that finance must be delivered, and I must also emphasise that technology plays a crucial role alongside finance.

If countries like Bangladesh, Malawi, and Nepal are to shift from their dependence on fossil fuels to renewable energy, technology plays a vital role. It enables them to manufacture energy solutions independently, reducing reliance on expensive imports. Thus, technologies are equally important for climate action mitigation as well as adaptation and addressing loss and damage.

At this year's Summit of the Future, where the Pact for the Future was established, how optimistic are you about the new pact? Will it help secure the necessary funding, for example?

Let me first zoom out and discuss some aspects of the future and what has been accomplished over the past few months and years since the conversation began.

On the positive side, it actually made the world leaders, policymakers, civil society and media realise that we are living through a polycrisis. We are no longer living in a world where we can talk about sustainable development in the way we have been doing it over the last few years and decades. 

Things have changed dramatically, whether it is due to the wars we are currently facing, the disruptive impact of technology like artificial intelligence, or the multiple crises at hand. We are confronting the climate crisis, biodiversity crisis, energy crisis, and the collapse of food systems.

A view of the General Assembly Hall during the "Summit of the Future" at UN headquarters in New York City on September 22, 2024 [Reuters/David Dee Delgado]

All these issues needed to be brought to the forefront, necessitating a conversation and global cooperation to address them in a much deeper and more comprehensive manner. That was the intention, and in some cases, it has successfully highlighted the complexities we are currently facing in the world.

But when you look at the pact, it is absolutely not enough to deal with the complexity and the scale of the problem that we are facing.

If I speak of climate in particular, it has not gone beyond what we have achieved in the Paris Agreement or at the recent COP28. If I specifically talk about the issue of fossil fuels, you may know that it was there in the initial draft, but then it was taken out. 

Then we, as the Fossil Fuel Non-Proliferation Treaty Initiative, actually worked with Nobel laureates and former heads of states to pressure for its reinstatement, which has now occurred. But then it is the same language, which is not enough.  

In a recent Bloomberg interview, you mentioned that the latest UN report, which states that developing countries need approximately $500 billion in climate finance per year, "falls short of capturing the full financial realities that developing countries face". Can you tell us more about this?

The UN report does not provide a complete picture. In fact, it clearly states that it does not even account for all the nationally determined contributions, which are the climate action plans submitted by countries. The estimated $500 billion per year does not account for climate plans of all the developing countries, and many activities have yet to be fully costed

So, it is an unfinished work which we cannot rely on. In the United Nation's own calculation, in a previous report, it said about $2.4 trillion is required annually. And in fact, as civil society when we look at various other calculations, our demand is that it is at least $5 trillion that we need as a base, which is a climate debt that rich countries owe to the developing countries. 

Now let me underline why I said it was not enough.

See the current financial architecture, it again only talks about mitigation and adaptation. It doesn't even look at the whole issue of loss and damage. Even in mitigation, it only talks about reducing emissions. Reducing emissions is only one part of the story and you cannot even reduce emissions unless you understand that you need to completely shift away from fossil fuels. 

That would require a transition the likes of which the world has never seen before. 

The floods in Bangladesh’s south-eastern parts killed more than 70. The photo depicts people suffering amid floods in Feni on 22 August 2024. Photo: Md Minhaj Uddin

What do I mean by that? We are talking about millions and millions of workers who are in the fossil fuel industry or other polluting industries like cement and steel and aluminium. They would require a shift, which means that economies have to invest in technologies and new green jobs. This calls for an unprecedented scale of economic diversification, and such a transformation will require substantial financial resources.

I always say that a coal miner cannot become a solar engineer in their lifetime. This reality is still not being adequately discussed; we will see winners and losers in this transition if we do not allocate sufficient funds and provide technology and assistance to developing countries that are now compelled to shift much faster. 

Without adequate financial support, the transition will be inequitable. Therefore, finance is absolutely crucial, and the current calculations do not account for many of these factors I just mentioned.

We know that wealthy nations failed to meet the $100 billion per year target, reaching it two years late. How long do you think it will take to reach the $500 billion threshold? Additionally, are we on track to achieve the trillions needed to effectively address the crisis?

Absolutely. I understand your question, and many people ask us why we are demanding trillions. It was such a struggle to secure the $100 billion, and even that figure is fraught with loopholes. I should mention that there is significant double counting, and over 70% of that amount consists of loans, meaning those governments will have to repay that money with interest. We also know that it includes guarantees, which will exacerbate the debt crisis.

Aside from that, the reason we argue that it is absolutely possible is that we have seen it happen in the past. During the financial crisis a couple of decades ago and the Covid-19 crisis, trillions were mobilised in a matter of days and weeks. 

We should also consider how much money is flowing into the fossil fuel industry. According to a report by the IMF, direct and indirect subsidies to the fossil fuel industry amount to $7 trillion annually, which translates to $13 million per minute.

That is the calculation. 

Now it is not a matter of money being unavailable; it is about funds being directed to the wrong places. We need to start addressing where that money is going. Why are we providing financial support to polluting industries, particularly fossil fuel companies, which caused the problem in the first place and delayed action? This includes companies from the US and other wealthy nations that were aware of climate change yet continued to promote disinformation. These are the very entities that are still receiving funding.

There was also a latest report from OCI [Oil Change International] that about $30 billion has been provided to these fossil fuel companies in the last 40 years for carbon capture and storage. Which we know is not working. So money has always been available but it was going to the wrong places. So our argument is that you need to shift that flow of money.

Besides, there are a number of ways we can raise money. For example, we have been talking about putting a levy on air passengers for all international travels. There are ways in which we can raise hundreds of billions of dollars. You can put a small levy on financial transactions that can help raise a lot of money. 

In fact, coming back to fossil fuels, there is a report, if you look at climate damages tax, which talks about how $900 billion can be raised by putting a levy of $5 per tonne of carbon this year and then continuing to add $5 every year. We can actually raise $900 billion only from the OECD countries. 

And of course, I should also mention the wars… look at how much money is going towards wars. The world is able to find money very quickly to fund wars and to further provide money to the military establishment. So yeah, it is not lack of money, it is lack of political will. 

How should the developing world spend the climate funds?

It is our responsibility that the money that we raise from international sources or even domestic sources for climate action be spent very judiciously and in a transparent and accountable manner. Because we are raising this money in the name of people who are facing a climate emergency. 

So be it developing countries who are receiving this money, local authorities or subnational or national governments, we have to be very responsible in the way we spend each and every penny that we get. 

And similarly, developed countries also have to make sure that they are being transparent in providing details of that money. As I said, even the details on the $100 billion are not available.