“Funding in the form of loans enables rich countries to evade their responsibility but also forces global south countries into even more debt to pay for the climate crisis that was created by wealthy countries.”
By Heidi Chow, Debt Justice
Who pays for the climate emergency has long been a key battleground for the global climate justice movement. Rich countries promised finance to help lower-income countries tackle the climate crisis as a recognition of their collective responsibility for historic carbon emissions. But the target of $100 billion a year of climate finance by 2020 has never been delivered, nor is it anywhere near the trillions of dollars needed to meet the scale of the crisis. And to add insult to injury, the finance that has been given has mostly been in the form of loans, not grants.
Funding in the form of loans enables rich countries to evade their responsibility but also forces global south countries into even more debt to pay for the climate crisis that was created by wealthy countries. With 54 countries in the global south currently in a debt crisis, this is not a sustainable situation. A debt crisis means that debt repayments are so high that resources are diverted away from essential public services like healthcare and education and from responding to the climate crisis. On average, lower income countries are spending five times more in debt repayments than on fighting the climate crisis.
Offering more loans for climate action to countries in a debt crisis will push global south countries to the brink of economic collapse while wealthy lenders benefit as they pocket the returns from lending.
Rich governments and polluting corporations need to stop shirking their responsibilities and instead scale up the climate funding required to the tune of trillions of dollars in the form of grants. Without adequate grant-based finance, Sub-Saharan African countries will have to take on almost $1 trillion in debt over the next ten years to address the climate crisis.
Although there was no progress around setting a new target for climate finance, there was a glimmer of hope at this year’s COP. A landmark agreement was made to set up a loss and damage fund to help finance rebuilding and reconstruction following climate-driven disasters such as floods, hurricanes and storms. This decision is historic and long overdue.
Global south governments and civil society groups across the world have fought for this fund for decades.The fund will ensure wealthy countries take responsibility for causing the devastating impacts of the climate crisis and has been a key demand around climate reparations. This is a victory for global south governments, climate activists and civil society groups around the world but it’s just the first step and there’s still more work to do. In particular, there will be an upcoming fight to ensure that the loss and damage fund dispenses new and additional funds in the form of grants not loans. As well as forcing rich countries, the historic polluters, to contribute to the fund to the scale required to meet the need.
The demands for debt cancellation, grant-based finance and climate reparations are growing louder. Global south leaders made powerful interventions at COP27 calling for action on the debt crisis and for grant-based climate finance. The Prime Minister of Pakistan, Shehbaz Shaif, called for debt relief and compensation, following the devastating climate-driven floods across Pakistan in the summer. The demand for debt cancellation was also echoed by global civil society, calling for the ‘cancellation of all unsustainable and illegitimate debts’ in the People’s Declaration jointly launched by various constituency groups including indigenous peoples, women and gender, youth, workers and environmental organisations and climate justice movements.
We need equitable and sustainable solutions to financing the climate emergency and the demands for debt cancellation, grant-based finance and climate reparations are based on the principle of polluter pays which is crucial to achieve climate justice.
- Heidi Chow is the Executive Director of Debt Justice. You can follow her on twitter here; and follow Debt Justice on Facebook, twitter and Instagram.
- Heidi Chow is speaking at the Arise Festival Conference: “Solidarity – Struggle – Socialism” this Saturday, December 10th at Conway Hall, London, 25 Red Lion Square, London WC1R 4RL. Register here.
- Others speakers and campaigns include: John McDonnell MP; Sarah Woolley, BFAWU General Secretary; Richard Burgon MP; Mick Whelan, ASLEF General Secretary; Nadia Whittome MP // Zita Holbourne, Black Activists Rising Against Cuts (BARAC); Lord John Hendy QC; Emma Dent Coad, Former MP & now Group Leader on Kensington & Chelsea Labour Group; Hilary Schan, Momentum; Sabby Dhalu, Stand up to Racism; Johnbosco Nwogbo, We Own It; and many more. See the line up and find out more here.
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