How will we finance climate action?

New figures due out in early October are expected to show how much funding to help developing states address climate change needs to be drummed up to meet a 2020 pledge of $100 billion a year, dispersing the fog surrounding the numbers.

The estimates, produced by the Organisation for Economic Co-operation and Development (OECD) and the Climate Policy Initiative (CPI), will be the first to use a definition agreed by donors, intended to avoid duplication and help clarify the complex picture of international climate finance.

Ensuring wealthy countries are on the road to meeting their 2020 commitment, made at a U.N. conference in 2009, is seen as crucial to the success of Paris talks in December, expected to produce a new global agreement to curb climate change.

Christiana Figueres, head of the U.N. climate change secretariat, recently said she expected donor governments to outline plans for reaching the $100 billion goal at a meeting of finance ministers in Lima on Oct. 9.

“Climate finance has been a source of some tension between donors and receiving countries. Donors always think they give and recipients always think they have not received,” Giza Gaspar-Martins, an Angolan government official who leads negotiations for the least developed countries, told journalists in London this week.

Rich nations are hoping the fresh estimates will help lay those tensions to rest.

On Sept. 6, ministers and government officials from donor countries, including the United States, European nations, Australia and Japan, issued a statement outlining their common view on what should be counted towards the $100 billion goal.

According to the statement, it will comprise public money provided by donor governments through a range of institutions and instruments, as well as private money for climate-relevant activities mobilised by public finance and public policy.

The methodology would exclude money raised by developing countries, avoid counting funding more than once, and encourage the most effective use of the finance.

“It’s a useful step in the right direction,” Gaspar-Martins said, emphasising that the poorest countries had been calling for such an exercise for some time.

CONTROVERSIAL FIGURES

For years, researchers have decried the lack of an international system for tracking climate finance, arguing that ambiguity in the numbers has undermined trust between rich and poor countries in the U.N. climate negotiations.

The new methodology should go some way towards tackling that problem – though it may still have some flaws.

J. Timmons Roberts, professor of environmental studies at Brown University, noted that developing nations were not involved in deciding it. Also it includes elements, such as non-concessional loans, that some may not agree with.

“The good thing about it is that (donors) admitted the need for increased transparency in reporting,” said Roberts. “It’s a start but I am concerned that perhaps it cannot be a definitive number.”

Donors have already flagged this possibility, admitting that data and methodological limitations prevent them accounting for all flows towards the $100 billion goal, especially those resulting from public policies.

“Any near-term estimate produced will necessarily be partial, and will omit some – and possibly a substantial amount – of climate finance mobilised,” the statement said.

Barbara Buchner, a senior director with the CPI, said there was still much work to be done to collect and analyse data. More accurate estimates would only be available towards the end of 2016, she told the Thomson Reuters Foundation.

Recent advances by multilateral development banks in setting out their own methods for tracking climate finance had spurred on donor governments, she added.

“It took a long time because it’s a very complicated issue,” she said.

Previous estimates of how much climate finance is flowing to developing countries – to help them cope with extreme weather and rising seas, and adopt clean energy – have varied considerably.

But according to a well-regarded annual report from the CPI, the amount flowing from developed to developing countries fell to $34 billion in 2013, down $8 billion from 2012.

Other estimates have been a source of controversy.

For example, donors said they had exceeded their commitment to provide $30 billion in “fast start” funding between 2010 and 2012. Yet a study by international think tanks said almost 80 percent of this was also reported as official development assistance, causing experts to question whether it was “new and additional” as promised.

An analysis by Brown University found that less than half the $2.7 billion in aid OECD donors marked as targeting climate adaptation in 2012 was destined principally for that purpose.

NO MORE TARGETS?

The history suggests the new estimates of climate finance due to be unveiled on Oct. 9 – which are expected to show an increase for 2014 – may again spur debate on how much more donors need to raise to meet the $100 billion goal by 2020.

Researchers suggest the Paris negotiations could set up a work programme to further pin down the numbers, although there is already a committee tasked with doing this.

And then there is the thorny issue of the amounts that will be needed after 2020, when the Paris pact is due to take effect.

Experts following the negotiations say funding will clearly have to rise, but it may be in the interests of both rich and poor countries not to put firm targets in the new deal.

At this month’s round of talks, developing countries stressed that climate change scenarios could shift in the next five years, making it hard to work out now how much money will be needed to help them cope with warming impacts after 2020.

Developed nations, meanwhile, pushed for poorer countries to create an “enabling environment”, including better transparency and changes in policy to help them access financial resources and boost private investment in low-carbon projects.

“No one wants to put any numbers on the table, thinking, ‘What if we ask for too little, or what if we offer too much?'” said Kashmala Kakakhel, a consultant working on climate finance with the Women’s Environment and Development Organization.

This article is published in collaboration Thomas Reuters Foundation trust.org. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Megan Rowling covers aid and climate change issues, with a focus on social, economic and environmental justice for the Thomas Reuters Foundation.

Image: Splinters of ice peel off from one of the sides of a glacier. REUTERS/Andres Forza.