As Trump takes office, developing countries question green finance

Wind turbines. Photo by: John / CC BY-NC

Regardless of the incoming U.S. administration’s policy on climate change, developing countries have already lost faith in wealthy countries’ commitments to invest in climate change mitigation, a top Indian government advisor said on Friday. He warned that any additional retreat by President Donald Trump could “erode trust further” between the U.S. and India, but wouldn’t eliminate “other ways to collaborate.”

“India and other developing countries are aware that the promises that have been made for several years now ... on climate finance in general, have not been kept,” Arunabha Ghosh told reporters on a conference call. He is adviser to the government of India for government, industry and civil society and CEO of the think tank Council for Energy, Environment and Water.

The Green Climate Fund, for example, a U.N.-embedded fund designed to leverage financing toward climate adaptation and mitigation in developing countries, “has failed to live up to its promise so far,” he said.

The warning comes amid mixed messaging from the incoming administration about its views and policy toward climate change.

During Senate confirmation hearings last week, the president-elect’s pick for secretary of state, Rex Tillerson, offered little detail on campaign pledges to end climate investments, such as the $3 billion pledged by the U.S. to the Green Climate Fund. The fund has so far secured only a fraction of the $100 billion pledged by donors in 2013.

On Monday, the outgoing Barack Obama administration transferred a second $500 million tranche of its $3 billion pledge, amid concerns that the remaining $2 billion pledge could be vulnerable to reversal by the incoming Trump administration.

Some experts said threats to pull climate finance could have been mere campaign bluster. “[Tillerson] has acknowledged that climate change exists and the consequences could be serious enough that it warrants action,” Brigadier General Stephen Cheney, CEO of the American Security Project, told reporters on Friday’s press call.

“So the bright side to this is, he’s not saying we’re going to drop out of it or not going to fund it, he’s saying well he’ll look at it, and I think that’s a positive sign,” Cheney said.

Others see alternative models of collaboration, for instance through climate tech and attracting foreign direct investment, as more promising routes to fund mitigation.

“There are ways in which India and the U.S. have been collaborating on co-financing technology development,” Ghosh said, pointing as an example to the $125 million Joint Clean Energy Research and Development Center, a joint venture between the U.S. and Indian governments that could harness redirected investments.

Ghosh called instead for institutional investments “based on real market principles,” for example using joint funds to derisk large foreign direct investments into India.

“If we need $100 billion for debt alone to hit our targets, we’re not asking for that money for free, we’re asking for it at lower rates of interest, and that can happen only if we find the collaborative, cross-country hedging mechanisms and instruments necessary to lower those costs of finance,” he said.

If global partners can dedicate their climate investments toward that end, “then all the market economics we’ve been talking about combined with the political will we’ve been talking about should be sufficient to reduce our emissions,” Ghosh said.

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About the author

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    Molly Anders

    Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.