Biden's summit a 'crunch moment' for US climate finance leadership

A view of a coal-fired power plant in Becker, Minnesota. Photo by: Tony Webster / CC BY-SA

U.S. President Joe Biden’s Leaders Summit on Climate kicks off Thursday, with 40 heads of state set to gather virtually over two days. After four years of obstruction by the White House, climate advocates want Biden to show he is serious about reclaiming that leadership mantle.

While much of the attention has focused on Biden’s expected announcement of a much more ambitious U.S. target for reducing greenhouse gas emissions, countries and communities on the front lines of climate change will also be looking for signs of renewed U.S. support. Thursday’s agenda features a session on climate finance, with a U.S. Cabinet official, heads of state, and leaders of public and private financial institutions taking the stage.

They will face pressure to chart a course toward delivering on long-agreed climate finance commitments, including a 2009 pledge by high-income countries to deliver $100 billion in climate finance per year to lower-income countries. That pressure has particularly been building since delegates at the 2019 United Nations Climate Change Conference, or COP25, in Madrid failed to reach agreement on some of the key climate finance agenda items.

“It's a crunch moment,” said Joe Thwaites, associate at the World Resources Institute. “They keep talking about reengaging. The U.S. is back in a leadership role. Well, you know, to be back in a leadership role you kind of have to lead.”

When the COVID-19 pandemic erupted last year, it temporarily derailed official climate negotiations — including a one-year delay of COP26, the next U.N. Climate Change Conference, in Scotland. But it also taught climate advocates a valuable lesson: When the world demands it, mobilizing unprecedented sums of public finance for a global emergency is possible.

“if we can mobilise trillions overnight, rightly to support our economies, why can we not reach this $100 billion dollar goal?” Alok Sharma, the COP26 president, reportedly asked at the Climate Ambition Summit in December.

“The U.S. is back in a leadership role. Well, you know, to be back in a leadership role you kind of have to lead.”

— Joe Thwaites, associate, World Resources Institute

With a pledge of roughly £11.6 billion over five years, the United Kingdom has been out in front of the United States on climate finance so far — though its leadership could be undercut by massive foreign aid reductions.

Earlier this month, the White House released a preview of its fiscal year 2022 budget request, which included $1.2 billion for the Green Climate Fund as part of a $2.5 billion overall proposal for climate finance. Thwaites said that budget request is likely not the final word on what Biden’s administration will propose.

In a Jan. 27 executive order, Biden committed to developing a climate finance plan for the U.S. government. That plan, which Thwaites said might be among the announcements coming this week, will likely include proposals that extend beyond the next fiscal year and give a clearer overall picture of the White House’s climate finance ambitions.

Thwaites said he hopes to see Biden’s administration double former President Barack Obama’s $3 billion contribution to the Green Climate Fund, while also making good on the $2 billion that remains outstanding from that commitment. That would mean a total pledge of $8 billion, he said.

“It really is going to be a test of how much is the U.S. commitment to leadership just narrowly focused on mitigation or is it going to be across all the pillars of the Paris Agreement,” Thwaites said.

One of the big questions is whether the administration will show a willingness to deliver more public finance for lower-income countries to tackle climate change, in addition to mobilizing private sector capital.

During a press call Wednesday ahead of the summit, an administration official who spoke on condition of anonymity suggested that private pools of capital have not received enough attention in climate change negotiations.

“Historically, the climate negotiations have been much narrower. They’ve looked at the World Bank. They’ve looked at bilateral assistance. They’ve not really looked at this much larger capital pool. And to us, that’s part of the solution,” the official said.

Biden proposes $6.8B boost for US international budget

An outline of the Biden administration's first budget request calls for a 12% increase for international affairs spending in fiscal year 2022.

Some outside of government have the opposite impression. Particularly in comparison with its global competitor China, the U.S. government has shown little interest in stepping up its public climate finance, despite the amount of influence and importance it carries with lower-income countries around the world, Thwaites said.

“Everything seems to be on the table except for public finance, and it's a really stark omission,” he said.

Apart from announcing a large dollar amount, the White House also has a chance to signal that it wants to play a constructive role in shaping the climate finance architecture.

“Still far too much funding flows through international intermediaries, and too little is going to be developing country institutions through direct access,” Thwaites said. “It would be really welcome if the U.S. was to actually focus on how they can help boost those institutions.”

This is an area where the U.S. Agency for International Development has a clear role to play in partnering with government ministries to help them improve their ability to design climate policies and access funding from international institutions, he added.

About the author

  • Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.