On climate finance, broken promises, and enlightened self-interest

James Murray
clock • 5 min read
On climate finance, broken promises, and enlightened self-interest

The government is on track to miss its climate finance pledges - a breach of trust that would do enormous damage to both global climate efforts and the UK's own interests

"If you break little promises, you'll break big ones."

The Road - Cormac McCarthy

The row over whether or not the government is about to breach its promise to mobilise £11.6bn of climate finance by 2026 concerns a lot more than the simple pledge to provide funding to climate-related projects in some of the world's poorest countries, critically important as that is.

The first thing to clear up is whether or not the accusation the government is preparing to drop its climate finance pledge stands up. It does.

The Foreign Office's insistence overnight that "claims that the international climate finance pledge is being dropped are false" hinges on semantics. The pledge may not be "being dropped", but the only way to interpret the briefing documents leaked to the Guardian is that it is being prepared to be dropped. It is equally clear that it is these budgetary issues that precipitated Lord Goldsmith's shock resignation late last week.

Number 10 would like people to think Lord Goldsmith has an axe to grind on behalf of Boris Johnson, but the numbers he is quoting don't lie. By the Foreign Office's own admission just £1.4bn of climate finance was provided in 2021/22. That is well below the annual runrate needed to honour the pledge made in 2019 to deliver £11.6bn between 2020 and 2026. Add in the subsequent cuts to the Overseas Development Assistance budget and the decision to classify spending on Ukrainian and Afghan refugees as aid spending, and it is clear that it is highly unlikely there will enough money left to meet the overarching climate finance target.

As the leaked documents show, the Foreign Office thinks spending on climate finance would have to rise to account for 83 per cent of the entire overseas development budget if the £11.6bn pledge is to be honoured. Goldsmith maintains that no government would be able to push through the contingent cuts to overseas humanitarian, health, and education budgets and as such it is perfectly reasonable to say the £11.6bn pledge is being breached.

The most generous possible interpretation is that the government is sincere when it says it is planning to honour the climate finance pledge and as such is preparing to massively increase the climate finance budget for 2024/25 and 25/26. And if that fiscally and politically challenging task happens to fall to the next government, well, wouldn't that be unfortunate?

Many observers will be forgiven for thinking Goldsmith's interpretation of events is entirely justified. And regardless of whether the pledge is being 'dropped' or not, recipient governments and their diplomats will now be deeply sceptical that it will ever be honoured.

And it is here that the outsized impact of the government's parsimony becomes clear.

The UK has a clear moral obligation to honour this pledge, both as a matter of climate justice and on the simple grounds that it has repeatedly said it will pay up. This may be an old fashioned view, but a Prime Minister's word should count for something.

But it is also massively in the UK's narrow self interest to provide this funding.

The money is to be invested in a mix of emissions reduction and climate resilience projects in many of the world's poorest and most climate vulnerable nations. As such, it delivers highly cost-effective emissions reductions that benefit everyone. But it also catalyses export markets, bolsters climate resilience in a way that enhances regional and national security, boosts food security, and eases many of the push factors that are driving migration.

Moreover, it can't have escaped anyone's attention that the UK's international reputation has taken a bit of a battering in recent years. Meanwhile, developing economies right across the world are being wooed by authoritarian emerging economies and petrostates that are increasingly willing to provide them with the finance they need. The accusation from China and others is that Western democracies don't deliver on their promises, either to their own peoples or to their allies. Consequently, liberal democracy is no longer the aspirational development model for too many governments and growing numbers of people all around the world.

This tension will be one of the defining narratives at this year's COP28 Summit. A UK government guilty of breaking its climate finance pledges and intent on torching all the goodwill it built up around the Glasgow Summit would go a long way to proving its critics right. And for what? A handful of headlines designed to appease the populist right and a misguided sense of what fiscal responsibility entails.

It is not yet too late to turn this around. The government could recognise its climate finance pledge is an investment that has to be honoured for strategic, economic, and moral reasons. Chancellor Jeremy Hunt could clear up the current budgetary confusion tomorrow, if he so chose. Domestically, the government could choose to properly build on this week's quietly encouraging announcements on heat pump training and carbon pricing reform. The UK's climate diplomats could be given the tools they need to build alliances and push for an ambitious new accord at COP28.

But it is unclear that Number 10 has the political appetite or skills to push through the policies that are needed. It's been a week since the Climate Change Committee published an absolutely damning assessment of the lack of climate policy progress over the past 12 months. Since then, the Energy Security and Net Zero Secretary's only comment on the environment has been to attack Just Stop Oil and the Labour Party, neither of which are actually in power. The International Environment Minister has resigned in protest at a Prime Minister who is "simply uninterested" in the climate and nature crises. And the PM himself has insisted the UK does not need to respond to US green subsidies because it is driving decarbonisation through its contracts for difference regime, on the same day the energy industry warned the progress delivered through those contracts is about to stall.

The government cannot keep breaking promises and expect to be taken seriously.

A version of this article first appeared as part of BusinessGreen's Overnight Briefing email, which is available to all BusinessGreen Intelligence members.

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