What will it take to finally get decisive climate action done? Well, on the one hand, more ambitious climate pledges from governments. But on the other hand, and perhaps even more important aspect, is money. Research shows that in the long run, climate investments can save money and create jobs — but you have to put the money down.

Developed countries have a historical responsibility over climate change, as their economies were the ones to develop faster and consequently trigger the global rise in emissions we see now; they basically got developed in the first place by burning a lot of fossil fuel (some more than others).

That’s why the United Nations and climate experts argue countries have common but differentiated responsibilities regarding climate change, and it’s up to the richer countries to help the less-well-off become sustainable as quickly as possible..

More than a decade ago at the Copenhagen climate summit, poor countries were promised $100 billion a year in climate finance from 2020. That commitment was repeated in the landmark 2015 Paris Agreement. The amount includes resources to build resilience to the climate impacts and to reduce greenhouse gas emissions.

But the money hasn’t exactly come in as planned, ad progress has been slow. As calculated by OECD, in 2018, the total had reached around $79 billion, and most of the growth over the previous four years had been in the form of loans. And now the pandemic has made things more difficult, with money being redirected away for other purposes. It’s starting to reach a tipping point.

Lidy Nacpil, coordinator at the Asian Peoples’ Movement on Debt and Development, told The Guardian: “We are at a point where we know what needs to be done to reverse the climate chaos and it boils down to this simple principle: wealthier countries, who emit more now and historically, can and should do more with their emissions reductions and delivery of climate finance.”

Biden’s climate finance

The Biden administration in the US finished today a virtual summit on climate change in which it pledged to double US international climate finance by 2024 and triple funding for adaptation. This comes after years of the exact opposite from former president Trump, who cut off climate funding from the US to developing countries. 

“Good ideas and good intentions aren’t good enough, we need to ensure that financing will be there to meet the moment on climate change,” the US president Joe Biden said at leaders’ climate summit he convened on Earth Day – in a bid to restore US credibility of tacking the climate crisis. 

While no figures were disclosed, administration official Leonardo Martinez-Diaz told Climate Home News that the baseline was around $2.8 billion, with $500 million of that going on adaptation. The total would be around $15 billion a year, adding in contributions to multilateral development banks and private finance. 

For climate experts, this isn’t nearly enough. Joe Thwaites of the World Resources Institute, told Climate Home News that the plan was “not particularly ambitious”, while Brandon Wu, director of policy and campaigns at ActionAid USA, said the numbers were “very low” and far from the $800 billion this decade campaigners said the US should contribute. 

“The US has made an important start, but must do much more if it wants to become a leader on climate finance. Provision of finance to vulnerable countries is a central pillar of the Paris Agreement, and such investments are key to building credibility and influence to unlock more ambitious climate action from other countries, delivering benefits at home and abroad,” Thwaites said.

The Biden administration committed yesterday to reduce its emissions by 50% to 52% from a baseline of 2005 emissions. This is nearly double the target set by the Obama administration in 2015 – which the US wasn’t on track to meet in the first place. The goal will soon be formalized as Nationally Determined Contribution submitted to the UN.

Companies must rise up to the challenge

At Biden’s climate summit, business leaders such as Bill Gates and Michael Bloomberg addressed political leaders, along with the chief executives of major financial institutions, including: Jane Fraser, chief executive of Citigroup; Marcie Frost, chief executive of the pension fund Calpers; and Brian Moynihan, chairman of Bank of America.

“We can’t beat climate change without a historic amount of new investment. We have to do more, faster to cut emissions,” said Bloomberg, who has donated millions over the years to promote replacing dirty-burning coal-fired power plants around the world with increasingly cheaper renewable energy.

Meanwhile, Bill Gates called for innovation in technology to meet President Biden’s and global goals for avoiding catastrophic climate change.

“Just using today’s technologies won’t allow us to meet our ambitious goals,” Gates, the Microsoft co-founder and philanthropist, said via video.

Biden said the production of solar panels, wind turbines and electric cars, along with upgrades to electricity grids and to buildings to make them more energy efficient would “create millions of good paying jobs around the world” and bring down emissions. John Kerry, Biden’s climate envoy, said the shift to clean energy provided “extraordinary possibilities.”

But a part of that innovation essentially boils down to (once again) money.

Private-sector money tends to flow where the potential profits are easiest, such as renewable energy projects in middle-income countries, not to the most vulnerable places that need it most. Plus, projects that build resilience to the climate crisis, such as early warning systems for flooding, usually don’t get a lot of funding. 

If the best we can do is take climate action where that’s profitable directly, that’s simply not good enough. Tackling the climate crisis will require a cross sector effort. While countries have to significantly reduce their emissions right now, finance has to significantly improve from the developed to the developing countries. And in the meantime the private sector has to build up to the task. It’s going to be an uphill battle, but it’s one that we’d best try to win.