The other side of climate finance

Money can’t buy you love. It hasn’t bought reforms either. But it can buy you other things, like a trip to Sharm-El-Sheikh, the beautiful seaside resort in Egypt where the UN conference on climate change was on.

- BISHAL THAPA

Countries from across the world met at the 27th Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC), popularly COP 27, to negotiate an international agreement for addressing climate change. A key part of those negotiations is focusing on the commitment of developed countries to provide developing nations with financial support for climate action.

At COP 15 in 2009, developed countries had committed to collectively mobilising $100 billion annually by 2020 for climate action in developing countries. The goal was reiterated and extended to 2025 at COP 21 in Paris in 2015.

Developed countries will not meet that goal. In September 2022, an analysis by the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organisation of 38 developed countries, estimated that $83.3 billion had been mobilised in 2020.

Counting climate finance flows has always been a murky business. Take the case of the Electricity Grid Modernisation Project in Nepal, where the Asian Development Bank (ADB) provided Nepal a loan of $216 million in 2021. The project aims to support the Nepal Electricity Authority (NEA) to expand and modernise the electricity transmission and distribution system in selected areas, as well as enhance its financial and customer information systems.

The ADB estimates that $188 million of the $216 million counts as climate finance, in part because “the project will allow increased penetration of renewable energy generation into the grid, allowing greater displacement of fossil generated electricity”. The ADB’s estimates were derived using standardised frameworks it developed in 2013 and 2017 for all projects, not just for Nepal.