A fortnight before the adoption of the 2015 Paris climate agreement, India’s government pu
blished a report that could have imperilled the talks.Developing countries were being aske
d to commit to reducing their greenhouse-gas emissions. In exchange, they expected develop
ed nations to provide climate funding totalling US$100 billion a year by 2020. Data publis
hed by the Organisation for Economic Co-operation and Development (OECD), a body that repr
esents many of the world’s richer nations, said that developed countries were on their way
to meeting this target — providing around $50 billion annually to low- and middle-income
countries. But India said that the real figure was nearer $2.2 billion, and that the numbe
rs reported by the OECD were open to “‘gaming’ and exaggeration”, adding to tensions betwe
en the two sides.The Paris meeting was rescued. Developed and developing countries alike p
ledged to reduce greenhouse-gas emissions, and to come back in 2020 with more-ambitious co
mmitments. But arguments over funding data have endured. Five years on, they are casting a
shadow over the next United Nations climate conference (COP26), scheduled for November, w
hen nations are expected to meet in Glasgow, UK, to take stock of their climate commitment
s.This is a crucial year for efforts to combat climate change. A number of countries are p
ledging to work towards achieving net-zero emissions. And the United Kingdom is making a d
etermined effort to get the worlds of banking, other private finance and industry to commi
t to greening their processes and operations. But there’s been little progress in resolvin
g disagreements over public climate-finance provision. According to the OECD’s latest data
, developed countries mobilized nearly $80 billion in 2018 — $62.2 billion of it from publ
ic sources and $14.6 billion in private finance. If increases continue at the same rate, t
hese nations are within touching distance of the $100-billion target by 2020.But other stu
dies do not support these findings. According to a report released by the aid group Oxfam
last October, climate-specific assistance provided by developed countries came to no more
than $22.5 billion in 2017–18. And last month, researchers commissioned by the UN secretar
y-general António Guterres found that donors were over-reporting climate-funding data by $
3 billion to $4 billion.Such disagreements are not new, but they are once again fuelling m
istrust ahead of a crucial climate meeting, says Saleemul Huq, director of the Internation
al Centre for Climate Change and Development, which is based in Dhaka. Ideally, verificati
on should fall to organizations or processes that all sides can trust. Only then will ther
e be any hope of resolving these disagreements.A helping handClimate finance has been a po
int of contention since at least 1992, when the Earth Summit was held in Rio de Janeiro, B
razil. Because richer countries are overwhelmingly the source of the emissions responsible
for global warming, they agreed — albeit reluctantly — to help more-vulnerable countries
to protect themselves from the effects of climate change. The Global Environment Facility
was created, headquartered at the World Bank in Washington DC. But its complicated rules m
ade it hard for some of the most vulnerable developing nations to obtain funding — especia
lly for climate-adaptation projects.Over time, developing countries worked hard to persuad
e the international community to establish funding bodies, such as the Green Climate Fund
and the Adaptation Fund, that were more able to respond to their specific needs. But donor
nations have mostly avoided providing climate finance through these channels, preferring
to fund countries directly, or through multilateral development banks such as the World Ba
nk.A major point of contention is the fact that more than 80% of climate finance supplied
to developing countries comprises loans. The proportion of climate funding given as grants
has been falling — between 2013 and 2018, for example, it dropped from 27% to 20%. The tr
end towards loans is problematic, both because loans need to be repaid, with interest, and
because they tend to be provided for projects that can demonstrate a return on the invest
ment, such as power generation. Loans are less likely to be obtained for projects, such as
the building of flood defences, that are designed to help countries become more resilient
but do not make money.The pandemic has also resulted in cuts to many nations’ credit rati
ngs, and the subsequent reduction in borrowing capacity has hit the poorest countries hard
. Ultimately, the nature of loan financing means that these countries will end up in incre
asing amounts of debt — as the costs of the damage done by climate change rise alongside t
emperatures.But it is the lack of agreed and trusted accounting rules for climate finance
that fuels mistrust. The absence of such rules is a major oversight in climate diplomacy,
say Romain Weikmans at the Université Libre de Bruxelles and Timmons Roberts at Brown Univ
ersity in Providence, Rhode Island1.The authors of India’s 2015 report arrived at the $2.2
-billion figure by counting money that they said had been disbursed. By contrast, the data
from donors include all pledged funding, whether or not the money has reached the recipie
nts. The OECD data also count funding for projects with only a partial link to climate mit
igation.Another complicating factor is that the OECD’s researchers are working to a rule b
ook agreed at a previous climate meeting, COP24, held in Poland in 2018. UN member states
are looking at how to improve data accuracy. But even with clear criteria and better repor
ting, one thing will not change: the OECD is an intergovernmental body whose leadership do
es not represent the majority of nations. If recurring arguments are to be avoided, a clim
ate-finance verification mechanism needs to be found that fully incorporates the perspecti
ves of OECD non-members.‘Meeting of minds’ neededTo agree on new accounting rules, both de
veloped and developing countries should consider taking advice from a trusted third party
that already has a role in setting data standards, but is not involved in international di
plomacy. That could be the UN Statistical Commission or the International Organization for
Standardization. “Countries should come up with proposals,” says Selwin Hart, who advises
Guterres on climate finance. “There needs to be a meeting of minds so that all sides can
be confident there is accuracy and accountability,” he adds.The COP26 meeting is less than
a year away. Widely seen as the world’s last chance to take meaningful, unified action on
climate change, it must succeed. That means developed and developing countries must agree
on more-ambitious targets to reduce emissions, and ensure that the poorest countries, and
those most vulnerable to climate change, receive support as they develop their economies
in a more sustainable manner and prepare for the inevitable effects of global warming. The
$100-billion pledge is a fraction of what is needed. Ultimately, investments around the w
orld must shift to support sustainable development. If global leaders can accomplish that,
Earth might yet have a chance.