Ed Davey, climate finance and big business

During the first week of the UN Climate talks in Doha, campaigners from Kingston and Richmond World Development Movement group met with Ed Davey, secretary of state for energy and climate change, to discuss the government’s contributions to climate finance. As WDM members, the group were concerned that the UK is pushing developing countries deeper into debt through climate loans.

Members of WDM Richmond and Kingston WDM local group present Ed Davey with paper ‘chains of debt’

The group delivered paper ‘chains of debt’ to Ed Davey, with handwritten messages from constituents asking him to ensure that the UK’s climate policies do not drive the world’s most vulnerable people deeper into poverty.

It is the world’s poorest people who are suffering the worst effects of climate change, and it is wealthy countries like the UK who are overwhelmingly responsible for the emissions causing the damage. We owe those worst effected by climate change a large ‘climate debt’. 

The UK government has been contributing to the World Bank’s Climate Investment Funds (CIFs). One of these funds, the Pilot Project for Climate Resilience (PPCR), is lending money to countries like Grenada which are judged to be under threat of debt distress. It is unfair to worsen the debt problems of these countries by lending them more money for adaptation, even if this lending is under concessional terms.

Mr Davey and his Department for Energy and Climate Change (DECC) are responsible for international climate negotiations and emissions reductions. The campaigners called on him to ensure that the government gives all its climate finance not as loans to the World Bank, but as grants through the more democratic UN Adaptation Fund. 

Jeannette James from the Kingston and Richmond World Development Movement group said, ‘Climate change has largely been caused by rich industrialised countries like the UK. Poor countries like Bangladesh, Nepal and Mozambique desperately need funds to help them deal with climate change, but World Bank loans will only drive them deeper into poverty. We are asking Ed Davey to make sure that solutions to climate change don’t cause more poverty. Otherwise, they won’t work.’

During the UN climate talks in Durban last year, the UK government took the welcome step of giving the majority of its funds to the World Bank’s PPCR as grants, instead of as a capital contribution which could only be disbursed as loans. Of the £85 million announced for the PPCR, £70 million would be given as grants. The government also promised, for the first time, to contribute £10 million to the UN Adaptation Fund. 

Over the last two weeks at the 2012 UN climate talks in Doha there have been no indications that the UK will contribute new funds to the World Bank’s PPCR. Instead, the government announced it would spend £1.8 billion between 2013 and 2015 to help poor countries develop clean energy and adapt to climate change. However, much of this money will go to projects that put business in command of the funds rather than the poor. 

Projects which help countries adapt to the effects of climate change, such as building flood defences, are often not profitable and are therefore not attractive to private sector investors. UK public money should support these vital adaptation projects, not  corporate energy projects which fail to boost energy access.

The government’s announcement in Doha also omitted to specify whether any of its contributions are additional to the £2.9 billion previously earmarked for climate between 2011 and 2015. Nor do they specify exactly how much money will be used to support business, or how much will be in the form of either loans or grants. 

Whether the government will be directing money away from the World Bank’s PPCR and towards the UN Adaptation Fund is not yet clear.