learn more about climate and finance

The problem

The majority of countries and powerful corporations and institutions support a neoliberal approach to resolving climate change. They have generated a set of solutions that stem from the same unjust model that created the crisis in the first place. These ‘false solutions’ fall into three categories: technical, financial and institutional. Whilst each can have devastating environmental and social impacts on its own, together they form an integrated and mutually reinforcing process, a system that perpetuates itself. And far from resolving the climate crisis, these false solutions tend to exacerbate it, as well as making people ever more vulnerable to its impacts.

Technical false solutions include agrofuels, forest and agricultural monocultures, large hydroelectric dams, nuclear energy, carbon capture and storage (CCS), genetic modification and other unsustainable options primarily intended to engage industry and private finance. Many of these require large tracts of land and can often lead to violent conflict over land and territories. They undermine peoples’ rights and sovereignty, and destroy natural and cultural goods and heritage.

Financial false solutions include ‘carbon offsetting’ which enables the global North to avoid its responsibility for reducing emissions by looking to private sector finance; this effectively removes democratic control over the governance and allocation of climate finance. Other culprits include unjust economic instruments such as patenting, which lead to monopolies that inhibit the diffusion of climate-friendly technologies; and the use of border tax adjustments which, by raising the cost of imports from developing countries in order to protect domestic industries, contravenes the principle of common but differentiated responsibility and fails to address climate debt and historical responsibility.

In the absence of a genuine will to repay climate debt, impoverished nations and communities are effectively forced to compete amongst themselves for inadequate and harmful financial flows like those of the Clean Development Mechanism (CDM). The CDM is inherently unfair and is based on industrialised countries’ failure of to meet their emissions reduction targets; it has also had devastating social and environmental impacts on communities and their environment in the global South, which are well-documented.

Institutional false solutions are a result of the global North’s insistence that climate finance is channelled through neoliberal economic institutions such as the World Bank, rather than the United Nations. The World Bank is trying to set itself up as the world's climate bank, through its Carbon Finance Unit (which purchases emissions reduction credits directly) and its Climate Investment Funds (which currently channel a large part of the funds for climate change measures in developing countries).

Regional development banks are also increasing their portfolios of climate investments funds and loans. Yet these same institutions continue to finance fossil fuel extraction and use: the World Bank, for example, is the largest multilateral lender for oil and gas projects and more than 80% of all oil projects it finances are for export back to wealthy Northern countries. Climate Investment Funds are also used to support so-called ‘clean technologies’, but these actually include coal, agrofuels and large hydroelectric dams.

The solution

The climate debt must be repaid. This climate debt is owed for the historical overproduction of greenhouse gas emissions by developed countries, who have polluted the global commons and thereby reduced the environmental space available to developing countries. The climate debt is also owed for the impacts of climate change: it is already being felt most sharply in impoverished developing countries and will be borne by future generations.

The climate debt, based on the historical responsibility of the global North, must be paid through a range of actions. This includes immediate and rapid emissions reductions in the global North, to ensure that sufficient environmental space within sustainable ecological limits is available for the global South. It also includes the global North sharing appropriate technology with the global South, without conditionalities. There should also be global sharing of knowledge and capacity building in order to:

• enable developing countries to adopt low carbon societies;
• provide reparations for damages;
• build communities’ resilience to the impacts of climate change; and
• transform the individual practices of citisens of the global North.

The provision of climate finance should be mandatory, and derive from stable and predictable public sources in climate debtor (global North) countries. It must also be new and in addition to existing Official Development Assistance obligations. The management of climate finance must come under the authority of the UNFCCC, not international financial institutions. Governments have already agreed that the UNFCCC, which is guided by multilaterally negotiated principles based on historical responsibility, is the main international framework for addressing climate change.

What we do

Friends of the Earth believes that climate justice requires a transformation away from traditional notions of development and towards peoples’ sovereignty and sustainable societies. Distinct from 'national sovereignty',  peoples’ sovereignty is a rights-based, people-centred and sustainable approach. It concerns the people's capacity to control their own territories and sacred places, and their right to defend them; and their right to access food, water and energy, and decide how to use those resources sustainably. Sustainable consumption patterns will lead them towards sustainable societies.

We promote alternatives to the neo-liberal model - building and creating new democratic structures, systems and processes that strengthen local markets and cultures, consumers' and producers' cooperatives, solidarity economies and alternative financial mechanisms. We lobby our governments to ensure that international obligations are met to support these new democratic structures, peoples' sovereignty and the creation of sustainable societies. We expose false solutions and support communities resistance to these solutions across the world.