Expert views on climate finance in the age of Trump

In a perverse sense, the Trump administration might be just the bitter medicine that’s needed to make global climate change efforts more effective.

Before you turn away in disgust, let me make clear that I consider myself a South Asian green socialist. Over the last three decades I have worked to promote renewables such as hydropower, biogas, and solar. Both my home and my office have long since “gone solar.” I have been pilloried by my foes as an “activist environmentalist”—a politically pejorative term in much of the Global South.

When the former chief executive of a multinational petroleum company becomes the top US diplomat—and a lawyer who has repeatedly sued the US Environmental Protection Agency becomes the head of that same agency—I consider these developments to be about as close to ecological apocalypse as any environmentalist can imagine.

So where do I perceive a silver lining in the gloom that surrounds the US election (and the United Kingdom’s Brexit vote)? In the possibility that Trump’s presidency will invigorate environmental activism in the Global North—which in turn might improve foreign-aid–based endeavors to promote environment-friendly development in the Global South, specifically Nepal.

No country can hope by itself to solve “wicked” problems like climate change. These problems require concerted international cooperation—and in Nepal, solutions will have to involve sagacious foreign aid and international development agencies. Over the last couple of decades, however, these agencies have often lost their way in procedural fetishism and have become increasingly irrelevant to realities on the ground. My colleague Sudhindra Sharma has analyzed six decades of foreign aid in Nepal and has shown that every decade saw a major shift in aid philosophy. Import substitution was emphasized, then an export-led economy, then structural adjustments, then meeting basic needs, then poverty alleviation. The latest fad, in vogue since the start of this century, has been climate change. Almost every development activity today is forced to justify itself in terms of climate change adaptation—even activities such as protecting drinking water in remote villages, where the link to global warming is tenuous or non-existent.

A recent study investigated why springs across the Himalaya were drying up—and fueling outmigration to city slums. The knee-jerk supposition was that climate change was to blame, but the study found otherwise. The areas under study showed no significant downward trend in rainfall. Rather, other powerful drivers were responsible. Livestock numbers had declined, and thus buffalo wallowing ponds were contributing less to groundwater recharge. Farmers were shifting from dryland maize to water-intensive crops such as tomatoes. Most significantly, water was being over-pumped with powerful technologies such as electric motors and PVC pipes instead of the traditional hand-carried water pots and buckets. If these issues are not addressed by the time the effects of climate change do become more severe three or four decades from now, problems with village water supply will become more pronounced, if not catastrophic. Unfortunately, little or no climate money is now available for addressing concrete, present-day tasks such as safeguarding village water supply.

The bulk of climate funding is directed toward seminars, nebulous “policy impacts,” and reports in English that are not read by anyone who matters. Contractors and sub-contractors working for the US Agency for International Development (USAID) or the United Kingdom’s Department for International Development are practically forbidden to spend money on real grassroots mitigation measures; they have to work exclusively on adaptation and policy impacts.

A perverse example was Nepal’s presence at the Copenhagen climate change conference in 2009. Nearly 600 Nepalis, according to various accounts, participated in the conference, including some eight government ministers. One could be forgiven for thinking that Nepalis were there in such force to showcase Nobel-deserving work in climate change—but it was nothing of the sort. The truth is that every foreign aid agency was conducting some climate change project or the other in almost every ministry (“gender and climate change,” “justice and climate change,” “education and climate change,” and so on). With lots of money still unspent, what better way for a nongovernmental organization to create the impression of policy impact than to take a government minister and his high officials off on a foreign junket?

It gets worse. Even with all the time, money, and expert resources that development agencies have directed toward climate change adaptation in the last dozen years—resulting in national plans of adaptation, local plans of adaptation, a national climate change action plan, and so forth—Nepal, far from heading toward some heavenly, climate-proofed future, is headed swiftly toward the hell of fossil fuel addiction. Nepal’s fossil fuel consumption has more than doubled over the last half-dozen years. And though the country is rich in hydropower, clean energy is in decline—more than half of the electricity Nepal consumes is supplied by dirty coal-fired plants in India’s state of Bihar.

In previous decades, Nepal was a major success story in bio-gas, having installed over 200,000 such plants across the country. In the last few years, that success has stalled and may even be going in reverse. Electric vehicles present a similarly sad story. A successful environmental campaign of the late 1990s displaced diesel-powered three-wheeled vehicles, which belched black fumes, from the streets of Kathmandu, and replaced them with electric models. But the petroleum-based industries—those involving cars, buses, petrol pumps, and petrol tankers—have used their money and policy clout to ensure that the electric vehicle industry is slowly strangled. The story is similar with ropeways—cable cars powered by hydroelectricity—which are a climate-friendly and mountain-friendly means of ferrying goods. But ropeways have been sidelined in Nepal’s official economic planning even as fragile Himalayan mountainsides are gouged to build unsustainable roads. It is a spree of construction that villagers suffering from subsequent landslides describe as “bulldozer terrorism.” USAID built a goods-carrying ropeway in 1964 west of Kathmandu. The European Union built one south of there in 1995. But neither organization has any institutional memory of those successes and neither has plans to repeat them. Built-in amnesia is after all a precondition for reinventing the bicycle if and when it becomes politically expedient to do so!

If this is the result of almost two decades of climate adaptation funding in a “least developed country” such as Nepal, why would any Southern environmentalist suffer angst because Donald Trump got elected president of the United States? How much worse can things get?

A few weeks ago, senior Nepali climate officials and activists, meeting under the aegis of Climate Action Network, concluded that both the 2016 Paris Agreement on climate change and Agenda 2030 of the UN Sustainable Development Goals were “unfunded mandates”—which, given Nepal’s experience with the erstwhile Millennium Development Goals, promised no meaningful funding in the future, Trump or no Trump. The climate journey from Kyoto in 1997 to Paris in 2016 has primarily achieved the undoing of the idea that national responsibilities are “common but differentiated”—so how could developing countries bargain for better, more meaningful climate funding even if Hillary Clinton had been elected president?

Northern nongovernmental organizations—with a few exceptions, such as Oxfam and Greenpeace—are of no help either. Most are more preoccupied with raising funds to operate their own large outfits than with campaigning meaningfully for environmental sanity. Essentially, they have been tamed and domesticated. I remember an activist from the International Rivers Network ruefully telling me in 1999 that he wished Bill Clinton had lost the presidential election in 1992 and George H.W. Bush had won. Surprised, I asked him why. He told me that if Bush had won, it would have been clear who he was fighting against. As things stood, activists were told to soften their campaigns and not cause too much embarrassment because “now we have Al Gore in the White House”—and donors were discouraged from funding activists who were too aggressive.

There is a message here for the Trumpian times in which we live. If millions of women can stage an inspiring march for their rights, and if efforts to repeal Obamacare can be challenged at town hall meetings, perhaps the environmental activists of the North can stop primarily raising funds and instead turn out at town halls themselves or stage a million-environmentalist march of their own. If the environmental activists of the North wake up from their domesticated, activism-free, procedural slumber, Donald Trump will have been just what the doctor ordered for climate change, no matter how bitter the medicine might be. If activists don’t wake up, it makes no difference—to us in the Global South—who occupies the White House.

President Trump has indicated that he will cut billions of dollars of funding for UN climate programs. Such a step could have a major impact on the synthesis of international climate research—a function performed by the Intergovernmental Panel on Climate Change (IPCC)—and could undermine science-based policy making. It wouldn't have a large impact on total global climate finance flows, which are largely driven by private capital markets—but the implications for climate adaptation programs in developing countries could be serious. A reduction in US funding could also spur doubt in the bottom-up pledge-and-review approach to climate that underlies the Paris Agreement.

Historically, the United States has been one of the biggest funders of the IPCC, the international scientific authority on climate change. Reduced US funding for the panel would leave a large gap that could potentially limit the ambition of the IPCC's next reports—though other countries might step in to fill the gap. Perhaps the most damaging consequence of reduced US funding for the panel would be the anti-science signal that Washington would send. Climate skeptics would applaud the shift away from peer-reviewed international scientific consensus.

If on the other hand the United States reduced the funding it devotes to sending delegates to the UN Framework Convention on Climate Change (UNFCCC), US absence from UN climate conferences would undermine international trust that Washington will follow through on its emissions pledges. When the United States signed on to the Paris Agreement, it provided an important signal about the goal of holding global warming to 2 degrees Celsius; US absence from UN climate conferences would dilute the power of that signal. If Washington reduces its funding for international climate projects, and either pulls out of the agreement or fails to meet its emissions pledges, the implications would be very damaging for the agreement, which hinges on bottom-up climate action.

Where global climate finance is concerned, the overall picture wouldn't change much if the United States reduced or eliminated transfers to the Green Climate Fund—the financial mechanism of the UNFCCC—or to other international funds. The Green Climate Fund aims to be the main channel for the $100 billion in contributions that developed countries have pledged for climate change mitigation and adaptation in developing countries. If the United States backtracked on its $3 billion pledge—by far the largest national pledge to the fund—the focus for meeting the $100 billion goal would shift to private-sector contributions. But it has long been a US negotiating stance that the fund should also depend on private-sector contributions.

Beyond the arbitrary $100 billion goal, the reality is that the green investments necessary for meeting the 2-degree target will require trillions of dollars, not billions. These trillions are contingent on shifts in private capital markets—shifts that can be stimulated by government spending but are not wholly reliant on it. Private investment in green infrastructure can also be stimulated through government de-risking moves such as providing guarantees or establishing insurance schemes.  In the end, financing from all sources—public, private, and a myriad of combinations—will be necessary for the transition.

Private capital markets are starting to signal a growing awareness of climate risk. Institutional investors are making low-carbon investment pledges. Issuance of green bonds doubled in 2016 and is predicted to double again in 2017. This reflects growing appetite for investment products that consider climate risk. Approximately 40 percent of green bonds have supported climate action in developing countries via multilateral and bilateral development banks.

Still, a cut in US funding for the Green Climate Fund would be bad news for climate adaptation in developing countries, where the majority of adaptation funding comes from public sources. The United States previously pledged to double its overall adaptation financing—and if this pledge is unfulfilled, greater stress will be placed on other developed countries. Within the Green Climate Fund, the aim is a 50/50 split between funds for mitigation and adaptation financing. If the portion of US funding for adaptation shrinks, this implies that other countries would need to fill the adaptation gap. Developing countries already pressure the United States to make amends for the greenhouse gases now in the atmosphere for which it is responsible—reduced financial transfers from the United States would exacerbate this tension.

If the United States pulls funding from UN climate programs such as the IPCC and the Green Climate Fund, and pulls US negotiators from the UNFCCC process, Washington would send a backward signal regarding scientific progress and the credibility of domestic actions pledged under international agreements. But reduced US funding would be unlikely to slow the growing trend toward private green investment.

Reducing carbon emissions within the United States is far more important than the little bit of money that Washington provides for international climate finance.

The big bad wolf will come—for so long, this threat has dictated the global narrative about climate change. The world has tiptoed around curtailing carbon emissions at the necessary speed and scale. Global agreements have been bent out of shape to appease climate deniers. In Paris, nations negotiated a weak, unambitious agreement for the sake of reaching any agreement at all. All this—because the world believed that attempting more would rile up those, particularly in the United States, who oppose climate action.

Washington, as the price of its participation in climate negotiations, has forced the multilateral world to change its rules. It has insisted on reconfiguring agreements, mostly reducing them to a lowest common denominator. Then, after the world reaches weak, worthless, and meaningless deals, it walks out. All the while, powerful civil society and media organizations in the United States hammer the point that the world must accommodate and be pragmatic toward Washington. The common refrain has been that "Congress will not accept ambitious climate action"—or, even worse, "the Republicans will come."

This happened at the Rio Earth Summit in 1992—when, after much "accommodation" of the United States, the agreement to combat climate change was whittled down; emissions targets were removed; and few specific actions were agreed. Then came the Kyoto Protocol—the first and only framework for specific action to reduce emissions. But at the Kyoto conference itself in December 1997, when climate change proponents Bill Clinton and Al Gore were in office, the agreement was reduced to nothingness. The compliance clause—meant to penalize countries that would not meet their specified targets—was removed; cheap methods for reducing emissions, such as carbon offsets, were added; and loopholes were included. All of this was supposed to bring the United States on board—but Washington rejected the agreement.

Later came Barack Obama and his welcome commitment to climate action. But even under Obama, what did the United States do? It forced the world to completely rewrite the Paris climate agreement so that, instead of establishing emissions targets based on science and past national emissions, it establishes only voluntary goals. This will lead to weak action and will not limit global temperature increase to 2 degrees Celsius, never mind 1.5 degrees. All this watering-down was meant to please American politicians who said that they would never sign a global agreement binding them to specific actions or targets—or accept an agreement establishing equitable rights to the common atmospheric space. The Paris Agreement has fatally and fundamentally erased nations' historic responsibility for greenhouse gases already in the atmosphere and has reduced the notion of climate equity to sweet nothings.

At times, the world has censored itself where climate is concerned. It has failed to tell the truth about the urgency of climate change; about the need for drastic, effective action by the world's rich and powerful countries; and about the need for many to change their lifestyles so that efficiency gains are not lost to greater consumption. This restraint has been intended to gain the participation of the country most unwilling to participate—the proverbial (and now the real) big bad wolf.

The big bad wolf has come to power in the form of Donald Trump—who, even among those who oppose climate action, is a different shade of gray. He denies that climate change is happening. He is certain that the United States needs to dig and burn more coal, which would increase greenhouse gas emissions. He is bad, bad news for the climate.

Meanwhile, as shown by extreme weather events around the world, climate change is happening now. It is impacting the poorest people in the world—those who have contributed least to the emissions already in the atmosphere. It is devastating the lives of farmers and other vulnerable populations. The fact is that the world needs to do much more to address climate change than is envisioned in the weak and meaningless Paris deal.

But now that the big bad wolf has come to power, what will the world do? That is the zillion-dollar question. Will the world call a spade a spade? Or will it engage in more meaningless self-censorship in an attempt to woo those who don't wish to be wooed—and, in my opinion, cannot be changed?

I can't speak for US civil society, which seems to relish playing Beltway games. But I do know that humanity has no option but to push for greater action on climate change. In India, the priority is to reinvent growth—that is, to achieve growth without pollution. We must find ways to urbanize without first investing in private transportation systems and only then investing in cleaner air. We must find ways to provide the poor with clean energy without first investing in electricity grids that leave the poor without energy access. These are our imperatives, and we will push. Countries like India have the opportunity to do growth differently—and we must.

But the coming of Trump will make all the boys want to be men. As protectionists do battle against globalization, many will wish to dig deeper and harder to get at the last shred of coal. "Forget the crisis of climate change," some will say. "That's tomorrow's problem." Environmentalists, particularly in the emerging countries of the South, will only find it harder to make their arguments.

But in the Trump era, environmentalists will no longer scare themselves into restraint and self-censorship. The big bad wolf is not coming—it is here. The only way forward now is to confront reality: The world is getting warmer, and an insecure and potentially catastrophic future awaits. Only when we face these realities can we hope to change the future.

Donald Trump's presidency raises an important question for the future of international climate finance: If the United States eliminates its public contributions to international initiatives for climate adaptation and mitigation, how much will developing countries suffer?

First it's necessary to understand how large a role the United States plays in climate finance today. According to the most recent numbers provided by the US government to the UN Framework Convention on Climate Change, the United States over the course of fiscal years 2013 and 2014 committed $5.5 billion to climate finance for developing countries. That is only about 7 percent of the $76.2 billion in public climate finance that, according to estimates by the Climate Policy Initiative, flowed from developed to developing countries over calendar years 2013 and 2014. This is no small contribution for a single country to make. But the US share of climate finance isn't large enough to cause systemic disruption if it suddenly decreases.

There's another important angle to consider—how would reductions in US international climate funding affect the world's prospects for achieving the urgent goal of shifting toward 100 percent renewable energy?

Again, US contributions to renewable energy efforts in the developing world are modest compared to other sources of funding. In 2013 and 2014, the three largest emerging economies—China, India, and Brazil, nations collectively responsible for more than 30 percent of global greenhouse gas emissions—invested $171.2 billion in renewables. This investment by just three countries is more than 30 times greater than the amount allocated by the US government to all aspects of international climate finance. And developing countries' investments in renewables are growing fast.

So it is possible to argue that US withdrawal from international climate finance would not have a massive direct impact in economic terms. But political considerations must also be taken into account. If Trump fails to meet the already existing US climate finance commitments, developed countries’ goal of providing the developing world $100 billion in climate finance each year by 2020 could be hampered. At last November's climate conference in Marrakech, several key countries—including China, Germany, and France—highlighted the urgency of proceeding with climate action and indicated that attempts to move backwards on national commitments would not be welcomed. With climate change having become a top diplomatic issue, the United States could face reprimands from other countries.

Beyond that, reductions in US climate funding would be a blow against climate justice. Reductions would harm the poorer countries that have contributed little to climate change but stand to suffer the most—if they don't receive fair and adequate support. Climate finance saves lives, homes, and livelihoods, and in that sense every dollar counts.

In short, the Trump administration can do significant damage on the international climate finance front, harming some of the most vulnerable countries in the world, and harming itself politically. But the US government alone cannot reverse the tide. And where the expansion of renewable energy is concerned, the consequences of altered US policy will be small—because the vast majority of investments in the sector do not rely on public international climate finance.

Already, less than two weeks after President Trump was sworn into office, it's clear that he intends to act in accordance with his previously stated antipathy toward the science of human-induced climate change and toward collective global action to tackle it. For people in my home country of Bangladesh, two aspects of the Trump administration's likely climate policies stand out as significant: the size of US contributions to global climate finance and the scale of US greenhouse gas emissions.

Bangladesh is a poor, densely populated country. Its 156 million people are crowded into a land area of just 130,000 square kilometers. Most of Bangladesh is situated amid the low-lying deltas of two of the world's mightiest rivers—the Ganges and Brahmaputra. These deltas are among the world regions most vulnerable to the adverse impacts of climate change, including sea level rise, intensified flooding, and cyclones. Bangladeshis have as much reason as any people in the world to perceive climate change as a serious threat and to care about climate policies in other countries.

With Trump in charge, the United States is likely to withdraw the funding that, under President Obama, it promised to provide developing countries such as Bangladesh for climate mitigation and adaptation programs. The money will be missed, to be sure—but it's likely that other developed countries will plug the gap, and that the $100 billion a year collectively pledged by developed countries under the Paris Agreement on climate change will in fact be delivered. The US share of the $100 billion was to have been a few billion a year; in the end its absence will not make a huge difference.

The second probable change under the Trump administration, more important by far, is that Washington will refuse to abide by the Obama administration's commitment to reducing greenhouse gas emissions. Far from continuing the domestic climate policies enacted by Obama, Trump will seek to revert to a fossil-fuel–based approach to energy and transportation—an approach on which the United States relied as it became a superpower in the previous century. US refusal to reduce emissions will complicate the already difficult task of keeping global temperature increase since the Industrial Revolution to less than 2 degrees; limiting the increase to 1.5 degrees, an aspiration identified in the Paris Agreement, may become impossible. Nevertheless, even if the United States reneges on its emissions commitments, nothing prevents other countries from honoring their own. 

Ultimately, the most important outcome of Trump's climate policy may not be intuitively obvious: As the rest of the world races forward into the post–fossil fuel age, the United States may get left behind. The clear winner in that scenario would be China. Trump is dropping the mantle of US climate leadership, and Beijing is well positioned to pick it up.