‘Climate Finance’ Saving the Planet, One Ice Cream at a Time

Billions of dollars earmarked for tackling so-called climate change in the developing world have been spent on building new coal and gas-fired power stations, along with airport and hotel developments. As part of the Paris Agreement signed in 2015, wealthy countries pledged to earmark $100 billion a year for climate action in developing countries and even though this target hasn’t been met, a good deal has been set aside nevertheless. ($83.3 billion in 2020.) Alas, not all of it has been spent on funding activities or businesses that could reasonably be described as helping developing countries reduce their climate emissions. For instance, the Italian contributions have helped a retailer open a chain of chocolate and gelato stores across Asia, while Belgium’s donations have funded a romantic film about a green activist and a rugby-playing logger set in a rainforest.

Of course, you can argue that these are all better uses of the money than funding wind turbines and solar panels, which will to little to ameliorate poverty in the Global South. But is it really necessary for the Italian state to promote ice cream shops around the world, given the excellent track record of individual Italians in this particular sector? The annual $100 billion commitment was made by 38 countries, as well as the European Union, but there are no guidelines as to what it should be spent on and different countries make up their own rules.

All of these embarrassing disclosures are contained in a recent database of ‘climate finance’ compiled by Reuters in collaboration with researchers from Big Local News, a non-profit journalism organisation at Stanford University. The database was created by extracting information from UN reports filed by most of the countries signed up to the pledge. It covers almost 44,000 contributions from 2015 to 2020, the most recent year for which reports are available (you can find it here).

The two largest contributors are the U.S. and Japan, with the latter granting itself a good deal of latitude when it comes to defining ‘climate finance’. In total, Japan has lent at least $9 billion for projects that rely on fossil fuels, according to the Reuters review. This includes the Matarbari Ultra Super Critical Coal-Fired power station in Bangladesh. Japan provided $2.4 billion in ‘climate finance’ for this plant, which is expected to come online in 2024. The plant will alleviate local power shortages, but if carbon dioxide is your thing, it will add 6.8 million tons of the gas to the atmosphere every year. This is more than the city of San Francisco reported in emissions for all of 2019, according to Reuters.

Apparently, Japan considers Matarbari a project worth of ‘climate finance’ because it uses Japanese technology that is said to generate more energy with less coal. In addition, Japan has provided loans totalling at least $776.3 million to finance three airport developments including the Borg El Arab airport in Egypt. The project is reported to be important for the local economy with Mohamed Nasr, Director of Climate, Environment and Sustainability in Egypt’s Foreign Affairs Ministry, observing: “People have to fly.” The Japanese, meanwhile, refer to the project as an “Eco Airport”. In a June 2021 press release, a Japanese Government spokesperson said the country’s expenditure of $59 billion on ‘climate finance’ between 2015-2020 was more than most other developed countries. “Japan will continue to lead the global effort to tackle climate change,” it boasted.

In 2019, the United States agreed to lend $19.5 million to developers of a Marriott hotel franchise in Cap-Haitien, Haiti. The plan called for new rooms, an infinity pool, a rooftop restaurant and an improved gym. ‘Climate finance’? You betcha. A U.S. State Department spokesperson justified the loan as counting towards the Paris Agreement commitment because it included stormwater control and hurricane protection measures. Meanwhile, Belgium threw in some cash to help fund a love story between a rugby playing logger working to clear Argentinian forests who falls in love with an environmental activist. The grant was classified as ‘climate finance’ because the movie “touches on deforestation”. Italian chocolatier Venchi opened dozens of new chocolate and ice cream stores across Asia backed by a public-private company helping Italians expand overseas. Naturally, Italy claimed the $4.7m equity was ‘climate finance’.

From 2015 to 2020, notes Reuters, 35 governments reported a total of more than $182 billion in grants, loans, bonds, equity investments and other contributions towards ‘climate finance’ in the developing world. However, more than $65 billion of this hasn’t been properly accounted for so it’s hard to say what the money’s been spent on. Some of the amounts didn’t even specify which continent the money has been spent in. The Reuters researchers also found that the receiving countries “sometimes couldn’t say how the money was spent”.

As is often the case with foreign aid, virtue goes hand-in-hand with practical politics, and ‘climate finance’ is little different. Imprecise reporting requirements in many countries allow deals to be tied to political and economic interests. The more cynical might say that some of the aid is little more than a transfer of wealth from poor people in rich countries to rich people in poor countries. This is the wild, wild west of finance, says Mark Joven, a Philippines finance official who represents his country at UN climate talks. “Essentially, whatever they call climate finance is climate finance,” he added.

Chris Morrison is the Daily Sceptic’s Environment Editor.