‘It takes four to five years even to secure a loan’
Ireland is donating millions of euro as part of a funding initiative that makes poor countries jump through impossible hoops and wait years for financial help with the climate crisis.
The system is so dysfunctional that Ireland mostly bypasses it and sends money through separate channels.
The revelation comes as governments attending the COP26 climate summit in Glasgow haggle over a $100bn annual climate finance fund for developing nations.
They agreed to create the Green Climate Fund more than a decade ago but have been slow to hit the target.
COP26 president Alok Sharma said yesterday he believed the goal would be reached in 2023.
On Tuesday, Taoiseach Micheál Martin confirmed in his address to the summit that Ireland would assist by more than doubling its annual contribution to the fund by 2025.
Reaching $100bn has become a benchmark by which the success or failure of COP26 is being judged.
But countries that depend on grants and low-cost loans from the fund to help them cope with the impact of climate change and adopt renewable energy and clean technologies say they have severe difficulty accessing the money that already exists.
Sonam Wangdi, chair of the Least Developed Countries (LDC) Group at the COP26 negotiations, told the Irish Independent a multitude of different eligibility criteria, application methods and assessment procedures applied and there were long delays in getting approval.
“Access is a huge problem,” he said. “For us it takes four to five years even to secure a loan.
“If you have a climate disaster and you apply for loan, and it takes four or five years, it doesn’t make sense.
“You are not able to help your people, not able to rebuild or secure livelihoods. We end up borrowing [on commercial markets] and most LDCs are getting in debt traps.”
Mr Wangdi said the system needed to be streamlined.
“It’s a goal from the LDCs’ perspective to have a simplified process where the requirements are harmonised, there is one template for all and you could get your loan in a turnaround time of six months or a year,” he said.
“The money is sitting there and yet it is not given out, so it is very frustrating.”
Conor O’Neill of Christian Aid Ireland said Mr Wangdi accurately described what was happening.
“The idea was to have a central Green Climate Fund where developing countries would have their own representatives coordinating the flows of money, so there would be a really transparent system in place,” he said.
“Instead the money goes through more than 100 channels and very few are monitored in meaningful ways.
“There is research to show that only 60pc of climate finance available was used between 2002 and 2018, so while there is a lot of emphasis on increasing the size of the fund, there is an equally important issue in ensuring the countries that need it can access it.”
Campaigners say the lack of harmonised regulations and monitoring allows donor countries to fudge their contributions by mixing in private sector loans and loans with restrictive conditions, and reclassifying portions of existing overseas aid budgets as climate finance.
Mr O’Neill said Ireland’s approach was praiseworthy as funding was in the form of grants, not loans, and it was almost all provided through trusted Irish Aid channels.
“We would still have an issue with the quantity of Ireland’s contribution. We think it should be €500m a year, but on the quality side, it’s an example to follow.”
He added, however, that it would still be preferable if the centralised Green Climate Fund could be used.
“If it operated as originally planned, it would have direct involvement of the countries who use it and it would be much more democratic.”
Ireland’s donation to climate finance this year was €93m, but the Government has pledged to increase this to €225m by 2025.
Minister for Overseas Aid Colm Brophy, who is in Dubai visiting the Irish pavilion at the Dubai Expo 2020 event, but who will attend COP26 next week, said he was aware of the barriers for countries trying to tap into funding.
“Developing countries have faced issues with accessing international climate funds,” he said in a statement.
“This challenge is particularly acute for least developed countries and small island developing states which are the most vulnerable to climate change impacts.
“Ireland raises these accessibility issues with international climate funds and actively seeks solutions.
“We also work directly with our partner countries to help build their capacity to access financial support through international climate funds.”
Minister Brophy said Ireland had recently co-founded a ‘Champions Group on Adaptation Finance’.
“Addressing accessibility issues of developing countries to international finance is a key objective of this group,” he said. He is due to speak on the topic at COP26 next Monday.
Climate finance dominated the summit agenda yesterday, with multi-billion euro pledges on private and public-private investments in renewables and green technologies being finalised. Activists argue, however, that private investors demand a return on their money and that poor countries need more public funding to safeguard their development.