Page 11 - IB November 2023

Climate Change

Escaping flooding in the Cook Islands.

advisors embedded in-country. With implementing partner money to countries for climate and sustainable development
Global Green Growth Institute (GGGI), CFAN placed its first needs is broken.
cohort of advisors with governments in Fiji, Kiribati, Papua Secretary-General Antonio Guterres has referred to the
New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and international financial system as “short-sighted, crisis-prone,
Vanuatu. In their first year, these advisors helped to unlock and bear(ing) no relation to the economic reality of today”,
US$61 million in climate financing to support resilience, with noting that it was created before climate change even
an additional US$352 million in the investment pipeline. existed.
The model has proven successful enough that Australia is Gutteres has said: “High financing costs largely drive
funding these advisors for an additional three years, while unsustainable national debt burdens. Even before the recent
an anonymous philanthropic donor has provided support for surge in interest rates, least developed countries borrowing
four additional Pacific advisors, who will be onboarded in from international capital markets faced rates of up to 8%
partnership with the Pacific Community (SPC). compared to 1% in many wealthier countries. When it comes
Apart from working to navigate the complexities of the to climate finance, this can translate into heavy costs beyond
climate finance system for their host countries, CFAN advisors what climate action already requires.
help countries build long-term capacity by training local “In 2019-2020, over 60% of climate finance entailed
practitioners. All of which makes the CFAN team highly borrowing funds, or around $384 billion. Only $47 billion came
qualified to make observations on the problems in the region. with low cost or concessional interest rates. No-cost grant
Dr Jale Samuwai is a manager with the United States-based finance was only $36 billion.”
Rocky Mountain Institute (RMI), which hosts and coordinates Samuwai says loans are becoming a “much more
CFAN. He points out the biggest problem is the divide between prevalent instrument for delivering climate finance, adding
developing and developed countries over what constitutes unsustainable debt burdens on developing countries,
climate finance. especially the low-income ones.”
“The term climate finance was never consistently defined.
Once you lock down a definition, that means allocation of A series of hurdles
rights and responsibilities. And that’s a conversation that The cost of funds is only one hurdle to getting climate
developed countries don’t want to engage in. They would funds.
rather have [the definition] loose, so that they can play For starters, before even making an application to a fund
around with the term and finance as they see fit. A definition such as the GCF, countries must get accreditation with these
would provide clarity on what kind of sources and instruments bodies—no easy task.
(e.g., grant vs. loans) will be accepted as climate finance.” Karlos Moresi is Programme Adviser on Resilience
The United Nations says the current system of lending Development Finance with the Pacific Islands Forum

Islands Business, November 2023 11