Wealthy countries alone cannot close funding gap for climate change

Public aid and funding from governments of developed countries alone won’t be enough to shut the funding gap on climate change initiatives in developing countries, IMF chief Kristalina Georgieva told CNBC.

More private investments are needed to assist developing countries to satisfy their climate change targets, said the managing director of the International Monetary Fund.

“We’ll never close it if we depend on the generosity of wealthy countries, since it is simply too big to be close [sic] with public money,” Georgieva told CNBC during an interview at COP27 climate change summit in Egypt’s Sharm el-Sheikh.

“So most significant here, and within the months to follow, is to work relentlessly to create opportunities for personal investments to happen within the developing world.”

Probably the most vulnerable people and communities are paying the worth. That is unacceptable.

António Guterres

UN Secretary-General

Ahead of the summit, the United Nations called for “increased funding and implementation of actions” to assist vulnerable nations adapt to the climate emergency.

“Climate change is landing blow after blow upon humanity, as we saw throughout 2022,” said the United Nations Environment Programme’s Executive Director Inger Andersen, citing the devastating floods in Pakistan.

Vulnerable and developing countries will need between $160 billion and $340 billion by the tip of the last decade to make climate-related changes, and as much as $565 billion by 2050, the UN report said.

Public aid and funding from governments of developed countries alone wouldn’t be enough to shut the funding gap on climate change initiatives in developing countries.

Sean Gallup | Getty Images News | Getty Images

“Adaptation needs within the developing world are set to skyrocket to as much as $340 billion a 12 months by 2030. Yet adaptation support today stands at lower than one-tenth of that quantity,” U.N. Secretary-General António Guterres said.

“Probably the most vulnerable people and communities are paying the worth. That is unacceptable.”

Why advanced nations should fight climate change

It’s within the interest of advanced economies to assist developing countries meet their climate change targets, Georgieva said, citing stability as a key reason.

“If we’re to permit climate shocks, again and again, to devastate poor countries, we contribute to instability that Europe feels very strongly, especially when migration flows increase,” she said.

Stability in developing countries also secures trade between advanced and developing countries, Georgieva said.

“If you need to have your economies export to those countries, there needs to be prosperity and stability there,” Georgieva said.

Disruptions in supply chains brought on by climate change events could pose a much bigger risk than the one posed by the pandemic, she added.

There also must be a greater push to make businesses in advanced countries accountable for emissions reduction, and taxes and regulations are levers that many governments can use, the IMF chief said.

“We have now to acknowledge that we’re way behind where we must always be to guard the wellbeing of our youngsters. When you have a look at this decade — 2020 to 2030 — we’ve to chop emissions by somewhere between 25% and 50% and emissions are still growing,” Georgieva added.