Realizing the goal of spending $100 billion per year by 2020 to address climate change requires investments from leading economies, development banks and the private sector, according to new projections. Wealthy nations alone cannot foot the bill, according to a paper from the World Resources Institute.
One business already stepped up. Swedish furniture maker Ikea announced its intention to spend €1 billion ($1.12 billion) on climate change mitigation over the next five years. Nearly half of the money, €400 million, will support the developing countries most impacted by climate change.
“Climate change is one of the world’s biggest challenges and we need bold commitments and action to find a solution,” said IKEA head Peter Agnefjall. “That’s why we are going all in to transform our business, to ensure that it is fit for the future and we can have a positive impact.”
The World Resources Institute paper describes four scenarios where the $100 billion goal is achieved. They escalate from just wealthy countries contributing and increasing contributions by 25 percent each year to a wide range of contributors where low growth is needed. If the best case scenarios play out, there will be $109 billion to $155 billion in climate financing available by 2020.
Now, it is a matter of getting more commitments like Ikea’s.
“While $100 billion is not sufficient on its own to create a low-carbon transformation, it is an important political goal to signal developed countries’ are committed to scaling up climate finance,” said Athena Ballesteros, director, sustainable finance initiative, World Resources Institute, in a news release.
The $100 billion goal stems from a commitment made in 2009 by countries attending the United Nations Framework Convention on Climate Change in Denmark. The next set of negotiations will take place in Paris at the end of this year. If all goes well, we will see a global agreement to reduce carbon emissions and slow climate change. A key component to its success is money.
The money is particularly important for low- and middle-income countries – places where climate change is already having the greatest impact and limited resources exist to deal with the problem. Waiting too long to act will have devastating consequences for the world’s most vulnerable people, warned the U.N.’s Intergovernmental Panel on Climate Change, last year.
“We have the means to limit climate change,” said R. K. Pachauri, Chair of the Intergovernmental Panel on Climate Change, in November. “The solutions are many and allow for continued economic and human development. All we need is the will to change, which we trust will be motivated by knowledge and an understanding of the science of climate change.”
The burden of realizing such change falls on the wealthiest countries of the world because they are the largest emitters of carbon and best off financially to deal with global climate change. As Charles Kenny put it in Bloomberg last year:
People who use less electricity than the average American refrigerator, who have incomes one-fiftieth those of the U.S., and who die of conditions that can be cured by antibiotics that cost cents should not be asked to sacrifice even more today for the sake of tomorrow. They are sacrificing enough already.
The commitments made in Copenhagen nearly six years ago are nonbinding and determined by individual countries. There is not even agreement on what counts for meeting the $100 billion goal. Donor countries want to count contributions from all parties while developing countries see public finance as the only flow that should really count. The paper recommends taking a middle point of view and uses its projections to show how a variety of finance sources can achieve the spending goal.
But the money is only a part of a larger discussion. The December meeting in Paris will get into the dirty details of global policies. Ikea is stepping up on the finance side. With other companies follow? Money is necessary to make the work, but throwing a lot of money in the wrong places is an equal concern.