{"id":50000,"date":"2024-02-15T14:06:15","date_gmt":"2024-02-15T14:06:15","guid":{"rendered":"https:\/\/www.climatechangenews.com\/?p=50000"},"modified":"2024-03-11T17:41:44","modified_gmt":"2024-03-11T17:41:44","slug":"blended-finance-can-perpetuate-climate-colonialism","status":"publish","type":"post","link":"https:\/\/www.climatechangenews.com\/2024\/02\/15\/blended-finance-can-perpetuate-climate-colonialism\/","title":{"rendered":"Blended finance can perpetuate climate colonialism"},"content":{"rendered":"

‘Blended finance’ took centre stage at Cop28, with the Green Climate Fund among its supporters. But there are still major problems with the concept that must be addressed before considering any further expansion.<\/b>
\n<\/b>
\n<\/b> Blended finance is a combination of public concessional finance (i.e. with more generous terms than the market) with private or public resources. The the aim of it is to \u2018mobilise\u2019 development finance from other actors.<\/span><\/p>\n

But, as Eurodad’s new<\/span> joint report<\/span><\/a> with ActionAid shows, it can perpetuate climate coloniality through the extraction of renewable resources from the global south to power Green New Deals in the global north.<\/span><\/p>\n

Financial actors outside of recipient countries are favoured in these projects. The largest recipients of blended finance for climate action have been corporates and project developers, who got four-fifths of the finance throughout between 2019 and 2021.<\/span><\/p>\n

Problems mount<\/b> for Sahara gas pipeline, leaving Nigerian taxpayers at risk<\/span><\/a><\/p><\/blockquote>\n

A report by<\/span> Follow the Money<\/span><\/a> shows that big climate-based funds from the global north charge extractive commissions in countries which are in dire need of resources, further impoverishing their economies.<\/span><\/p>\n

The high salaries and commissions of such funds are a problematic example of who is actually profiting from the emerging privatised green climate agenda in global south countries.<\/span><\/p>\n

New debt<\/b><\/h3>\n

Furthermore, blended finance often brings new debt, which needs to be repaid, even if the beneficiaries are provided with softer terms than purely commercial loans.<\/span><\/p>\n

This can contribute towards recipient countries\u2019 indebtedness. A lack of transparency around projects, and poor\u00a0 accountability to the communities they are supposed to serve, are also pressing\u00a0 problems.<\/span><\/p>\n

Another issue is the limited amount of private finance currently mobilised by blended finance.<\/span><\/p>\n

In 2021, Development Finance Institutions financed long-term projects totalling US$13 billion supported by blended concessional finance.<\/span><\/p>\n

Argentine resistance<\/b> hinders Milei\u2019s forest and glacier destruction<\/span><\/a><\/p><\/blockquote>\n

Of this, the total volume of private finance mobilised was approximately US$5 billion, while the rest was either from the institutions\u2019 own-account ($5 billion) or from other public sources.<\/span><\/p>\n

Zambian example<\/b><\/h3>\n

Many of these issues were evident in<\/span> Zambia\u2019s Scaling Solar programme<\/span><\/a>, an initiative launched in 2015 by the International Finance Corporation (IFC) \u2013 the World Bank Group\u2019s private sector arm.<\/span><\/p>\n

To implement a solar energy project in the country, the investors received subsidies which ultimately raised the project\u2019s costs to the public.<\/span><\/p>\n

In fact, estimates show that around US$3.50 of public international finance was used to attract each dollar of private finance.<\/span><\/p>\n

Indonesia turns<\/strong> traditional Indigenous land into nickel industrial zone<\/a><\/p><\/blockquote>\n

If governments are to continue promoting blended climate finance, they need to ensure that public money could not have achieved better impacts if spent in alternative, cost effective ways. Improvements to transparency are also crucial.<\/span><\/p>\n

Ultimately, climate change has been caused by the global north\u2019s extraction and exploitation of natural resources. Blended finance must not be seen as a substitute for delivering on existing climate finance commitments and reducing emissions in the global north.<\/span><\/p>\n

Farwa Sial is senor policy and advocacy officer at the European Network on Debt and Development (Eurodad)<\/span><\/i><\/p>\n

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