President Joe Biden arrives Friday at the UN’s COP27 summit in Egypt with a climate change victory in-hand: a massive US law passed this year that experts have told CNN will go far to help transition the country to renewable energy.
Democrats’ Inflation Reduction Act contained $370 billion for climate and clean energy tax credits and new programs – the largest climate-related investment in the country’s history and a significant statement that the US is back in the clean-energy race.
But that law left out an important thing: international climate finance – funds to help poorer countries adapt to the climate crisis and grow their economies without becoming dependent on fossil fuel.
Last year, Biden pledged to contribute $11.4 billion per year to that fund, something he hoped would go a long way in helping developed nations meet the $100 billion a year they pledged to raise by 2020 and have thus far fallen short on.
Whether Biden can marshal that much funding is unclear; while senators attending COP27 told CNN they expect Congress to pass a government spending bill by the end of this year, it remains to be seen whether Biden’s full international goal will be approved.
“We would like, as Democrats, to get a lot of support for the international Green Fund or other means of providing support to transitioning economies into this bill,” said Sen. Sheldon Whitehouse of Rhode Island. “The obstacle is Republican opposition, and the Republican opposition is driven by the fossil fuel industry.”
Democratic majorities in the US Senate are already razor thin, meaning Republicans will have significant input on appropriations. And all are watching to see whether the balance of power in Congress could change after a competitive midterm election.
“The politics in Washington is always challenging on any appropriations bill,” Sen. Ben Cardin of Maryland told CNN. “I hope the House is controlled by Democrats, but it’s still going to be challenging to make funds available – we recognize that.”
A senior administration official said that while a new budget bill could pass before a new Congress takes control in January, the potentially shifting politics around the midterms puts big question mark how control of Congress could impact US climate finance in the coming years.
The US has also shied away from calls for the richest nations to create a so-called “loss and damage” fund, which would help developing countries that are most impacted by the climate crisis – yet have had little hand in creating the problem – to recover after climate disasters. The US has thus far pledged no money to the effort, though Biden’s climate envoy, John Kerry, has said he is committed to talking about a potential fund at COP27.
Kerry told reporters before the summit that “it is imperative for the developed world to help the developing world to deal with the impacts of climate.”
Even if the US is able to walk the talk this year on its domestic climate goals, it will still face questions about whether it can actually meet its global finance commitments, experts said.
“It’s not just about the U.S. and other developed nations reducing emissions. It’s also about what the U.S. does for developing countries to help them along,” said Barry Rabe, Professor of Environmental Policy at University of Michigan. “It becomes a huge challenge for Biden to explain how [the IRA legislation] will benefit other countries.”
One way the US might be able to meet its goals is by leveraging the buying power of the private sector. On Wednesday, Kerry announced a controversial plan to raise cash for climate action by selling carbon credits to companies wishing to offset their polluting emissions.
That plan was met with criticism because of the way it will be financed: carbon credits, which allow companies to pay for someone else to cut their planet-warming emissions, instead of cutting their own.
But Kerry stressed to CNN on Thursday that “that it is one of the few ways that we have” to generate the huge amount of money needed to fund the global clean energy transition.
“We desperately need money,” Kerry told CNN. “It takes trillions and no government that I know of is ready to put trillions into this on an annual basis.”
The US is not alone in developed countries that have struggled to meet their climate commitments. The United Kingdom has so far failed to deliver more than $300 million it promised last year in international climate finance, a year after that government hosted COP26.
A recent report from the governments of Canada, Germany, and the UK released ahead of COP27 found that overall, the world’s 39 richest countries are failing to meet the annual $100-billion pledge they announced in 2009. But the report noted that there has been some progress, and they are expected to meet it by next year.
In 2020, nations raised $83.3 billion toward the goal, according to a separate report from the Organization for Economic Co-operation and Development released earlier this year.
The new date nations have outlined to meet their $100 billion goal is 2023, which climate officials from Germany, Canada and the UK insisted would be met.
“Developed countries remain committed to the trajectory on the $100 billion and beyond that was set out in last year’s delivery plan – we do remain on track for delivery in 2023,” COP26 president Alok Sharma told reporters recently.
But Sharma and other climate officials acknowledged a lack of trust from developing nations about whether developed nations would indeed meet their commitments given the years of delay.
“It does very much remain the case that developed countries and indeed the whole of the global financial system, need to be doing even more and faster, to support developing nations,” Sharma said. “Ultimately this is all about rebuilding and retaining trust in the system.”
Even though developed nations have been shirking their climate finance commitments for years, the scale of need is growing as global temperatures rise. The UK, Canada and Germany report developed countries and the private sector should increase their financial commitments even more after 2025, with the private sector taking on a larger role as well.
“What this year’s progress report shows is that we’re making progress in some areas, but there are still some challenges that remain,” Canadian Minister of Environment and Climate Change Steven Guilbeault said. “How can developing countries trust we can mobilize more money post-2025?”