NAIROBI, Sep 18 (IPS) – A report investigating corporate misappropriation of public funds has accused industries that are fuelling the climate crisis, including fossil fuels, of being a drain on public coffers in the global South, squeezing up to $700 billion out of governments every year in public subsidies.
A report released on September 17, “Money Flows: How Corporate Stealing of Public Funds Fuels the Climate Crisis in the Global South,” found that climate-destroying industries benefit three and a half times more from funding that could be used to educate children in sub-Saharan Africa, yet renewable energy projects in the Global South remain underfunded, receiving 40 times less public funding than the fossil fuel industry.
ActionAid has urged governments in developing countries to allocate more of their limited resources to climate solutions in the food and energy sectors that “genuinely meet the needs of their people”, while analysis of funding flows shows that the region’s fossil fuel sector has received a whopping average of $438.6 billion in subsidies annually between 2016 (the year the Paris Agreement was signed) and 2023.
The report found that the industrial agriculture sector alone received an average of $238 billion in government subsidies annually from 2016 to 2021, but this continues to fuel the destruction of nature.
It also found that the industries that are causing the climate crisis are draining most of the public funds, including in “climate crisis countries” such as sub-Saharan Africa, while initiatives to provide climate solutions remain severely underfunded.
The report notes that corporate misappropriation of public funds and a lack of international climate finance are delaying climate action in some of the “countries and communities that need it most.”
While it also finds that climate finance from the Global North to countries affected by climate change remains woefully inadequate to support climate change responses and essential transitions in the Global South, the report provides examples of several African countries where policies are at odds with practical realities in their responses.
These include fossil fuel-rich countries like South Africa and Nigeria, which have been found to provide massive subsidies to low-reliability sectors.
According to Action Aid, countries including Bangladesh in South Asia, for example, provide fuel subsidies that are up to 22-33 times higher than the “per capita level of annual public investment in renewable energy”.
As a result, public funding for renewable energy initiatives in the Global South is 40 times less than public funding for the fossil energy sector, and climate finance is only one-twentieth of the public funding for fossil energy and industrial agriculture in Global South countries.
“Trillions of dollars in climate finance are needed from the Global North to the Global South to adequately address the climate and development crisis, but governments in the Global South must allocate limited resources in a way that truly meets the needs of their people, including through climate solutions for food and energy,” the report says.
“Meanwhile, the failure of countries in the Global North to provide adequate climate finance for the climate transition means that countries in the Global South are locked into harmful development paths that destroy ecosystems, steal land, and exacerbate the injustices of climate change,” the report added.
Citing the example of Zambia in southern Africa, it says the country’s industrial agriculture sector has consumed 80% of the national agricultural budget through subsidies for “climate-damaging synthetic fertilizers and commercial seeds” by 2023.
“Meanwhile, only 6 percent of the USDA’s agricultural development and productivity programs were used to support farmers to adopt agroecological, nature-friendly farming practices that naturally enhance soil fertility and reduce reliance on pesticide inputs.” This explains the contradiction.
Zambia’s neighbouring country Zimbabwe has issued a public policy statement supporting a shift towards agroecology, a shift evidenced by the fact that this year it will spend 34% of its national agricultural budget to support farmers adopting practices that stop using climate-damaging pesticides.
Despite this, Zimbabwe still spends about 50% of its total national agricultural budget on subsidizing industrial agricultural inputs such as fertilizers and hybrid seeds, showing that industry continues to control the sector and budget, and that there is potential for more public finance to be used for the public good.
The Gambia and Senegal in West Africa and Brazil in South America also appear to be engaging in contradictory practices. These countries are making public investments in renewable energy, and the scale of these investments is almost the same as the public subsidies per capita for fossil fuels.
In Gambia, public investment in renewable energy is more than four-fifths of the public funding for fossil fuels, while in Brazil and Senegal, renewable energy investment is two-thirds of the fossil fuel subsidies.
“Kenya’s ambition to become a global leader in renewable energy is evidenced by the fact that the country’s per capita investment in renewable energy outpaces public subsidies for fossil fuels. However, recent protests in Kenya over the government’s decision to reduce fossil fuel subsidies highlight the importance of feminist just transition principles,” the study said.
“The shift in public funding must be carefully sequenced to protect the rights of those living in poverty, especially women. Reducing fossil fuel subsidies must target wealthy corporations first. Progressive policies must be transformed once accessible and democratic alternatives and comprehensive social protections are available to low-income people,” the analysis concluded.
The report also found that governments in the Northern Hemisphere are disproportionately contributing to the climate crisis, with rich countries spending an average of $239.7 billion a year in fossil fuel subsidies, despite having just a quarter of the world’s population.
ActionAid laments that public investment in renewable energy in the Global South is currently at an average of $10.3 billion per year, and, more seriously, points out that renewable energy investment in the Global South is in decline, having more than halved from $15 billion in 2016 to $7 billion in 2021.
The report urges governments to accelerate the transition to green, resilient, democratic and people-centered climate solutions for food and energy, including renewable energy and agroecology. “The need for a global transition is even more urgent for countries in the Global South that are already experiencing the devastating consequences of climate change.”
According to Arthur LaRock, executive director of ActionAid International, the report helps further expose the “parasitic” behaviour of wealthy corporations.
“They are siphoning public funds and fueling the climate crisis, which is killing lives in the Global South. Sadly, the promises of climate finance to the Global North are as hollow as the empty rhetoric they have been chanting for decades. It is time to end this circus. We need a real commitment to ending the climate crisis,” he said.
Teresa Anderson, ActionAid International’s global lead for climate justice and one of the report’s authors, said the report also exposed the “false narrative” that fossil fuels and the expansion of industrial agriculture in the global South are needed to address food insecurity and energy poverty and provide livelihoods and public revenues.
“Money seems to be the root of all climate catastrophe. Climate-destroying industries are diverting public funds from the global South that should be used to address the climate crisis. “Because public and climate finance for solutions is lacking, renewables in climate-vulnerable countries receive 40 times less public funding than the fossil fuel sector,” she added.
It’s time for the poor to take action against industries that are draining our finances and destroying our climate.
The report recommends that public resources should be used to support a just transition away from climate-destroying fossil fuels and industrial agriculture, and to support “people-led climate solutions that protect people’s rights to food, energy and livelihoods.”
We must also invest in expanding distributed renewable energy systems to provide energy access and in gender-responsive agricultural extension services that provide training in agroecology and adaptation.
The agreement calls on wealthy countries to “provide trillions of dollars in grant-based climate finance each year to countries in the Global South on the front lines of the climate crisis,” including agreeing ambitious new climate finance targets at COP29.
It also calls for regulation of the banking and financial sector to end destructive financing, including by setting minimum standards on human rights, social and environmental frameworks and transforming international financial institutions that are trapping climate-vulnerable countries in “spiral debt.”
IPS UN Secretariat Report
Follow @IPSNewsUNBureau
Follow IPS News UN Bureau on Instagram
© Inter Press Service (2024) — All rights reservedOriginal Source: Inter Press Service
