The climate-wrecking sectors, particularly the industries that are fuelling the climate crisis, are eating up billions of public funds in the Global South countries.
The climate-destructive fossil fuels and the industrial agriculture sectors are squeezing climate-hit countries for over US$600 billion in public subsidies every year, says a report of ActionAid.
The countries, including Bangladesh, provide fuel subsidies up to between 22 and 33 times the per capita level of annual public investment in renewable energy flow. As a result, the renewable energy initiatives in Global South are receiving 40 times less public finance than the fossil sector.
Farah Kabir, country director of ActionAid Bangladesh, on Friday told the Bangladesh Post that the Global South countries are already experiencing the devastating consequences of climate change. In such a situation, the governments, including the Bangladesh government, should speed up the transition to green for food and energy, such as renewable energy and agro-ecology.
“Now it is the time to overhaul our energy policies and fully commit to a just transition to renewable energy. Bangladesh must take immediate action to ensure a climate-resilient future. We must act decisively before it is too late,” Farah Kabir said this while talking to this correspondent over the new report of the ActionAid.
The report ‘How the Finance Flows: Corporate capture of public finance fuelling the climate crisis in the Global South’ was released on September 17 following a research which was carried out in partnership with independent research organisation Profundo.
The new report of ActionAid says that multinationals are benefiting from these subsidies. The climate-destructive sectors are benefiting from subsidies amounting to an average of US$677 billion in the Global South every year, money that could pay for schooling for all sub-Saharan African children 3.5 times over.
Climate finance grants from the Global North for climate-hit countries are still grossly insufficient to support climate action and the necessary transitions. Climate finance grants amount to just 1/20th of the Global South public finance goes to fossil fuels and industrial agriculture.
Saying that trillions of dollars in climate finance from the Global North to the Global South are necessary to adequately address the climate and development crises, the ActionAid in its report urged governments in the developing world to allocate more of their limited resources in ways that ‘truly serve their people’s needs’ through climate solutions for food and energy.
In its report, the ActionAid finds that the fossil fuel sector in Global South countries has been receiving an annual average of US$438.6 billion a year in publicly financed subsidies, between 2016 (when the Paris Agreement was signed) and 2023.
The report finds that the industrial agriculture sector has alone benefited from the subsidies worth a staggering US$ 238 billion a year on average between 2016 and 2021. The same industries that are causing the climate crisis and harming communities are also successfully squeezing Global South governments for the lion’s share of public finance.
The report points to corporate capture of public finance, combined with a lack of international climate finance, as some of the factors holding back climate action in some of the “countries and communities that need it most.”
Meanwhile, the failure of Global North countries to provide adequate climate finance for climate transitions means that the Global South countries are locked into harmful development pathways which destroy ecosystems, grab land and compound the injustice of climate change.
These numbers illustrate a deeply worrying pattern about the state of the planet’s finance flows, and how corporate capture of public finance is actively undermining the needs of climate-vulnerable countries, as well as global climate commitments.
According to Arthur Larok, Secretary General of ActionAid International, the new report of ActionAid exposes wealthy corporations’ parasitic behavior. They are draining the life out of the Global South by siphoning public funds and fueling the climate crisis.
“Sadly, the promises of climate finance by the Global North are as hollow as the empty rhetoric they have been uttering for decades. It is time for this circus to end, we need genuine commitments to ending the climate crisis,” said Arthur Larok.
Teresa Anderson, Global Lead on Climate Justice at ActionAid International and one of the report’s authors, said that it seems that money is the root of all climate upheaval. “The climate-wrecking industries are bleeding the Global South of the public funds they should be using to deal with the climate crisis. The lack of public and climate finance for solutions means that in climate-vulnerable countries. It is time for the Global South to stand up to the industries that are eating up their finances and wrecking the climate. We need to fix the finance flows that are fuelling the climate crisis,” Teresa Anderson added.
The ActionAid report also exposes the false narrative that fossil fuel and industrial agriculture expansion in the Global South is necessary to address food insecurity and energy poverty and to provide livelihoods and public revenue in the Global South.
Jonah Gbembre, an activist from Iriwekan in Nigeria’s Delta State where Shell’s fossil fuel extraction has had devastating local impacts, said that communities in the Niger Delta have witnessed first-hand the irreparable damage caused by oil drilling. “Rivers that support livelihoods are polluted. People are struggling to get drinking and irrigation water, and fishing is no longer possible. The flaring has caused health problems for our children. We have lost our way of life and there is no end in sight to our suffering.”
“We can’t continue to live like this. The government should be financing alternative forms of energy such as solar and wind that will not harm us,” said Jonah Gbembre.
The report calls for public finance to support just transitions from climate-destructive fossil fuels and industrial agriculture, towards people-led climate solutions that safeguard people’s rights to food, energy and livelihoods.
Scaling up of decentralised renewable energy systems to provide energy access, and gender-responsive agricultural extension services that offer training in agroecology and adaptation, says the report.
The report calls for wealthy countries to provide trillions of dollars in grant-based climate finance each year to Global South countries on the front lines of the climate crisis, including by agreeing to an ambitious new climate finance goal at COP29 that reflects this scale.
“The regulation of the banking and finance sectors to end destructive financing, with regulations that set minimum standards for human rights, social and environmental frameworks, and transformation of the international financial institutions that are pushing climate-vulnerable countries into spiralling debt,” it says.
