Understanding the Stakes of Climate Talks for Countries in Conflict

What is happening?

As delegates gather in Dubai for the 28th iteration of the UN Climate Conference, or COP28, global efforts to stem climate change and offset its worst effects are falling woefully short. States have failed to meet targets set by the 2015 Paris Agreement to keep temperatures from rising 1.5 degrees Celsius above pre-industrial levels and to raise funds for countries hardest hit by climate change, according to a UN report published in September. The horizon looks more ominous still when one considers that around half the countries most vulnerable to the climate’s increasing volatility are also grappling with armed conflict. The Horn of Africa has suffered from unprecedented drought, while Libya and South Sudan have endured devastating floods. Somalia has seen both, as has Afghanistan, which is getting precious little help with the pariah Taliban regime exercising de facto power in Kabul. Increased funding alone will neither prevent further instability nor protect these or other war-torn countries from the impact of climate change. But funding for climate adaptation and resiliency efforts is the best hope for warding off the most dismal potential outcomes.

What will COP28 focus on, and what relevance will it have to conflict-affected states?

The climate conference in Dubai has two main concerns. The first is to improve on the 2022 conclave’s disappointing failure to reach agreement on cutting carbon emissions. The emissions discussion could be acrimonious, not least because the BBC has reported that the UAE used preparatory events to secure deals for its national oil and gas companies, an accusation the government denies.

The meeting’s second main line of effort is to sharpen COP27’s focus on adaptation and resilience in places where climate change is already beginning to bite – many of which are also plagued by deadly violence. As Crisis Group has calculated, these doubly disadvantaged countries receive a disproportionately small amount of climate finance – ie, funding to help them deal with the effects of climate change. They receive only one third of the money for adaptation that goes to countries at peace. The discrepancy owes mainly to the high risks of such projects, as well as the reality that adaptation does not generate revenues for investors. But if the reason for the gap is obvious, the way to bridge it is not. As a result, conflict sits at the heart of considerable climate funding inequity.

The agenda for COP28 aims to begin addressing this disparity by making climate finance for conflict-affected countries a priority. For the first time, conflict will feature in the thematic program at the climate summit. As the host, the United Arab Emirates (UAE) government also intends to release a declaration and a “package of solutions” for member states, multilateral banks and humanitarian organisations that aims to strengthen finance, programming and collaboration in countries beset by fighting. Finally, during the opening session of COP28 in Dubai, diplomats from around the world approved and set into motion the creation of the “loss and damages” fund to support countries, including those experiencing conflict, that are suffering harm due to climate change.

What is climate finance, and why is there so much disagreement about it?

The UN climate agency defines climate finance loosely as money – private, public, domestic and international – spent in support of adaptation or mitigation projects that seek to address climate change. The discussion around climate financing, particularly as it relates to economically disadvantaged countries, is fractious for several reasons.

First, the broad UN definition includes vast amounts of both private and government money that is disbursed at high interest rates, placing it out of reach for low-income countries that need funds to adapt to climate change. Indeed, the Climate Policy Initiative, an independent climate policy research group, found that of the $1.27 trillion in climate financing disbursed in 2022 according to the UN definition, more than 90 per cent was allocated to mitigation efforts, mostly in the form of market-rate loans or other forms of debt financing. Moreover, more than 50 per cent of this funding came from the private sector, with the rest coming from governments and development banks. Only 6 per cent of the $1.27 trillion, almost all of it from governments, was in the form of grants – the only vehicle for providing financing to low-income countries without adding to their already extensive debt burdens.

Experts also note that the $1.27 trillion figure is bloated by domestic financing, household spending and foreign investment in wealthy countries like China, the U.S. and Japan – including under government policies like the Inflation Reduction Act passed by the U.S. Congress in 2022. Indeed, an overwhelming 84 per cent of the aggregate climate finance funds went to the U.S., Canada, Western Europe, East Asia and the Pacific in 2022. Less than 3 per cent flowed to the world’s least developed countries.

Secondly, this small slice of the climate finance pie accessible to vulnerable countries, which comes largely from public monies, is the subject of contentious international political debates over the concept of “common but differentiated responsibilities” for combating climate change. This concept is intended to express the idea that – while climate change is a global challenge that must be addressed by all states – rich, industrialised states with more to give and greater responsibility for the crisis are expected to bear a corresponding burden. The tenet is embodied in the 2009 commitment by wealthy countries to contribute an additional $100 billion on top of existing development assistance in climate mitigation and adaptation finance annually to developing countries by 2020. (The deadline was extended until 2025 due to lagging progress and the COVID-19 pandemic.) But while broadly accepted in principle, the idea that wealthy countries must subsidise climate resiliency in poorer nations can be a political wedge issue in the former group – for example among populists and political conservatives who style it as a giveaway of taxpayer monies.

A related issue is that developed countries are frustrated that the classification of who counts as a donor for climate finance purposes is based on Annex II of the 1992 Rio Declaration – which established the UN climate agency and is the foundation for the Paris Agreement. That Annex does not include countries that have since become quite wealthy and contribute significantly to high carbon emissions, especially China and the richest oil and gas monarchies of the Gulf: Saudi Arabia, Qatar and the UAE.

Thirdly, for all the talk about climate finance, the conversation lacks rigour in important respects. There are no UN guidelines for reporting climate finance, including for the $100 billion commitment, leaving it up to individual member states to determine what projects have adaptation or mitigation aims. Moreover, the lack of standardisation in climate finance reporting means that developing and developed countries have divergent assessments of the state of climate finance. Among the chronic issues that separate them are questions about how to count grants versus loans and how to ensure that climate finance funds are “new and additional” rather than reclassified development assistance.

The looseness of the UN Framework Convention on Climate Change leaves ample room for negligence and misconduct as well. For example, a Reuters investigation found that from 2015 to 2020, over $65 billion in funding meant to flow from developed countries to those classified by the UN climate agency as eligible to receive climate finance was reported in such little detail that it is impossible to discern what it was meant for. Poor definitions and failed commitments have resulted in building resentment between donor and recipient nations. Even with the extension of the 2009 commitment, the OECD reported that it was falling short as of 2022, with only $83.3 billion mobilised at last count. Developed countries contend that they will finally meet the $100 billion goal in 2023. As 2025 approaches, delegates at COP28 in Dubai will also be discussing whether to renew and scale up the commitment for a subsequent period.

The climate exposure index measures the degree to which countries will be affected by climate changes' physical impacts, based on ND-GAIN data. This index was averaged over the period 2012-2021. Climate adaptation financing per capita reflects the amount of public financing that was pledged to each country, as tracked by the OECD and averaged on an annual basis from 2012-2021 (2021 is the latest year that climate financing data is available). World Bank population data was used to calculate the per capita financing amounts. The 'peaceful to moderate'/'moderate to severe' conflict affected countries classification splits the total population of climate adaptation finance recipient countries (for which conflict data is available) into two buckets with equivalent populations based on the amount of conflict incidents chronicled by UCDP-GED over the period 2012-2021. Countries for which the UCDP did not have conflict data were excluded from this chart.

Why do conflict-affected countries receive so little climate financing?

Among the countries that require climate finance support, conflict-affected states are among the worst positioned to get it. Countries experiencing conflict do not receive sufficient financing for climate mitigation or adaptation first and foremost because of real and perceived risks of instability, poor governance and diminished capacity to carry out projects that yield returns for investors.

Private-sector investors are deterred both by the level of risk and the nature of the projects that are required, many of which offer little or no promise of a return on investment. For example, climate adaptation projects such as constructing wastewater treatment or water desalination plants or distributing drought-resistant seeds are essential in preparing for and responding to extreme weather events and preventing losses, but they do not typically generate revenue. As a result, adaptation financing is under 5 per cent of total climate financing, amounting to $62 billion in 2022.

But, as indicated above, public-sector financing for conflict-affected states is also hard to come by. The risk factors that worry private investors are also a deterrent to funding from wealthy governments and multilateral organisations. Indeed, climate finance from governments and multilaterals overwhelmingly goes to mitigation projects in conflict-free, populous, middle-income countries, where the state can absorb large amounts of investment and where risk is generally lower. It is mostly invested in renewable energy projects because they have the potential to generate revenue and create quantifiable climate benefits in the form of emissions reductions.

While it is understandable that funders are inclined to treat active conflict as prohibitive to climate financing – due to concerns about operational risk or shaky governance – it would be a mistake to yield entirely to this impulse. Turning away from conflict-affected countries would have the effect of abandoning significant portions of the world, leaving them vulnerable to a destabilising cycle of climate change and violence, which can only be expected to require costly humanitarian and political interventions. Instead, donors should develop their capacity for planning projects in and around conflicts, learning from humanitarian agencies that operate in such circumstances and can help manage risk and provide a bridge for stabilisation efforts.

Beyond risk aversion, another part of the problem in steering funding to conflict-affected countries is that public funds most suited for this purpose do not have adequate capital. The UN’s Green Climate Fund (GCF) – which has an overlapping mandate to invest half its funds in adaptation and half its funds in countries most vulnerable to climate change (namely the least developed countries, small island nations and African states) – has failed to reach its target of $10 billion for its next four-year funding cycle, which lasts through 2027. Although its mandate covers several conflict-affected countries, the GCF does not consider conflict as a factor in making its grants. The GCF’s pursuit of its mandate is further hobbled by its byzantine application protocols: the approval process can drag on for more than seven years before money begins to flow. That can create particular challenges for conflict-affected states, where bureaucracies gutted by war struggle to prepare the technical project proposals required by the GCF and other funds and banks that each have their own specifications.

How will COP28 try to address these challenges?

COP28 will draw attention to the issue of climate and conflict through a mix of symbolic and more concrete measures, although all of these fall short of what is needed.

First, issues of international peace and security appear on the thematic program of the climate summit for the first time ever – and indeed will be the centrepiece of the conference’s Relief, Recovery and Peace Day on 3 December. The peace day in Dubai will feature discussions on climate and conflict in the Horn of Africa, early warning for climate disasters, and the effects of conflict on funding and implementation of critical adaptation projects.

Secondly, the UAE presidency will release the above-referenced declaration, which Crisis Group has endorsed. The declaration calls upon donors to increase the supply of grant-based funding for countries experiencing conflict, while asking climate funds to speed up application and procurement procedures for resiliency projects. It implores international partners to provide technical support and predictable financing to help countries experiencing conflict with climate adaptation. It emphasises that integrating conflict considerations throughout the project cycle for donors, building local resilience through early warning and increasing flexibility so implementers can adapt to evolving conflict situations are necessary for effective programming in conflict-affected countries.

The non-binding document is far from a panacea. It identifies many technical barriers for climate finance in war-torn parts of the world, but offers few concrete ideas for overcoming them. The declaration also fails to address the problems surrounding the definition of climate finance that are discussed above. It makes reference to “substantially scal[ing] up financial resources for climate adaptation” and “considering how to best incorporate conflict-sensitive approaches across the project cycle”, but offers no specific guidance on any of these fronts. It also leaves unaddressed the need for serious accountability and transparency in climate finance. Finally, it largely avoids addressing how the climate action it advocates for will take place after the delegates depart Dubai. Still, it represents a useful step forward in terms of raising awareness and amplifying the global conversation around the issue.

Finally, the most promising vehicle for unlocking resources for vulnerable countries at COP28, including those experiencing conflict, came through the establishment of a “loss and damages” fund. At the 2022 climate talks in Cairo, after decades of arguments, developed nations agreed to establish such a fund to support poor, vulnerable countries in their climate mitigation and adaptation efforts. A highlight of the UAE COP28 presidency has been its push to bring this fund online. After several rounds of contentious talks, there is agreement on two key items: the World Bank will host the fund on an interim basis; and the fund’s scope will include slow-onset events, like sea level rise, and sudden disasters like floods. In COP28’s opening session, participants moved to make the fund a reality, with the UAE, the European Union, Germany, Japan, the UK, the U.S. and others contributing over $400 million in total. More pledges are promised in the coming days. Funds are set to begin disbursement in 2024.

Of course, there are barriers that will need to be overcome if the fund is to achieve its goals. Pledges fall significantly short of the $100 billion per annum some have estimated will be needed in vulnerable countries for loss and damage finance by 2030. The chief delinquent is the U.S., which promised only $17.5 million for the fund – the smallest per capita commitment to date among donor states – despite being the greatest historical emitter. Washington has consistently objected that the fund does not call upon nations that have amassed their wealth since the above-referenced 1992 declaration – like China, the UAE, Saudi Arabia and Qatar – to chip in despite their contribution to current emissions. This complaint has lost some potency, however, since the UAE made its $100 million commitment to kickstart the fund.

The Group of 77 countries – a coalition of developing states – are concerned that the fund will rely on ad hoc contributions from wealthy states and thus be unsustainable. They argue for continuous replenishment of the fund, via such avenues as an international shipping tax or the fossil fuel extraction levy proposed by a coalition led by Kenya and France. 

Climate adaptation financing per capita reflects the amount of public financing that was pledged to each country, as tracked by the OECD in 2021, the latest year that climate financing data is available. The 'peaceful to moderate'/'moderate to severe' conflict affected countries classification splits the total population of climate adaptation finance recipient countries (for which conflict data is available) into two buckets with equivalent populations based on the amount of conflict incidents chronicled by UCDP-GED over the period 2012-2021. Region-wide projects are those in which a region or "developing countries" broadly was marked as the destination for the funding.

What has been the UAE’s role in preparing the ground for progress at COP28 and bringing climate finance to conflict-affected states?

While the Emiratis are playing a convening role, using their presidency to highlight the linkages between climate and peace, and contributing in a significant way to the loss and damages fund, the oil-rich monarchy has made no monetary commitments to provide dedicated climate finance for conflict-affected countries. Officials at the UAE COP presidency say the Emirates would prefer to contribute through efforts such as exporting water-related adaptation technology to vulnerable countries. Until recently, that tack was most visible in the UAE’s financing for Project Prosperity, a deal Abu Dhabi brokered between Israel and Jordan, whereby Jordan would supply solar energy to Israel and Israel would sell desalinated water to Jordan. (Protests in Jordan amid the war between Israel and Hamas forced the Jordanian government to call off the deal on 16 November.)

More broadly, climate advocates have been critical of the Emirati decision to appoint the head of its state-owned oil company as COP president. They fear this emphasis will continue trends from COP27, at which the oil industry had more delegates than the ten most climate-affected countries combined, and thereby position these companies to have outsize influence over the deliberations. Scepticism about the UAE’s commitment to reducing carbon emissions has grown after the revelations that Abu Dhabi used conference preparatory events to secure deals for its national oil and gas companies. Critics see the Emiratis’ emphasis on peace and climate finance as an attempt to deflect attention from the underwhelming showing on fossil fuels and emissions.

Still, COP28 will see important steps forward that should not be undersold. These include the declaration authored by the UAE and endorsed by scores of countries and international organisations, the appearance of conflict on the thematic program and the tangible progress on loss and damages – all of which mark historic advances for countries experiencing conflict. The extent to which these spur enduring positive change will depend, among other things, on the concrete measures for mitigation and adaptation that will be included in the “package of solutions” to be introduced by the UAE on 3 December, the strength of political commitments from donors and recipients alike at COP28 and beyond, and the continuation of peace as a thematic priority at subsequent COPs.

What more can be done at COP28?

COP28 delegates who wish to bolster financing for countries experiencing conflict, and to ensure that peace remains a priority at climate talks in coming years, should focus their attention on three areas:

• Global Goal on Adaptation: Delegates should try to ensure that conflict is integrated in the Global Goal for Adaptation, a framework for driving and monitoring global efforts at adaptation, especially in developing nations, that was agreed upon at the 2015 Paris climate talks. Adaptation efforts are different from the global mitigation campaign, which aims to keep global warming to less than 1.5 Celsius compared to pre-industrial temperature levels. One key difference is that progress on mitigation can be measured in terms of emissions and temperature, while successful adaptation is difficult to define because what is needed to adapt to climate change varies according to local circumstances, such as an area’s level of development, governance and vulnerability to climate change. The difficulty in creating a standardised set of indicators for evaluating global adaptation efforts slowed work on the Global Goal for Adaptation, but that work is expected to finally come to fruition at COP28.

Given that many areas vulnerable to climate change also experience conflict, delegates should ensure that the Global Goal on Adaptation acknowledges the additional difficulties adaptation efforts face in conflict zones. These challenges range from operational constraints to the risks inherent in building and maintaining projects amid active hostilities. The Goal emphasises that early warning for climate disasters will play a vital part in supporting adaptation efforts, but those provisions do not recognise the importance of using conflict analysis to identify areas donors should prioritise because of the likelihood that climate change will contribute to deadly violence.

• Conflict Sensitivity for Climate Funds: Funding arrangements discussed at COP28, such as the loss and damage fund, as well as deliberations about updating the 2009 donor commitment of $100 billion, should similarly consider the implications of conflict for mitigation and adaptation efforts. The loss and damages fund will allocate its scarce resources based on the principles of attribution (whether a climate event that affects a country is attributable to climate change) and vulnerability (how exposed the country is to climate distress and ensuing shocks). Delegates at this and future COPs (where governance and other issues are likely to be decided) should ensure that conflict is considered in any assessment of vulnerability, given that conflict renders countries disproportionately vulnerable to climate shocks. While it might not be politically feasible, delegates operationalising the loss and damages fund should also consider devoting a percentage of its funding to countries affected by climate crisis and conflict.
   
• Accountability and Sustainability: COP28 delegates will be adopting the first Global Stocktake, a sort of report card mandated by the Paris Agreement, which measures progress toward its core goals. It will likely be filled with failing marks: from missed emissions targets to fundraising shortfalls. The failure of international climate efforts to come to grips with the needs of conflict-affected countries should be included in this number. As Crisis Group has demonstrated, extreme weather events caused by climate change have contributed to violence in conflict-affected states; yet funds for the communities that need it most to build resilience have slowed to a trickle. Recognition of this fact, and a pledge to revisit progress on this matter at future stocktakings, would be an important step to building accountability and sustainability for conflict-affected countries at climate summits down the road.

Beyond COP28, what steps should be taken to help manage climate and conflict risks?

After the COP28 delegates leave Dubai, the challenges posed by climate change and conflict will persist. Among the initiatives that would benefit from continued attention are the following.

First, a cost-effective path that can help address climate security risks while reducing loss and damages caused by climate change would be deploying early warning systems for climate and conflict risks. In March 2022, UN Secretary-General António Guterres launched Early Warnings for All, an ambitious initiative to provide climate-linked early warning to nearly half the countries around the world. Roughly one third of the global population is concentrated in countries lacking effective climate early warning systems. The initiative seeks contributions of $3.1 billion over five years – it is unclear if it will be able to achieve this goal. Its objective is to enhance disaster management knowledge, risk detection, warning dissemination and general preparedness. Among other things, it aims to create systems that rely on meteorological agencies and humanitarian organisations to promulgate warnings via broadband and mobile phones. Donors should work with the UN to support this effort, while being mindful that conflict-affected countries may present specific challenges that require workarounds – eg, because their communications infrastructure is either impaired or less developed than in other states.

Secondly, as noted above, even when vulnerable countries get climate finance, most available funds are loans, which exacerbate debt distress. One way to make financing more available at scale without adding to this often crippling debt is for shareholders to expand the balance sheets of multilateral development banks and direct them to issue loans at concessional, or below-market, rates. The World Bank and IMF have heeded calls from the Bridgetown Initiative – a multilateral effort to expand vulnerable countries’ access to climate finance – to suspend interest payments from heavily indebted borrowers for two years after they have experienced a climate shock and to lend $100 billion of wealthy countries’ unused special drawing rights to vulnerable countries. These steps are a good starting point.

Finally, as noted, countries in conflict are often extremely dangerous and costly places to run climate mitigation and adaptation projects. As many governments and private-sector actors are unable or unwilling to finance climate adaptation work in conflict zones, it would help to empower and fund humanitarian organisations that have already been stretching themselves to perform this desperately needed task. Humanitarian agencies are loath to assume new responsibilities that distract them from their core work, but some of them (including the World Food Programme, which received accreditation to receive climate funds in 2016) appear to see getting involved in climate adaptation in fragile states as unavoidable, the financial and operational constraints notwithstanding. As an aid manager told Crisis Group, “We have to deal with the consequences of nobody doing it, so we might as well”. But as crises pile up, one atop another, even agencies that are inclined in this direction are reluctant to dip into their core budgets for this purpose. For moral, humanitarian and security reasons, donors should help ensure that they are supplied with additional funding for this essential work.