I thank members for the invitation to speak. As an international aid and development organisation, we also witness the devastating impact that climate change is having around the world and the profound inequality underpinning it. I recognise and endorse the comments of my colleagues in Oxfam and Trócaire in this regard. In the interests of time I will focus more specifically on the question of loss and damage and some of the detail of what we would like to see in the COP28 and in this Parliament in the coming years.
As Mr. O'Brien mentioned, earlier this month Christian Aid Ireland and Trócaire published new research entitled, The Cost of Inaction, which has been shared with members, in which we estimate that Ireland’s fair share of loss and damage finance will be at least €1.5 billion per year by 2030. I want to look more closely at how we arrived at that figure as it illustrates some of the core political questions that still remain live ahead of COP28. The first key principle is that we have to work from the basis of need. A significant problem with previous climate finance targets is that they have generally been top-down and wholly political figures, as opposed to being based on any scientific assessment of need. We should not repeat this mistake with the new loss and damage fund. Our paper draws on a number of different studies which utilise climate and economic modelling. Here we focus on two of the most thorough, one from Climate Analytics and one from Markandya and González-Eguino.
The latter is the most recent and complete estimate of how much financing will be needed for loss and damage using an integrated assessment model to calculate how much would be needed for mitigation and adaptation financing under different warming scenarios, and then what residual or unavoidable costs remain.
A health warning is that large uncertainties remain in these models, not least because a failure to adequately deliver emissions reduction and climate adaptation now could significantly increase the costs of loss and damage in the future. If we overshoot the 1.5°C target, that could trigger climate tipping points, underscoring the importance and urgency of front-loading action. In that sense, the figures presented here are conservative estimates, and they tend to range around a global need of between €350 million an €450 million per year by 2030. It is for this reason that civil society, collectively, has proposed an initial floor for the new loss and damage fund at around this level. However, while earlier negotiating drafts included specific targets, they were later removed and the current working text that has been sent to COP28 does not provide any real detail on how much money ought to be raised or by when. We would like to see Ireland push for greater focus here, as well as provide support for a UN-led loss and damage finance gap report to provide a reliable and regular assessment of global need.
Returning to the table, a second important aspect is seeking to divide these global targets up into national level fair shares, which is the subject of a growing body of academic research. Here, we focus again on two estimates in particular. First, from the Overseas Development Institute, ODI, and then the climate equity reference framework, CERF, which has been developed by EcoEquity and the Stockholm Environment Institute. What these assessments do to calculate national fair shares is break down key factors, including contribution to global greenhouse gas emissions, current financial capacity, projections of future loss and damage costs, population size and differential pathways to staying within the global 1.5°C warming target. The CERF in particular, as an equity-based framework, also attempts to take into account inequality within countries, essentially exempting those below a certain income or development threshold from calculation of a national level fair share.
The methodologies are discussed in more detail and referenced in the paper, but while they differ somewhat, they arrive at very similar figures, 0.48% and 0.54%, respectively. In the whole, what this tells us is that of the global effort needed, we can estimate that Ireland’s fair share contribution is approximately 0.5% of that figure. We can apply these fair share estimates to best projections of need to give us ranges for 2030, with €1.5 billion as the floor and €2.5 billion as the upper bound.
The first and most important thing to note here is that we recognise that these figures, both at a global level and for Ireland specifically, are very significant. The scale is ultimately a reflection of the seriousness of the situation we are in. Much like the efforts needed to bend the global emissions curve down and stay within 1.5°C are huge, it stands to reason that the financial resources needed to deliver equitable, justice-orientated climate action would also be significant.
When we consider the scale, we think it is also extremely important to put it into a wider international context. For example, the International Monetary Fund, IMF, recently stated that subsidies for fossil fuels surged to over $7 trillion in 2022 alone. Our colleagues in Action Aid and Oxfam have estimated that a small number of energy companies recently made over $200 billion in excess profits, above already astronomical normal levels, in just two years. A deep and starkly unequal concentration of resources is a defining feature of the modern global economy, with Nobel Prize winning economist Thomas Piketty and co-authors noting in the World Inequality Report 2022 that the richest 10% of the global population now owns 76% of all wealth, while the richest 1% has captured almost 20 times the wealth of the bottom half of the world, or 4 billion people, since 1995.
To us, that is the crucial backdrop and reference point for this whole debate. It is a reminder that we cannot separate climate justice from economic justice. The resources needed for transformative, comprehensive action are significant but they are there. What is required is bold, ambitious and, crucially, co-ordinated international action to raise them.
This need for new thinking is reflected to an extent in the historic COP27 decision text to set up the loss and damage fund, which reiterates the importance of existing sources of finance, such as national contributions, but also recognises that they are highly unlikely to be sufficient. It specifically calls on governments to “identify and expand sources of funding”, including so-called “innovative sources”. There is a growing realisation that business as usual will not be sufficient and this has been an important element of the negotiations over the past 12 months.
For this reason, in section 12 of our report and in other research published by some of our colleagues in front of the committee today, we have set out a number of proposals, not just from ourselves, as development organisations, but from a broad range of CSOs, economists, human rights experts, international institutions and some government bodies, particularly from the global south, to marshal the resources needed. This includes, but is not limited to, more progressive, co-ordinated taxation of excessive corporate profits, extreme wealth and fossil fuel production; progress on debt relief; and new levies on aviation and shipping.
The Minister, Deputy Eamon Ryan, has emphasised some of these proposals in his own engagements at EU and UN level, which we recognise, and we very much agree with his insistence that the polluter must pay. What we are calling for now is much more detailed engagement with those proposals and work to ensure we deliver a properly capitulated loss and damage fund that is fit for purpose.
