A new study by ActionAid has found that climate-hit countries are seeing public subsidies benefiting “Climate-wrecking fossil fuel and industrial agriculture companies”[i] to the tune of $677 billion per year. Analysing the corporate capture of public finances, the research finds that climate-destructive sectors are benefiting substantially from subsidies in the Global South, the value of which would pay for schooling for all sub-Saharan African children 3.5 times over.
Across these countries, the industrial agriculture sector has benefited from publicly financed subsidies worth $238 billion a year on average between 2016 and 2021, whereas the fossil fuel sector has received an annual average of US$438.6 billion a year between 2016 and 2023.
Teresa Anderson, Report author and Global Lead on Climate Justice at ActionAid International, commented: “It seems that money is the root of all climate upheaval. Climate-destructive 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, renewable energy is receiving 40 times less public finance than the fossil fuel sector. It’s time for the Global South to stand up to the industries that are draining their finances and wrecking the climate. We need to fix the finance flows that are fuelling the climate crisis.”[ii]
The report calls for the following to address the issues raised:
· Public finance should be redirected 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.
· 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[iii].
ActionAid’s study finds that climate finance grants from the Global North for affected countries remain grossly insufficient to support climate action. Its data shows that climate finance grants amount to just 1/20th of the Global South public finance going to fossil fuels and industrial agriculture. They state that as a result, renewable energy in the Global South is receiving 40 times less public finance than the fossil fuel sector.
Climate finance has already been noted as a key topic for COP 29 this November with the main task for the summit being agreement between nations on an annual funding figure, with this to be paid by wealthier nations to support poorer countries in meeting their emissions targets[iv].
[iii] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
