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With just a month to go before COP28, the question of climate finance is threatening to derail the negotiations. Failure to deliver on past promises have damaged trust, and current discussions around both the New Collective Quantified Goal (NCQG) and especially the promised Loss and Damage (L&D) Fund are mired in arguments about who should pay, who should be eligible to receive, how much is needed, and who should administer the L&D Fund.
A particular point of contention is whether the current group of climate finance providers—23 “Annex II” developed countries identified based on classifications that date back to 1992—should be expanded to embrace new contributors. Developed countries argue it should, as some rapidly growing emerging economies now have levels of emissions and income that exceed those of existing donors. Developing countries say no, arguing that responsibility lies with the rich world, that has industrialised on the back of fossil fuels.
So, what might “fair shares” look like?
“Fair shares” based on historical emissions and current income
In a new paper I assess various measures of historical emissions (a measure of responsibility) and per capita income (a measure of capability). The analysis differs from previous work in that it covers all countries, and captures both responsibility and capability by combining measures of emissions and income such that two countries with the same cumulative emissions would have “fair shares” in proportion to their per capita incomes. In this sense it reflects the Paris Agreement’s emphasis on equity and “common but differentiated responsibilities and respective capabilities”. It’s relevant to both the NCQG that should replace the existing $100bn commitment from 2025, and the new L&D Fund (with contributors to any L&D Fund potentially also eligible as recipients).
I don’t try to get to a definitive answer on who should pay what, but illustrate the implications of different technical and moral choices—all of which can all be contested—regarding the measures used, the cut-off date before which emissions are excluded, and whether or not the value of older emissions is discounted. A baseline scenario that broadly balances developed and developing country interests uses undiscounted cumulative CO2 emissions since 1979 and per capita GNI in 2021 US$/hd, with scenarios 2-8 exploring the effects of alternative measures of emissions (all GHGs) and income (PPP$/hd), different cut-off dates (1990 and 1900) and discount rates (1.4 percent and 3 percent), and the exclusion of the poorest and most vulnerable countries. Results are summarised below.
Summary fair shares results across 9 different scenarios
| Country | S1 | S2 | S3 | S4 | S5 | S6 | S7 | S8 | S9 | Range | No.times | ||
| Baseline | All GHGs | PPP$/hd | CO2/hd, | 1990 | 1900 | 1.4% | 3% | excl L/LMICs, | (min-max) | top 20 | |||
| GNI | cut-off | cut-off | d.rate | d.rate | LDCs & SIDS | ||||||||
| United States | 46.9% | 43.1% | 37.2% | 48.1% | 46.3% | 50.6% | 46.5% | 46.0% | 47.8% | 37.2% - 50.6% | 9 | ||
| China | 7.8% | 8.2% | 10.1% | 7.2% | 9.1% | 5.1% | 8.5% | 9.3% | 8.0% | 5.1% - 10.1% | 9 | ||
| Japan | 6.0% | 4.9% | 5.0% | 5.2% | 6.1% | 4.9% | 6.0% | 6.0% | 6.2% | 4.9% - 6.2% | 9 | ||
| Germany | 5.8% | 5.1% | 5.4% | 5.1% | 5.2% | 7.8% | 5.6% | 5.4% | 5.9% | 5.1% - 7.8% | 9 | ||
| Canada | 3.1% | 3.7% | 2.7% | 3.3% | 3.1% | 2.8% | 3.1% | 3.1% | 3.1% | 2.7% - 3.7% | 9 | ||
| United Kingdom | 2.9% | 2.9% | 2.6% | 2.8% | 2.7% | 4.8% | 2.8% | 2.7% | 2.9% | 2.6% - 4.8% | 9 | ||
| Russia | 2.6% | 2.6% | 5.8% | 2.3% | 2.3% | 2.4% | 2.5% | 2.4% | 2.7% | 2.3% - 5.8% | 9 | ||
| Australia | 2.4% | 3.5% | 1.8% | 2.6% | 2.5% | 1.9% | 2.4% | 2.4% | 2.4% | 1.8% - 3.5% | 9 | ||
| France | 2.1% | 2.1% | 2.0% | 2.1% | 1.9% | 2.7% | 2.1% | 2.0% | 2.2% | 1.9% - 2.7% | 9 | ||
| Italy | 1.8% | 1.6% | 1.9% | 1.6% | 1.8% | 1.5% | 1.8% | 1.8% | 1.9% | 1.5% - 1.9% | 9 | ||
| South Korea | 1.8% | 1.5% | 1.9% | 1.7% | 2.1% | 1.2% | 1.9% | 2.0% | 1.8% | 1.2% - 2.1% | 9 | ||
| Netherlands | 1.1% | 1.1% | 1.0% | 1.1% | 1.1% | 1.1% | 1.1% | 1.1% | 1.1% | 1.0% - 1.1% | 9 | ||
| Saudi Arabia | 1.0% | 0.9% | 1.7% | 1.3% | 1.1% | 0.6% | 1.0% | 1.1% | 1.0% | 0.6% - 1.7% | 9 | ||
| Spain | 1.0% | 0.9% | 1.1% | 0.9% | 1.0% | 0.8% | 1.0% | 1.0% | 1.0% | 0.8% - 1.1% | 9 | ||
| Taiwan | 0.8% | 0.7% | 1.3% | 0.7% | 0.9% | 0.5% | 0.8% | 0.9% | 0.8% | 0.5% - 1.3% | 9 | ||
| Poland | 0.8% | 0.7% | 1.3% | 0.6% | 0.7% | 0.8% | 0.7% | 0.7% | 0.8% | 0.6% - 1.3% | 9 | ||
| Belgium | 0.7% | 0.7% | 0.7% | 0.7% | 0.7% | 1.0% | 0.7% | 0.7% | 0.7% | 0.7% - 1.0% | 8 | ||
| United Arab Emirates | 0.6% | 0.6% | 0.8% | 1.1% | 0.7% | 0.4% | 0.6% | 0.7% | 0.6% | 0.4% - 1.1% | 7 | ||
| Switzerland | 0.5% | 0.4% | 0.3% | 0.5% | 0.5% | 0.5% | 0.5% | 0.4% | 0.5% | 0.3% - 0.5% | 5 | ||
| Mexico | 0.5% | 0.6% | 0.7% | 0.5% | 0.5% | 0.3% | 0.5% | 0.5% | 0.5% | 0.3% - 0.7% | 7 | ||
| Non-Annex II | 22.6% | 26.5% | 35.7% | 23.0% | 24.2% | 16.7% | 23.6% | 24.6% | 21.3% | 16.7% - 35.7% |
Its conclusions are clear: while the fair shares for individual countries do vary (by more than double in some cases), there is remarkable stability across the top 20, with 16 countries appearing in the top 20 in all nine scenarios. Developed countries should clearly continue to take primary responsibility (with the USA shouldering at least 40 percent of the burden). But there is a strong case for non-traditional donors providing 20-30 percent of any total, with China (range of 5-10 percent), Russia, South Korea, Saudi Arabia, Taiwan, Poland, the United Arab Emirates and Mexico consistently featuring in the top 20. The collective fair share of all low- and lower-middle-income countries (LICs and LMICs), least developed countries (LDCS) and small island developing states (SIDS) is negligible at less than 2 percent in all scenarios.
Worth flagging too that differences in grant equivalence and scoring methodology can also make a substantial difference to the value of donor contributions. A full assessment of fair shares should take this into account.
A question of politics, a question of global solidarity
The politics of making this happen however will continue to be difficult. China and other developing countries continue to resist calls for any expansion of the donor group, although differences are beginning to emerge with some now calling for the larger polluters, notably China, to start contributing. The USA in particular has resisted any link to reparations and appears unlikely to contribute to any L&D Fund. But in a context where current commitments fall significantly short of needs, even without taking loss and damage into account, progress in negotiations is likely to require both additional commitments from existing donors as well as contributions from new ones. Excluding all LICs, LMICs, LDCs and SIDS would be a pragmatic way forward, but it is hard to escape the conclusion that both the USA and China will need to provide more. It’s also a question of global solidarity. As argued previously, restoring trust between developed and developing countries is key to accelerating progress towards net zero, requiring donors to do more to improve the credibility of climate finance, to deliver on past promises, and be bold with new ones.
Disclaimer
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
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