Solutions Series: Money
We know that fossil fuels caused the climate crisis.
Instead of moving money into safe, renewable energy for all, wealthy governments and banks are funding more coal, oil and gas projects. To transition to fair, community-led renewables solutions we must first stop funding fossil fuels. If we cut the cash flow to fossil fuels, justice flourishes.
Welcome to the final part of our Solutions Series: Money. Let’s explore what we’re currently funding, what needs to be funded, and how we can do that.
See the previous edition here: Solutions Series: Justice.
What we’re up against
Banks, investment funds, and governments are the gatekeepers of money. These financial institutions decide where money goes and where it doesn’t. Currently, many of these institutions support climate-wrecking activities, like drilling for oil or bankrolling PR firms that feed climate denialism. This is called “fossil finance”.
Every year, governments pour between US$300 billion and US$5,9 trillion into fossil fuel subsidies.1 This happens either by letting companies get away without paying what they owe, or by paying them directly. To build a world that prioritises people, communities and nature, these subsidies must be scrapped.
But suddenly changing the flow of money can upend the livelihoods of many. In the transition to renewable energy, the workers and families that rely on the fossil fuel industry must be cared for. This is part of what a “just transition” means – leaving no one behind.
What we need to move forward
Renewable energy solutions need money to become a reality. In contrast to fossil finance, “climate finance” is all the money that protects our planet’s future. This pays for renewable energy that will prevent carbon emissions, funds to adapt to a changed world, and for those who have already lost land and livelihoods due to the climate crisis.
We need our leaders to shift money away from fossil fuel projects and into renewable energy. At this year’s UN climate conference, COP29, leaders will set a goal for climate finance. To ensure poor countries can meet their climate goals and transition to renewable energy, we need rich nations to commit to US$1 trillion each year.
Where do we get the money from?
This is a lot of money, but it could come from many places – taxes on fossil fuel companies, wealth taxes on billionaires, and rich governments.
One of the most equitable funding sources is a wealth tax on the ultra-rich. Since 2020, the richest 1% have captured almost two-thirds of all new wealth, and billionaire fortunes are increasing by US$2,7 billion a day.2 By making the ultra-rich pay what they owe, we could raise hundreds of billions a year for climate finance.
Where does the money go?
The responsibility to pay for climate finance must be on the countries that have contributed the most to the climate crisis. The bulk of the money should support developing countries, who are least responsible, and the most affected by the climate crisis.
But if climate finance is done wrong, it can harm poorer countries and communities. Rich countries can take advantage of poor countries through high-interest loans for renewable energy projects. Currently, poor countries spend five times more on repaying debt than on addressing the impacts of the climate crisis.3
Any climate finance must benefit local people, not the rich in wealthy countries. This money must be reliable, equitable, and affordable – in the form of grants that don’t create a long-term burden. Vulnerable communities should benefit from renewable energy investments, not suffer as a result.
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The current global financial system supports and feeds climate breakdown. We need to change that.
It’s time to hold oil giants and governments to account. We must move money away from fossil fuels and fund a renewable energy transition that leaves no community behind.
Looking for a deeper dive into money and the climate crisis? Check out our ClimateCash Series here.
Sources:
1. Why fossil fuel subsidies are so hard to kill, Nature (20 Oct 2021
2. Survival of the Richest, Oxfam (2023)
3. The debt and climate crises: Why climate justice must include debt justice, Tess Woolfenden and Sindra Sharma-Khushal (2022)
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