International Development Committee Call for Evidence

Greenpeace UK.

Greenpeace UK is part of a global organisation that has campaigned for 50 years to defend the environment and fight for a socially-just future in which all people can live in peace and dignity, in harmony with nature. We are committed to supporting and strengthening the government’s provision of international climate finance and to supporting the committee in its scrutiny of that work.

We will begin by setting out the approach that the UK should take towards future international climate finance, before responding directly to several questions in the call for evidence.

Priorities for future UK ICF:

For future ICF the UK should focus on three major priorities:

1. New and additional grant-based public finance commitments from the UK
2. New commitments to the UN Climate Funds - including the new Fund for Responding to Loss and Damage - in line with the New Collective Quantified Goal commitment to triple provision of international climate finance by 2030.
3. Concrete next steps on new sources of public finance from polluter pays measures.

International Climate Finance needs to be predominantly grant based public finance and funding for mitigation, adaptation and loss and damage needs to meet the absolute minimum credible needs estimates. It is currently only meeting a small fraction of that. In the context of shrinking budgets and the need for fiscal policy to align with emissions reductions and the UK’s ambitious decarbonisation goals, making use of polluter pays measures is vital. Finance, particularly for adaptation and loss and damage, should be public, highly concessional and grant-based to avoid worsening a severe debt crisis.

Provision of international climate finance by the UK and developed countries is the major barrier to climate action, and finance forms a key obstacle across many international climate negotiations - including, but not limited to, UNFCCC, CBD, and the Global Plastics Treaty. Taking the example of UNFCCC, climate finance by developing countries is a small fraction of what is necessary - particularly when it comes to adaptation and loss and damage. The Loss and Damage Collaboration has estimated the Loss and Damage finance needs are at least US$724.43 billion a year - while the fund has not yet received $1 billion. The UN Environment Program estimates adaptation financing needs in developing countries to be 12-14 times as much as current flows - with financing needs reaching $310 - 365billion per year by 2035.

The UK needs to substantially increase its provision of high-quality grant-based public money  for international climate finance including through taxing polluting industries, multi-national corporations and high net-worth individuals.The UK has a significant role to play in leading by example, and encouraging other rich nations to do the same. Many countries and multinational corporations have profited greatly from practices which have contributed significantly to climate change - a country like the UK that is steadfastly committed to justice and fairness should ensure that climate debt is repaid. Substantial new and additional funds need to be committed to UN Climate Funds - particularly for adaptation and Loss and Damage, which are being unacceptably sidelined as we address later in this submission. This is crucial for unlocking ambition and rebuilding trust with Global South countries. The continued failure of developed countries to provide adequate climate finance obstructs the wider political dynamics concerning emissions reductions, and erodes the trust and political capital which brought the Paris Agreement into being and seeks to operationalise its provisions.

Raising revenues from polluting industries:

The costs of climate breakdown are being paid by ordinary people. Storms, floods and hurricanes supercharged by fossil fuel companies are costing lives and billions of dollars in damage, with those costs arbitrarily and unfairly distributed among communities in the UK and globally. Hurricane Melissa in Jamaica recently wiped out 41% of the GDP of a small island country. Shifting those costs to polluting companies could unlock vast sums and is vital for sustaining public support for climate action.

Energy giants have made over £125 billion in profits on their UK operations since 2020 while average energy bills for households and businesses across the country soared. Those companies use those profits to enrich shareholders while retreating from climate commitments and failing to support UK energy workers.

There is growing international momentum for making polluters pay their fair share for climate damage, with high-level statements at COP30 in support of making polluters pay by the Brazilian president, German and Slovenian ministers. A Climate Damages Tax - on the extraction of fossil fuels in the world’s richest advanced economies - could raise $720 billion by 2030. 

Polluter pays measures are popular with the public. 79% of people in the UK support taxing oil, gas and coal corporations to pay for climate-related loss and damage, including a majority of Labour, Conservative, Lib Dem and Reform voters. 85 current MPs support making polluters pay for climate action.

The UK Treasury should introduce domestic polluter tax options to raise more UK public funds for climate-impacted communities at home and abroad, while incentivising lower emissions - in addition to the Energy Profits Levy. These options could include a climate damages tax[1]; taxes on payments to shareholders[2] such as dividends and share buybacks from polluting assets; or US-style climate superfunds[3] that tax historic greenhouse gas emissions.

The government should support international initiatives to tax polluters - grasping the major opportunity of the UN Tax Convention to realign global tax rules to properly fund sustainable development and climate action. The UNTC could unlock trillions for climate, nature and sustainable development by  establishing fairer global tax rules for multinational corporations and high net worth individuals, including the introduction of progressive environmental taxation at the national and international level - taxing the global profits of international oil and gas companies and channelling these revenues directly into multilateral funds for climate loss, damage and mitigation in line with key UNFCCC principles. This is critical for increasing investment in sustainable development, reducing reliance on debt and aid, and curbing illicit financial flows and tax avoidance that depletes public resources by reducing tax revenues for the treasury.

At the last round of UNTC talks, the UK supported incorporating the polluter pays principle into the article on sustainable development - it is vital that the UK now builds on this momentum and actively supports global polluter taxes, starting with the fossil fuel industry.

What impacts will the reduction of Official Development Assistance have on the UK’s ability to deliver its ICF commitments?

The UK government has cut Official Development Assistance (ODA) twice in the last five years so that it is at the level of just 0.3% - GNI despite 0.7% being enshrined in UK law and promised in Labour’s manifesto. This reduction has made it more difficult for the UK to deliver its £11.6 billion ICF commitment for 2021-2025 and is likely to dampen ambition in the UK’s next round of ICF covering 2026 - 2030 and require difficult tradeoffs with damaging cuts to other sections of the aid budget.

What are the trade-offs associated with decisions to divert aid from ICF to other priorities, such as humanitarian crises?

There are major tradeoffs that come into play when the ODA budget is cut and these are incredibly damaging for the UK’s reputation and standing. On top of Climate Finance, ODA supports sanitation and vaccination to stop diseases, education, gender equality, reproductive rights, ODA-funded projects can prevent conflict, instability and displacement. Cuts to ODA harm the UK’s relationships, particularly with Global South countries and undermine its climate leadership

We note that a significant portion of ODA is spent on asylum accommodation here in the UK - 28% of the entire ODA budget in 2023. People seeking sanctuary are banned from working until their claims are approved, preventing them from rebuilding their lives in the UK and forcing them to remain in limbo in generally poor quality asylum accommodation. The UK government should build an asylum system based on dignity and integration, which would improve lives and reduce costs for the government.

How does the UK’s ICF commitments and delivery compare with other countries in a similar situation?

As with other OECD countries, the UK has fundamentally failed to deliver sufficiently on both quality and quantity of finance. Under the core principle  of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) - a key tenet of UNFCCC and international law generally (recently clarified by the ICJ in its legal opinion on the obligations of states in respect of Climate Change) developed countries have both greater responsibility for the climate crisis, and greater financial and technological resources to address it. The world’s collective effort to limit global warming is underpinned by the need for developed countries to provide substantive financial support for  climate action. Developed countries, like the UK, have failed to grasp the scale of the finance gap and have committed to a small fraction of what is required to meet the scale of the climate crisis.

There are few similar countries that come close to the UK’s historical carbon debt and responsibility for climate change. The UK is a country that drove the industrial revolution, beginning to burn fossil fuels in the 18th century, and even now ranking as the fourth highest historical emitter in the world when accounting for colonial emissions.

How transparent is the UK Government about its ICF commitments?

The transparency of the UK’s ICF commitments were undermined when, in 2023, it changed how ICF spending is calculated to enable the UK to fulfil its commitment to spend £11.6 billion on international climate finance for the period 2021-2026. The UK’s new methodology for counting climate finance now includes money spent on multilateral development banks, humanitarian spending in climate vulnerable countries, and British International Investment contributions. In effect the UK has shifted the goalposts in order to remain compliant with its existing ICF needs in the face of cuts to ODA, undermining trust, transparency and the UK’s standing in the world and ability to lead on climate and nature.

Is the UK using the right and most effective financial instruments to deliver ICF?

What opportunities and risks do alternative funding instruments, such as private or blended finance, pose for the UK’s ICF?

There are risks associated with the UK’s increasing reliance on private finance. At COP29 the prime minister emphasised the strategy of using public finance as a multiplier “to unlock much more private finance” in his statement. This is part of an alarming wider global trend of over-reliance on private finance, over public, in the sphere of international climate finance - sometimes referred to as the Wall Street Climate Consensus.

This is inherently problematic because the amount and distribution of climate finance should be based on need rather than where a profit can be made. Provision of climate finance is a legal and moral obligation for developed countries - under doctrine of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) - and clarified by the ICJ in its legal opinion on the obligations of states in respect of Climate Change. Nevertheless on top of the UK’s legal and moral obligations, it is in the UK’s strategic interests and important for global stability and security to invest in climate resilience and reduce emissions as quickly as possible.

Making climate finance rely on private sector investment means that funding flows towards projects that can guarantee returns for private investors. In the context of climate finance, that has meant adaptation and loss and damage being sidelined as they are often not inherently profit-generating. For example Save The Children reported that in 2021 and 2022 only one of 43 UK-supported climate programmes that mobilised private finance had adaptation as a core objective.

Is the UK’s use of loans, that represented more than two-thirds of the global ICF commitment in 2022, appropriate and, what is its impact on low-income and climate-vulnerable countries?

Funding should be grant based and needs to be fairly distributed among mitigation, adaptation and loss and damage in line with minimum credible needs estimates. The increasing use of loans pushes developing countries deeper into debt, exacerbating what the UN Secretary General has called an unprecedented debt crisis in developing countries and hindering their ability to carry out climate action.

Developing countries are required to prioritise debt servicing over other critical public spending priorities such as climate action, health and education. When climate finance is provided as loans it traps countries in this vicious cycle, and holds back climate action resulting in further vulnerability to climate impacts. After Hurricaine Melissa wiped out 41% of its GDP Jamaica has been forced to borrow money to pay for reconstruction efforts.

●        Debt Justice estimates that lower income countries are currently spending twelve times more on debt repayments than on addressing the impact of the climate crisis.

●        The Global Governance Forum estimates that one-third of developing countries now spend more on interest payments than they do on health, education, or climate action.

The most severe climate destruction is disproportionately hitting countries in the Global South, leaving the world’s poorest communities facing spiralling loss and damage costs which force governments to borrow money to fund reconstruction efforts.

How should the UK’s ICF be spread between, mitigation, adaptation and loss and damage spend to respond to climate change most efficiently?

Funding for mitigation, adaptation and loss and damage needs to meet the absolute minimum credible needs estimates.  In the context of shrinking budgets, making use of polluter pays measures will help unlock trillions in public finance. Finance, particularly for adaptation and loss and damage, should be public, highly concessional and grant-based to avoid worsening a severe debt crisis. Developing countries are receiving just a fraction of what is needed and adaptation and loss and damage are unacceptably sidelined.

Loss and Damage:

Loss and damage funding continues to be sidelined in international climate negotiations. The Loss and Damage Collaboration has estimated the Loss and Damage finance needs are at least US$724.43 billion a year - while the fund has not yet received $1 billion. Since its creation the Fund for Responding to Loss and Damage (FRLD) has received 0.2% of the estimated annual need and at COP30 there were limited new contributions to the FRLD, and nothing meaningful in the text to compel stronger contributions.

Adaptation

The UN Environment Program estimates adaptation financing needs in developing countries to be 12-14 times as much as current flows - with financing needs reaching $310 - 365billion per year by 2035. At COP30 a goal to triple adaptation finance was agreed but it remains far weaker than required. There was a lack of a clear baseline which means that, given today’s very low levels of adaptation finance, this risks being significantly lower than what developing countries need and what they called for at COP30. In addition, the end date by which finance must be tripled is set for 2035, five years later than the 2030 deadline sought by developing countries, meaning a much slower increase in the amount of finance provided. Moreover the commitment does not sufficiently emphasise grant-based finance or the responsibility of developed countries to provide it.

19th January 2026