Financing For Just Transition: Urgent Call From Developing Countries To The G20 Visions From Latin America And The Caribbean

Developing countries need to transition to more sustainable finance, but major emitters in Latin America and Caribbean (LAC), as well as many countries in the Global South, rely on an extractivist development model for revenue. The Sustainable Finance Index (SFI)! reveals that these countries, including G20 members Brazil, Mexico and Argentina, receive 15 times more carbon-intensive revenues than sustainable revenues. Moreover, they spend 31 times more on activities that cause climate change, such as oil extraction and production, than on activities that help tackle it. At the national level, the gap between carbon-intensive and sustainable revenues is $140 million in Argentina, $8.693 billion in Brazil and $85.066 billion in Mexico. Similarly, in terms of carbon-intensive and sustainable budgets, Argentina has a gap of USD $1.083 billion, Brazil of USD $4.465 billion and Mexico of USD $43.373 billion. Changing this trajectory is essential to comply with article 2.1.c of the Paris Agreement, but also requires compliance with article 9, which calls for finance from developed countries to achieve this transition in a just manner. Financing for the just transition is urgent and needs to go in several directions. It involves decoupling economies from extractivism, implementing structural changes in the financial sector, including tax reforms to reduce fiscal advantages for carbon-intensive activities, such as fossil fuel subsidies; reallocating budgets to expand fiscal space and address public debts; and developing national climate finance strategies to align needs with international climate finance and cooperation. Therefore, meeting developed ‘ Guzmén Luna, S., Barbosa Mejia, O., and Alvarez Soriano, F. “Indice de Finanzas Sostenibles 2023,” in Panorama de las Finanzas Sostenibles en América Latina y el Caribe (2023) countries’ financing obligations, beyond the $100 billion committed since 2009, is crucial. Defining a new collective and quantifiable financing target in 2024 is among the critical issues that the G20 needs to address during this year along the task to furrher operationalize the Loss and Damage Fund.