An ambitious plan to remake the world financial system and channel funds to small nations facing high climate costs should help guide countries' decisions in future climate agreements.
The proposal, spearheaded by the island state of Barbados and known as the Bridgetown Initiative, was launched in 2022, with its latest version launched in 2024. But, I heard about it first while attending the SB60 Climate Conference in Bonn Germany in 2024. SB60, hosted every June/July, sets the tone, agenda, and goals for the UN’s annual Conference of the Parties (COP) the following winter.
Climate finance was the centerpiece of negotiations in Bonn during my week at the SB60 conference. I watched every negotiation I could on what’s known as the New Collective Quantified Goal on Climate Finance (NCQG).
The new finance goal is meant to replace the $100 billion fund established at COP15 in 2009. At COP15, developed countries agreed to mobilize the funds by 2020 to address the needs of developing nations. This money would allow small countries to finance climate mitigation and adaptation, techniques they couldn’t afford otherwise.
The NCQG goal was the most significant issue to be discussed at the Baku summit. It was also one of Bonn's most controversial, drawing large crowds. Countries significantly disagree about which countries should pay the most towards the fund and what it truly means for such an agreement to be “fair”. When I entered the Bonn meeting on the first day, I expected to watch countries make significant commitments and contributions to the world's efforts to address global warming.
However, progress was slow. At SB60, every nation seemed to agree that climate finance is critical to the green transition, and any delay in finance availability would cause developing nations to suffer more intense climate disasters.
But countries could barely agree to advance negotiations, let alone establish the exact amount developed countries should strive to raise through the new climate finance goal. And, calling for a more democratic process, developing countries still struggle to be heard in climate talks and have agreements that reflect their needs.
The Bridgetown proposal has found growing influence and support among developing nations, particularly among other Small Island Developing States (SIDS). While on a lunch break during the conference, I talked to Ricardo Marshall, the director of sustainable development and the Roofs to Reefs program in Barbados. He served as a negotiator at the conference, representing Barbados and the Alliance of Small Island Developing States (AOSIS) at climate- negotiations. He said the Bridgetown Initiative represents the ideal program for financing assistance to small countries hard-hit by climate change.
Marshall explained that many small countries have incurred deep debt to meet climate requirements and rebuild after repeated natural disasters. Barbados struggles with $7.6 billion of debt, Colombia with $241 billion of debt, and Brazil with $1,726 billion of debt. Each time a disaster hits, these nations are forced to borrow more money, reinforcing the debt trap.
Barbados, in particular, is one of its region's wealthier islands. Each time a nearby island is struck by a natural disaster, Barbados’ government asks itself whether it can afford to lend money to its neighbor. When Barbados grants a loan and is hit by a hurricane later in the season, its own debt increases.
During the first Climate Finance Panel at SB60, Sofia Vargas Lozada, a climate finance advisor to the Colombian foreign ministry, said many countries like Colombia are using funds to pay off debt instead of providing government.
“What kind of support are we providing to developing countries? My country is one that is paying more on servicing its debt that paying, for instance, on education,” said the Colombian climate finance official.
“We still see and we are affected by the disproportionate impact of climate exchange, and this is costing us 4.5 percent of our GDP annually,” she explained. “This is not only the case of Colombia. This is the story of many developing countries.”
Delegates from Barbados, Vanuatu, the Philippines, and other members of the AOSIS said they are as past the point of mitigation. Their islands are already beginning to shrink due to sea level rise and are suffering from more intense disasters. But these islands never emitted much carbon dioxide in the first place. With so much climate finance infrastructure focused on lowering emissions, countries that need to adapt are offered only loans that worsen their debt.
The Bridgetown Initiative proposes a solution to both climate financing problems simultaneously. The first is the intensifying debt crises in which worsening debt defaults lead to inequality and political upheaval. The second involves meeting the need to expand the use of clean technology and large-scale electrification of buildings and transportation.
Answers lie in solutions that redistribute resources between developed and smaller nations and funnel more funds to developing countries. They can then direct funds toward climate adaptation and mitigation, ease debt crises, and reroute money toward green infrastructure. These redistributive solutions funnel more money towards developing countries and reorient money towards adaptation and mitigation.
One solution would provide emergency liquidity and utilize regulations to provide short-term loans and lower interest rates to developing nations. This allows immediate debt relief so developing countries can focus on funding adaptation measures.
Another solution would expand lending from multilateral institutions to middle-income countries that can accept higher-risk loans, prioritize climate lending, and change lending guidelines. The last solution is to activate the private sector. Private funding pools would free developing countries from increasing their debt. This allows developing countries to shoulder less of the climate finance burden. Funding pools through private fundraising or developed nations would mean developing nations don’t have to worsen their debt.
In theory, international agreements should offer a rare avenue of respite for poor nations. The most developed nations should pay into a fund based on their historical carbon emissions and make adaptation affordable to smaller countries. But Bonn illustrated the difficulty of implementing this goal agreed upon in the 2015 Paris Agreement.
In the Bonn talks, countries disagreed over how their contributions should be calculated and where the money should go. The United States wants to begin the contributions count after the Industrial Revolution, drastically reducing it cumulative emissions. Larger developing nations like China want money funds to transition their economy while smaller island countries seek funds for adaptation. During negotiations, countries were often sidetracked by minor complaints over legislative text or unrelated concerns.
Watching this process reminded me of the importance of having a genuinely democratic process when making impactful decisions. Currently, a few large and impactful nations are blocking the broader interests of the global community. If we choose to let the most powerful economic interests guide our decisions, we will be driven towards a less equal and warmer world.
Responding to climate change offers us the opportunity to change the state of the world we live in. We must prioritize the ethic of equity and democracy by equalizing the playing field between the largest and smallest countries. By choosing the Bridgetown Initiative, we choose that world.