Could Climate Aid Avoid Development Aid’s Implementation Problems?

A general view of the Kusile Power Station, a coal-fired power plant. The power station’s At the 2009 Copenhagen Conference of Parties (COP) meeting, developed countries agreed to provide $100 billion for overseas climate projects. A recent suggests that this goal was finally met in 2022! This milestone should motivate an equally important conversation about climate aid’s delivery and implementation.

Specifically, how might donors assess local preferences about climate projects, and who should be tasked with managing aid monies? These issues are especially critical when recipient governments suffer from corruption and governance failures. Without these conversations, might climate aid face leakages, diversion, and effectiveness challenges that some development aid projects have experienced? Though countries have provided international assistance at least since the early 19 century, the systematic use of foreign aid as a policy tool began towards the end of the Second World War. Under the , the United States provided massive assistance to Western and Southern European countries to rebuild their economies.

The idea was that prosperity would check the . The Marshall Plan delivered on its economic and political objectives. Within a decade, the economies of aid-receiving countries recovered, and these countries remained in the Western alliance.

While the Marshall Plan was a success story, the effectiveness of aid in other instances remains unclear. As the colorful – debate reveals, aid effectiveness is a tricky topic because aid comes in different forms and with different donor motivations. Aid could be funneled through bilateral channels, multilateral agencies, or nongovernmental organizations.

Moreover, the capacities of recipient countries to use aid vary depending on their motivations and governance competencies. Many donor countries suffer from “aid fatigue” due to the misperception that aid crowds out domestic priorities. For example, Americans believe that about of the federal budget is devoted to foreign aid, although the U.

S. barely devotes 1%! In addition to policy illiteracy and populism, aid fatigue is probably driven by the perception that aid is misused by corrupt governments abroad. Donors often use aid for political objectives: either to support regimes they favor or more brazenly to motivate countries to support donors in diverse bodies such as the or the .

But donors also use aid to win hearts and minds of recipient country citizens. This requires that recipient governments use aid effectively and use the monies for projects that people want. These conditions are not met when aid-receiving countries suffer from corruption and governance failure.

In such cases, citizens in aid-receiving countries view aid as supporting corrupt and often violent regimes. The battle for the hearts and minds is lost. Recently, the South African government approved a $8.

8 billion “just transition” package funded by foreign aid. What is “just transition” and why should foreign aid fund it? Climate mitigation faces because it creates a global public good that benefits everybody but imposes local costs that hurt specific communities, especially fossil fuel communities. To address these concerns, there is a push for providing an economic package, labeled as “ ,” to these communities.

The idea is that if local people can find employment outside the fossil fuel sector, they will be more supportive of climate transition. Many developing countries depend on coal to generate electricity. Because these countries do not have domestic resources to fund “just transition”, foreign donors are stepping in.

This makes sense because developed countries are responsible for a large share of accumulated emissions of greenhouse gases—the driver of climate change—and should therefore pay for fixing the problem, including the climate transition costs. However, it is not clear what projects the “just transition” package will include and who will implement them. Have the aid-recipient governments consulted with local communities on this subject? Take the case of South Africa where coal provides 86% of the country’s electricity and employs around 82,000 workers.

South Africa’s “just transition” “renewable energy plants and power transmission lines, green hydrogen, “new energy” vehicles, skills development and bolstering municipal finances to help them cope with the energy transition. ” As reported in a recent paper, “ ,” co-authored with Nthabiseng Mohlakoana and Muhammed Lokhat of Stellenbosch University, we interviewed 51 coal miners, Eskom power plant workers, and community members in the coal-producing Mpumalanga province. We found that interviewees favor quick monetary compensation which provides direct support to individuals.

In part, this is driven by their acute economic distress. They do not want the money to be spent on new infrastructure or to create new industries that the South African plan proposes. Why the opposition to investing in new industries? A examining 130 million U.

S. workers’ profiles found that less than 1% of workers who left dirty jobs found green jobs. Now place this in the context of South Africa which has very high unemployment levels (34%) and where coal mining is considered to be a well-paying job.

A “just transition” package that promises jobs in new industries that coal miners will probably not get, and will probably not pay well, is not likely to secure public support. A similar issue was highlighted in the recent where workers expressed their misgivings about electric vehicles replacing traditional automobiles. Thus, South Africa’s official “just transition” package is unlikely to create local benefits that can help coal communities in the short run.

Moreover, we found that South African coal workers have a deep distrust of their government due to high levels of corruption. reports that in 2021 “Almost two-thirds (64%) of South Africans say that corruption increased in the past year, including half (49%) who believe it increased ‘a lot’. ” Not surprisingly, given the low trust in the government, our interviewees did not want the government or even the labor unions (which are viewed to be a part of the political system) to administer the “just transition” funds! Instead, interviewees favored independent actors, such as NGOs and the judiciary, to do so.

As the climate community debates the appropriate level of climate aid (and its division between mitigation and adaptation), it needs to revisit the implementation shortfalls of development aid. We recognize that this is a difficult issue because developing countries would probably see this as violating their sovereignty. But there is also a downside to ignoring it.

After 9/11, the United States provided hundreds of billions of aid to and yet, it could not secure public support for its preferred political goals. This is not to say that foreign aid will always fail; the Marshall Plan was a political success. But donors need a clear plan to ensure that climate aid follows the path of the Marshall Plan as opposed to aid to Afghanistan.

The aid discussion also informs the subject of the “loss and damage” fund, an important topic at the ongoing COP28 in Dubai. How might donors ensure that these funds compensate local communities hurt by climate change, and are not repurposed (or drained away) by recipient governments? Anticipating the implementation challenge, donor countries want the “loss and damage” fund to be managed by the World Bank – which is being opposed by developing countries. This begs the question: why is the World Bank the appropriate agency for one type of overseas funding (loss and damage) but not for another (climate aid)? What is the Banks’ track record of listening to local people in both project design and implementation? Perhaps, now is the appropriate time to devote more attention to these conversations.

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