Report: Climate-destructive sectors got $438.6bn annually in 7 years — 65% of subsidies for developing countries

A new report has revealed that the fossil fuel and industrial agriculture sectors, which contribute to the climate crisis, are benefiting from public subsidies in the global south.

The report titled ‘How the Finance Flows: Corporate capture of public finance fuelling the climate crisis in the Global South’ was released on Wednesday by ActionAid International.

The organisation said that the fossil fuel and industrial agriculture sector received an annual average funding of $677 billion across developing countries from 2016 to 2023.

The report found that the fossil fuel sector has been receiving a shocking annual average of $438.6 billion — 65 percent of public subsidies in the gobal south countries in seven years.

It added that due to the lack of finance for climate solutions in developing countries, renewable energy is receiving 40 times less public finance than the fossil fuel sector.

 ‘REDIRECT PUBLIC FINANCE TO SUPPORT JUST TRANSITION’

Arthur Larok, ActionAid International secretary-general, said climate-disruptive industries are draining public funds meant for global south countries.

“This report exposes wealthy corporations’ parasitic behavior. They are draining the life out of the Global South by siphoning public funds and fueling the climate crisis,” Larok said.

“Sadly, the promises of climate finance by the Global North are as hollow as the empty rhetoric they have been uttering for decades. It is time for this circus to end, we need genuine commitments to ending the climate crisis.”   

Teresa Anderson, global lead on climate justice at ActionAid International and one of the report’s authors, said climate-destructive industries are “bleeding” the global south of the public funds needed to combat the climate crisis.

“The lack of public and climate finance for solutions means that in climate-vulnerable countries, renewable energy is receiving 40 times less public finance than the fossil fuel sector,” Anderson said.

“It’s time for the Global South to stand up to the industries that are draining their finances and wrecking the climate. We need to fix the finance flows that are fuelling the climate crisis.”  

ActionAid called for the redirection of public finance to support just transitions, scale-up renewable energy systems to provide energy access, and gender-responsive agricultural extension services that offer training in agroecology and adaptation.  

It also advised wealthy countries to provide grant-based climate finance each year to global south countries, and regulate the banking and finance sectors to end destructive climate financing.