Global biodiversity financiers strategize at COP16 to end ‘perverse subsidies’
At COP16, an international conference here on the edge of the Amazon that is devoted to enacting plans to protect forests, oceans and the biodiversity living in both, a staggering financial reality took center stage in a day-long event Sunday:
Each year, wealthy countries and large institutional lenders devote $1.7 trillion in subsidies, tax incentives and tax breaks that damage or destroy nature while directing just one-quarter of that amount to conserving or restoring the natural world, according to World Wildlife Fund.
At the start of the final week of the 16th biennial United Nations Biodiversity Conference, known as COP16, attendees are hearing unusually bold talk and high ambition focused on the typically off-limits notion of reducing and eliminating so-called “perverse subsidies.”
What’s a “perverse subsidy? Here’s one example: the $640 billion provided annually to the fossil fuel industry that has generated enormous profits for that industry and economic prosperity largely for the Global North, while simultaneously creating the conditions for global warming, ruinous weather disasters, runaway deforestation and record species extinctions.
That’s $640 billion every year given as a gift by wealthy governments to oil, gas and coal companies that are actively resisting steps to avoid climate catastrophe. That’s a government giveaway to fund global greenhouse gas emissions that soared to a record 57 gigatons last year, according to the just-released 2024 U.N. Emissions Gap Report. According to the report, Earth is on a path to heat up by an estimated 2.6° Celsius (4.7° Fahrenheit) by the end of the century, or worse.
Such temperatures will lead to disasters beyond anything we’re seeing today — worse than the fires that burned across Canada in 2023, worse than Hurricane Helene in 2024 and worse than the record smashing drought gripping the Amazon this year.
Today, perverse subsides continue to pour out of taxpayers’ pockets and into fossil fuel coffers and other economic sectors even after nearly every nation in the world, including the U.S., pledged last year at Dubai’s climate summit for “transitioning away from fossil fuels” and accelerating climate action.
Blunt talk
“Most governments pay people more to exploit nature than to protect it,” Barry Gardiner, a long-time Labour Party member of the British Parliament, said Sunday at COP16. “We use nature because it is valuable. We abuse nature because it is free. The failure to properly value nature leads to shortsighted decision making, and perverse subsidies that damage the global ecosystem.”
Gardiner was the keynote speaker at a COP16 event organized by the U.S.-based Global Environment Facility, a $5.25 billion international fund that finances conservation projects around the world. The goal of Sunday’s event: to develop concrete strategies to enact Target 18 of the Kunming-Montreal Global Biodiversity Framework approved by 196 nations at the COP15 biodiversity summit in Montreal in 2022.
Participants at Sunday’s meeting were largely what you’d expect: conservationists from large NGOs like WWF and Conservation International. But also participating were top leaders with the World Bank and International Monetary Fund, and wealthy philanthropies like the Gordon and Betty Moore Foundation and Bezos Earth Fund, which have the power to redirect billions in subsidies. All called for the rapid enactment of Target 18.
“For decades, the goal [of finance] was always growth at any cost. We never took the environment into account unless it was on the back of a truck — filled with cut trees,” said Valerie Hickey, the World Bank’s global director for environment. “That’s changing.”
Loans to facilitate unregulated growth through paid-out subsidies have not only led to horrendous environmental damage, but also to crippling debt in scores of countries.
“In a world where almost 60% of governments are in debt distress or the risk of debt distress, they don’t have money to spend on subsidies that aren’t working or costing them more environmentally in the long run,” Hickey said. “There is a political hunger to reform subsidies. The time is right because we are not talking about eliminating subsidies but repurposing them.”
Hickey stressed that for such reform to truly work, key players must be “at the table,” including Indigenous groups, small-scale farmers, local NGOs and academic experts. “They have the numbers and expertise, and they must be heard,” she said to applause.
Blunt talk
“Most governments pay people more to exploit nature than to protect it,” Barry Gardiner, a long-time Labour Party member of the British Parliament, said Sunday at COP16. “We use nature because it is valuable. We abuse nature because it is free. The failure to properly value nature leads to shortsighted decision making, and perverse subsidies that damage the global ecosystem.”
Gardiner was the keynote speaker at a COP16 event organized by the U.S.-based Global Environment Facility, a $5.25 billion international fund that finances conservation projects around the world. The goal of Sunday’s event: to develop concrete strategies to enact Target 18 of the Kunming-Montreal Global Biodiversity Framework approved by 196 nations at the COP15 biodiversity summit in Montreal in 2022.
Participants at Sunday’s meeting were largely what you’d expect: conservationists from large NGOs like WWF and Conservation International. But also participating were top leaders with the World Bank and International Monetary Fund, and wealthy philanthropies like the Gordon and Betty Moore Foundation and Bezos Earth Fund, which have the power to redirect billions in subsidies. All called for the rapid enactment of Target 18.
“For decades, the goal [of finance] was always growth at any cost. We never took the environment into account unless it was on the back of a truck — filled with cut trees,” said Valerie Hickey, the World Bank’s global director for environment. “That’s changing.”
Loans to facilitate unregulated growth through paid-out subsidies have not only led to horrendous environmental damage, but also to crippling debt in scores of countries.
“In a world where almost 60% of governments are in debt distress or the risk of debt distress, they don’t have money to spend on subsidies that aren’t working or costing them more environmentally in the long run,” Hickey said. “There is a political hunger to reform subsidies. The time is right because we are not talking about eliminating subsidies but repurposing them.”
Hickey stressed that for such reform to truly work, key players must be “at the table,” including Indigenous groups, small-scale farmers, local NGOs and academic experts. “They have the numbers and expertise, and they must be heard,” she said to applause.
Clear and precise language
Target 18 is a landmark measure prompted by the global environmental emergency. It is a call for extraordinary political will and fiscal responsibility with the intention of shifting traditional measurements of economic success away from planet-wrecking growth and unbridled wealth, toward the rapid conservation of 30% of Earth’s land and sea (known as 30 by 30) to put a brake on the planet-wide biodiversity and climate crises.
Here’s what Target 18 says: “Identify by 2025, and eliminate, phase out and reform incentives, including subsidies, harmful for biodiversity, in a proportionate, just, fair, effective and equitable way, while substantially and progressively reducing them by at least $500 billion per year by 2030, starting with the most harmful incentives, and scale up positive incentives for the conservation and sustainable use of biodiversity.”
Perverse subsidies don’t only go to fossil fuels. They also flow annually to industrial agriculture ($350 billion), forestry ($155 billion) and fisheries ($50 billion), according to the International Monetary Fund.
In agriculture, subsidies often go for petrochemical-based fertilizers that harm soil and insects, while barely improving yields and creating marine dead zones off global coasts. Forestry subsidies flow to forest biomass companies which turn living forests into wood pellets to be burned at converted coal power plants. These subsidies come on top of the billions — often taxpayer funds — paid to produce more planet-warming oil, gas and coal.
The biodiversity summit in Colombia, with 23,000 attendees, is a very different animal from the UN climate summits held annually with three times more in attendance. In Dubai, United Arab Emirates, last year, the president of the conference was an oil company executive, and fossil fuel lobbyists outnumbered national delegations.
Such lobbyists are largely absent here in Cali, as was the case in Montreal two years ago. That’s largely why Target 18 not only exists, but its language is unusually clear and precise. By comparison, the historic Paris climate agreement of 2015 — which focuses heavily on reducing carbon emissions — does not mention fossil fuels at all.
Encouraging political will
Carlos Eduardo Correa, Colombia’s former minister of environment and sustainable development, spoke Sunday about how governmental departments, either friendly to or controlled by outside corporate interests, pose a genuine obstacle to subsidy reform.
At the U.N. climate summit in Glasgow, Scotland, in 2021, Correa was proud to announce that his country intended to meet its 30 by 30 conservation goals long before the 2030 deadline. But when he returned home to the capitol in Bogota, he was met by angry ministers of agriculture, energy and trade.
“My colleagues had a hard time accepting that we had to protect more of Colombia,” Correa said. “Keep in mind, 50% of our revenue comes from oil and gas. We still accomplished our [conservation goals], but it takes a lot of political will.”
Prasad Ananthakrishnan, the International Monetary Fund’s unit chief for Monetary and Capital Markets, said his institution will play an important role in providing a context for enhanced political will by convening policymakers from various countries to talk through the challenges of subsidy reform and pursue the proper planning collectively.
He also said that significant change must come from within the lending community: “Of the 100 largest banks, 38% of their loans extend to harmful subsidies. Many didn’t begin with the intention of causing harm but evolved in that way. Recognizing what needs to change is essential.”
The real value of nature
Change must come, the speakers noted, because the subsidy problem continues to worsen. Since Montreal and the drafting of Target 18, harmful subsidies have grown by billions, according to Nina Seega, director of sustainable finance at the Cambridge Institute for Sustainable Leadership. “It is therefore imperative that COP16 agrees to a viable framework for the implementation of Target 18,” she said.
In his keynote speech, Gardiner, the British MP, spoke about how economists mistakenly view the natural world as a subset of the economic world. The opposite is actually true, he explained. “When is the last time you received an invoice from a bee? Bees don’t wait to see if the orchard owner has paid for their services. But the value of insect pollination is estimated at $153 billion a year.”
Bees, of course, are fighting to survive pesticides; birds are struggling against habitat loss in exchange for economic growth; forests are being cut not for timber but to be pressed into pellets and burned for energy, causing more pollution than coal. And carbon continues to rise from smokestacks.
In a statement that crystallizes the goals and challenges of COP16, Gardiner said, “When the last forest has fallen to the chainsaw, when the last ocean has been choked with plastic, when the last fish has been caught and the Earth lies barren, is it only then that you will understand how all your wealth was built upon nature. And that without nature, your money is no better than sand in your pocket.”
Cover photo: The 16th United Nations biodiversity summit, called COP16, is being held in Cali, Colombia, near the country’s mountainous Pacific coast. The motto for the meeting is also its goal: Paz con la Naturaleza — Peace with Nature. Image by Justin Catanoso for Mongabay.
