Is the Ayrton Fund A High Impact Way to Spend UK ODA?

The UK Prime Minister announced during his visit to the UN General Assembly that one billion pounds worth of overseas development assistance (ODA) will be used to set up the ‘Ayrton Fund’ to support British scientists “and other scientists from around the world” to “work in partnership with developing countries” on climate and energy. Topics would include off-grid energy solutions, battery technology, clean stoves, reducing carbon output from major polluting industries, improving the efficiency of cooling systems, and research into electric vehicles. The fund would be run jointly by DFID and the UK Department of Business, Environment and Industrial Strategy (BEIS).

There is a lot to like in this proposal: it backs research in an area where the world needs urgent progress, it looks like the funding isn’t formally tied to British researchers, and it emphasizes partnership with developing countries. That said, redirecting ODA to the Ayrton Fund raises some big concerns.

First is the fact that this is not new money. Given that the ODA budget is treated as fixed, with a government committing to spend 0.7 percent of GDP on ODA, this fund will displace, rather than increase UK aid. While we agree that the UK should spend more on climate mitigation, we don’t think this money should be taken away from poverty reduction measures. Climate change is already upon us largely because of the activities of rich countries. The UK’s cumulative emissions between 1751 and 2017 were 77 billion tonnes. Nigeria’s were 3.4 billion tonnes. Ethiopia’s were 207 million tonnes. That is the reason that the Paris Agreement suggested climate finance “should represent a progression beyond past efforts.” Taking money from the UK’s commitment to 0.7 percent of GDP going to global poverty reduction and re-tasking it to climate-related research doesn’t look to be progression beyond past efforts.

That means the opportunity cost of the Ayrton Fund is spending on other development priorities. This might be worth it, but the causal chain from spending additional money on R&D in areas outlined in the announcement to reduced poverty, is long and uncertain (not least, the R&D has to deliver technologies that are subsequently adopted and have a significant impact on emissions). It requires heroic assumptions about the impact that “UK inventors” can have on emissions.”

Second, policies and research that allow for the rapid reduction of greenhouse gas emissions by consumers and industries in richer countries will have a far more significant effect than focusing on the emissions of poorer people and countries. Westminster alone–the seat of the UK government–emits more than Malawi and Burundi combined. Of course, China has emerged as the world’s largest greenhouse gas emitter, but that only demonstrates that a focus on mitigation efforts involves a distinctly different set of countries than a focus on reducing extreme poverty. And research into technologies to reduce rich world greenhouse gas emissions certainly shouldn’t count as ODA.

One estimate suggests that, since 2011, if the UK had increased fuel duty in line with general inflation–keeping its value the same in real terms–the amount of emissions avoided by 2017 would be equal to around 4.5 million tonnes. This is equal to the combined annual emissions of Sao Tome and Principe, Comoros, Burundi, Guinea-Bissau, Central African Republic, The Gambia, Eritrea, Lesotho, and Chad. It also would have generated an additional £7 billion in tax revenue–enough to finance seven Ayrton Funds. This would be a much better source of finance for climate-related research than the aid budget. It could also help provide additional finance to quick-impact climate mitigation activities in developing countries that may be more effective than research on poor-country-focused mitigation technologies, such as the forest initiative REDD+.

More climate research finance is welcome–the world needs innovation to find new climate solutions. But by using the UK aid budget, the Ayrton Fund diverts financing for poverty reduction, and–to the extent it focuses on poor-country mitigation challenges–it diverts responsibility and focus from where the greatest challenges exist.