Finance, and how it is to be channelled to the developing world, dominated the agenda of COP27 again on Tuesday 8 November, the third day of the international climate summit.
On Monday, Former President of Ireland, Mary Robinson had called for “solidarity funding” from the World Bank and the IMF for developing countries. Tuesday began with reports of record temperatures in October in parts of Europe, as delegates gathered in the Egyptian city of Sharm el-Sheikh for the second day of the World Leaders Summit and heard first-hand accounts from nations devastated by or at severe risk from climate change, including from Shehbaz Sharif, the prime minister of Pakistan:
“An estimate of damage of loss has exceeded 30 billion dollars” he stated “and this all happened despite our very low carbon footprints. We became a victim of something with which we had nothing to do, and of course it was a manmade disaster.”
The president of South Africa, Cyril Ramaphosa called on multilateral development banks to change their approach to climate finance, stating that more funding must come in the form of grants and concessional loans without the costs associated with existing funding. Botswana’s President Mokgweetsi Masisi called for direct contributions to national treasuries rather than project-based climate adaptation funding.
It is clear that scale of the finance required is enormous. A report co-written by the climate economist Lord Nicholas Stern showed that $2 trillion a year is needed by developing countries to enable them to transition from fossil fuels, invest in renewable energy and other low-carbon technology, and cope with the impacts of extreme weather.
As a huge proportion of this finance will come from private-sector businesses, there are calls for reform in the finance sector to allow for easier access to capital for renewable projects, which tends to be harder to acquire than funding to finance for fossil fuel projects.
Taoiseach Michael Martin interviewed here, in turn called for new tools to help countries deal with weather disasters: “Along with all of the measures we must take to reduce emissions, we also now have to look at adaptation, and create financial instruments in terms of dealing with catastrophic risk,” he said.
Earlier on Tuesday, the Taoiseach announced that Ireland will donate €10m to the Global Shield Against Climate Risks initiative, a new financing structure that was first proposed in July 2022 and which aims to channel capital to protect vulnerable nations against climate and disaster risks, tailoring support to countries and match them with finance, insurance and technical mechanisms. In his later address to the World Leaders Summit, the Taoiseach stated that “If this generation does not step up urgently, future generations will not forgive us.”
“This generation of leaders cannot say that we didn’t know…The science is clear. Every tonne of carbon warms the world. Every delay makes our task that bit bigger. Let us not waste a second more.”
The Taoiseach referred to Ireland’s international climate finance roadmap and announced that Ireland is more than doubling our finance to at least €225 million at year by 2025.
Other headline items include the call for an international fossil fuel non-proliferation treaty, so far by only two countries: the small Pacific Islands nations of Tuvalu and Vanuatu.
Another was the proposal by the US for carbon credits which it says could be purchased by major companies to fund clean energy projects in poorer countries. However, the UN High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities has called for “red lines” to stop support for new fossil fuel exploration and overuse of carbon offsets. The group, created in March by the UN secretary general, António Guterres, aims to crack down on the greenwashing of net zero pledges by industry and governments. It stated that carbon offsets should be used only sparing, if at all, and then only after immediate cuts are made in absolute emissions. (Offsets are an often controversial practices whereby companies and governments pay for cuts elsewhere instead of reducing their own pollution.) The market for offsets continues, however, and on Tuesday a group of African countries including Kenya, Malawi, Gabon, Nigeria and Togo are backing a new initiative to “dramatically expand” the use of carbon offsets, aiming to produce 300 million credits annually by 2030 with each representing a metric ton of reduced, removed or avoided greenhouse gas emissions.
The UK Transition Plan Taskforce (TPT) also launched its Disclosure Framework and Guidance for the private sector, emphasising the need for concrete, short-term action by companies and financial firms across the economy. The TPT was announced in 2021 at COP26 as part of the UK’s plan to become the world’s first net zero financial centre. It has a two-year mandate from HM Treasury to provide financial institutions and companies with the tools they need to create rigorous transition plans to fulfil their net zero commitments.
Loss and damage continued to dominate speeches, with criticisms levelled at the US which, like most of the EU, has consistently resisted paying compensation to countries most severely impacted by climate change. There are exceptions to this resistance to pay, though: New Zealand announced a $20m climate fund for land and resources lost by developing countries to the effects of the climate crisis., and five European countries - Austria, Scotland, Belgium, Denmark and Germany - have committed to fund the loss and damage finance mechanism.
Some useful resources
- Summary of loss and damage by Pilita Clark in The Financial Times
- This article in the Examiner, by UCC Professor Hannah Daly discusses the valuation of the damage climate change and as well as the best outcome we can hope for from the negotiations.
- Podcast from Bloomberg Green’s Akshat Rathi’s on Loss and Damage, direct from COP: Zero
Did you know….about the Global Stocktake?
The ‘Global Stocktake’ is the UN’s way of taking stock of the implementation of the Paris Agreement. It assesses progress towards achieving the pact’s goal to limit global warming to 1.5 degrees celsius above pre-industrial levels, and to scale up climate finance. The stocktake has three components
- Collecting and preparing information. This is currently underway at COP27.
- Technical assessment component, which will end in June 2023.
- Consideration of the outputs. This will take place at COP28 in November in Dubai next year.
The global stocktake will provide critical information for countries and stakeholders to see what progress has been made on meeting the Paris Agreement goals, as well as identify any remaining gaps and opportunities for increased action.
You can find all our COP27 updates, information, guidance and supports to help members understand sustainability and meet the challenges it presents in our online Sustainability Centre.
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