Not only have recent scientific reports from the UN Intergovernmental Panel on Climate Change (IPCC) warned of the dangers of deviating from targets to reduce the emissions of the greenhouse gases responsible for driving the planet’s temperature above critical levels, they have also underscored significant shortages in the funds available to the developing countries so that they can effectively address climate challenges.
They are hardly the first such reports to be released by this international agency that was founded by the World Meteorological Organisation (WMO) and the UN Environment Programme (UNEP) in 1988 and that is composed of 195 member states. Year after year, its reports have sounded the alarm on climate change.
In innumerable conferences and other forums, speakers have long urged the need to respect scientific findings and to take resolute measures to save the planet from the fate of which we have already seen portents in the form of devastating hurricanes and tornadoes, mounting droughts and desertification, increasingly severe floods and forest fires, and coastline erosion.
Moreover, these dramatic conditions have occurred when the Earth’s average temperature stands at around 1.1 degrees Celsius above its average before the Industrial Revolution. Imagine what will happen should temperatures exceed 1.5 degrees Celsius above this level, which scientists have identified as a threshold that cannot be crossed without gravely increasing the risks to human survival.
Yet, harmful emissions of all sorts continue to accumulate. Rather than see a reduction in these emissions by at least 45 per cent by 2030, in keeping with international pledges, they have increased by about 14 per cent. This means the world is nearly 60 per cent off target.
Some have cited the war in Ukraine as a reason why the world has been remiss in its commitments, including the pledges governments made in the Paris Climate Agreement of 2015. This is not true. This irresponsible behaviour was documented in the IPCC’s reports in February before the war broke out and then again in March. These reports monitored climate-related disasters that preceded the humanitarian disaster unleashed by the war in Ukraine. It is a common but misleading practice to blame problems or failures on global political crises, as if everything had been working fine beforehand.
This is not to say that we can ignore the detrimental impacts of the Ukrainian war on work to save the world from catastrophic climate change. In my view, the war has created two antithetical trends. One is short term and coincides with the fallout of the war and its impacts on food and energy prices in particular. The automatic reaction has been a scramble to arrange for such commodities, fuel above all, from any available source and at any price.
Thus, the European countries have reopened many coal-fired power plants. They also put nuclear plants back to work despite warnings of security risks, especially after the 2011 Fukushima disaster in Japan. The EU also reassessed previously shunned natural gas as a transitional energy source.
The second trend has been the rush to diversify geographical sources of energy, which has entailed additional European investments, particularly in new and renewable energy sources. Senior officials from the EU, its member states, and energy firms have been paying numerous visits to the countries of the south of the Mediterranean to sign memorandums of understanding (MoUs) and lay the groundwork for arrangements to promote the production of green hydrogen, solar energy, and wind power and to expand electricity grids and lay underwater cables.
However, without sufficient funding, the climate crisis will remain mired in a vicious circle.
The above-mentioned IPCC reports say that the developing nations need much more money for climate-mitigation and adaptation programmes. Estimates of the amounts involved or around an annual average of $2.6 trillion, and that is if we presume the minimum and maximum estimates are relatively accurate.
How are these countries to bridge this huge funding gap? Not from the amount of 100 billion euros per year that the developed nations pledged to commit to this purpose in Copenhagen in 2009. As we know, a large chunk of that money has not reached its intended recipients. The highest estimate, announced last year, placed the funding that made its way to the developing nations at about 80 per cent of the pledged amount. Even then there was considerable scepticism surrounding the approach used to make this estimate, as well as about the actual flow of the money and the ways in which it was being used.
This is how such vicious circles work: a figure is announced without a concrete needs assessment. It is then proclaimed as a landmark accomplishment, as occurred in 2009. The conference participants shake hands and pat each other on the back. Then, years pass without the funds arriving in full. Studies are conducted using conflicting methodologies to explain what went wrong. Yet, all the while it is known that ten times the amount announced would actually be needed to meet the developing nations’ climate-mitigation and adaption needs.
The following are six interrelated ways to break out from such vicious circles.
-The donor nations must meet their $100 billion pledges. This is essential in order to build trust before making other pledges. It should be borne in mind that these amounts are not a gift from the munificent. They are a means to rectify an injustice. The developing nations did not cause the climate crisis or contribute as much as others to aggravating it. Yet, they are the ones that are the most harmed by its effects.
These pledges also offer an incentive for the developing nations to use more environmentally compatible technologies that will simultaneously benefit the developed nations that own the rights to these technologies. At the same time, the investment also helps to ward off potential harm to the more developed nations should the developing nations continue to use environmentally harmful technologies.
It would also avert the adverse effects of the transition to green technologies in the developing nations, which could increase migration trends or population displacements due to the repercussions of climate change.
- The funds should be delivered in the form of investments and not loans. Is it fair to have a poorer neighbour go into debt to repair his humble home because of damage caused by the construction of a richer neighbour’s mansion? Obviously not, and even less so when the neighbour in question was already encumbered by debts before the Covid-19 pandemic and is now more debt-ridden than ever at a time when soaring inflation, rising interest rates, and the declining value of local currencies make it harder and harder for him to service his debts.
Clearly, the only solution is more grants and more direct investment. If, and only if, the funds must come in the form of loans, they should be highly concessional and have extended grace periods and low servicing costs. They should also be backed with technical assistance and ways to encourage the private sector to use facilitated loans to leverage private investment and reduce financing risks.
- There should be a role for the private sector. At last year’s COP26 Climate Summit in Glasgow, it was announced that a group of 450 of the largest financial management organisations that control some $130 trillion in funds was willing to fund projects aiming to achieve the goals of the 2015 Paris Agreement on Climate Change.
In advance of the forthcoming COP27 Climate Summit in Sharm El-Sheikh, the Egyptian host, in collaboration with the UN and climate leaders, will organise five regional forums to discuss funding climate projects and identify investment opportunities in the developing nations in clean and renewable energy and other projects for climate-mitigation and adaptation systems, with a particular focus on agriculture, agro-processing and food products. The above-mentioned financial organisations, development banks and other relevant firms will be invited to these five forums, the results of which will be presented at the COP27 meeting in November.
- Debt should be reduced. If the members of the G7 and G20 groups of nations want to do a favour to the world this year, they should adopt mechanisms to reduce the debt burden on the developing nations by linking it to a system whereby repayments are swapped by investments in greenhouse-gas emissions reduction projects, renewable energy enterprises, or climate adaptation and environmental diversity conservation projects.
Recently, the Seychelles and Belize introduced debt-swap operations that will serve to increase their transactions and reduce the costs of these with international financial agencies.
- Carbon markets need to be established. The developing countries, especially in Africa, need to establish an integrated carbon market that will both serve their particular needs and spare them from exploitation.
According to African UN officials Ahunna Eziakonwa and Maxwell Gomera, the global carbon market topped $850 billion in 2021, up 164 per cent from the previous year. However, this market is highly volatile and prices can swing from $10 to $100 per ton. The African countries need to work closely together to develop the appropriate organisational structures and training programmes benefiting from the expense of the type that Europe has already developed.
Europe established its system in 2005 and then cooperated with China and the Southeast Asian countries to create emissions trading systems that aimed to reduce emissions rather than just shift the emissions burden from one county to another.
- Above all, the developing nations need to emerge from their vicious circles. Each of them needs to set priorities regarding the measures that should be taken to address climate change and achieve the UN Sustainable Development Goals (SDGs). They should then itemise these measures in their budgets, earmark outlays, encourage private investments in designated fields and projects, provide for the effective management and utilisation of international financing, and ensure that the necessary measures for sound governance, reporting, and accountability are in place.
An Arabic version of this article appeared on Wednesday in Asharq Al-Awsat.
A version of this article appears in print in the 30 June, 2022 edition of Al-Ahram Weekly.