When climate ministers from nearly 200 countries descend on
the United Arab Emirates for a UN climate summit in late November, some hard
conversations will need to be had on what has – and what hasn’t – been done to
mitigate climate change on a global scale.
اضافة اعلان
This year’s event is of particular importance. The 28th
Conference of the Parties (COP28) faces a reckoning as it takes stock of
progress towards the goals of the Paris Agreement, which sets out to limit the
average warming across the globe to “well below” 2 degrees Celsius and to
pursue efforts to cap warming to 1.5 degrees Celsius.
On September 8, the United Nations Framework Convention on
Climate Change (UNFCCC) released the Technical Document on Global Stocktake, a
sort of check-in on what countries have done so far to prevent a more dangerous
climate change. Two findings in this document stand out and they will feed into
the outcomes of the COP28 summit.
Challenges
First, global emissions are not on track with the desired
targets of the Paris Agreement. The UNFCCC’s 2022 Nationally Determined
Contributions Synthesis report found that the global emissions are set to rise
by 10.6 percent by 2030 compared to 2010, an improvement from the 2021
projections of 13.7 percent increase. However, these efforts are not enough and
implementation of current pledges by national governments put the world on
track to become 2.5 degrees Celsius warmer by the end of the century. COP28 will
have to reach a consensus for further reductions in emissions targets,
especially by the developed world.
- The OECD's "Towards Orderly Green Transition" report indicates that by 2030, an extra $1.8 trillion annually is required for climate action, representing a quadrupling (toward adaptation, resilience and mitigation) from 2019 levels, primarily for sustainable infrastructure.
This brings us to the second key issue raised by the Global
Stocktake. The shift to low-emission energy sources has been too slow. This lag
is primarily because of a lack of technology and insufficient climate financing
options, especially for developing and low-income nations. Poor countries face
obstacles in generating local resources for climate initiatives. The absence of
loans from the private sector poses a significant barrier.
The creditworthiness of a nation is generally gauged through
macroeconomic parameters and past repayment histories. Unfortunately, many
developing nations wrestle with issues related to low GDP, political
instability and poor fiscal management, affecting their credit ratings
adversely.
Even when loans are secured, they often come with
exorbitantly high interest rates, further exacerbating their economic strain.
The lack of adequate financing not only hampers their ability to implement
crucial climate mitigation and adaptation strategies but also restricts their
capacity to participate in global climate initiatives, perpetuating a cycle of
environmental degradation and economic hardship. Moreover, the scant finances
often must be juggled between immediate socioeconomic concerns and long-term
climate actions, presenting a complex conundrum for policymakers.
Possible solutions
Developing countries need better access to institutionalized
climate finance. The financial commitments essential for combating climate
change are in disarray. The 2009 pledge to mobilize $100 billion annually for
developing nations by 2020 has not been achieved in any single year. The
Organization for Economic Cooperation and Development estimates available
funding for the year 2020 at a paltry $83.3 billion, a figure that underscores
the systemic failure to honor even the most basic commitments. Further, more
public funds flow from developed to developing nations for mitigation rather
than adaptation. However, there has been a rise in adaptation finance from
multilateral development banks (MDBs), which include such institutions as the
World Bank and the Islamic Development Bank.
global emissions are not on track with the desired targets of the Paris Agreement. The UNFCCC’s 2022 Nationally Determined Contributions Synthesis report found that the global emissions are set to rise by 10.6 percent by 2030 compared to 2010
The OECD's "Towards Orderly Green Transition"
report indicates that by 2030, an extra $1.8 trillion annually is required for
climate action, representing a quadrupling (toward adaptation, resilience and
mitigation) from 2019 levels, primarily for sustainable infrastructure.
That is where MDBs come in. They can substantively address
the climate financing challenges faced by developing and low-income countries
by amalgamating financial support, technical expertise and policy advice to
bolster necessary reforms and resources. Their capacity to work cohesively with
both governments and the private sector facilitates a framework for investment,
while their aptitude for providing low-cost, extended-maturity financing
mitigates and efficiently shares risks, thereby enticing private investment.
However, the disbursements by MDBs have been lagging, and
the current extent of resource transfer to developing countries is inadequate.
Unlike many institutions that consistently seek to enhance their reach and
efficiency, MDBs appear to have stagnated in their efforts. In financial terms,
MDBs' gross disbursements are currently half what they were in 1990 relative to
the GDP of borrowing countries. On the private sector front, MDBs today
mobilize just $0.60 in private capital for each dollar they lend. Thus, MDBs
need to reform.
COP28 needs to advance this issue. Without climate finance for developing countries, Paris Agreement goals won't be met. The UAE will have a crucial role to take this agenda forward.
An independent expert group commissioned under India's G20
presidency has crafted a strategy for MDBs. Tasked with producing two reports,
the initial "Triple Agenda" emphasizes the role of MDBs in merging development and climate goals,
partnering with governments and businesses to mitigate risks, and becoming more
adaptable. MDBs should enhance their operations, considering disbursements and
resources are now below 1990 ratios. The group suggests a tripartite strategy:
MDBs should focus on eradicating poverty, boosting shared wealth and aiding
global issues like climate change. There's also a call to triple sustainable
lending by 2030 and introduce a novel funding approach (apart from negotiated
equity contributions from sovereign shareholders and discretionary trust funds)
to foster versatile collaborations with investors aligned with the MDB agenda.
COP28 needs to advance this issue. Without climate finance
for developing countries, Paris Agreement goals won't be met. The UAE will have
a crucial role to take this agenda forward.
Aditya Sinha, Officer on Special Duty, Research, at the Economic Advisory
Council to the Prime Minister of India. X: @adityasinha004
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