COP28 : It’s money time !
COP28 in Dubai kicks off amidst a worrying climate backdrop. For the first time, the threshold of a 2°C temperature rise compared to the pre-industrial era was exceeded in one day. In addition, a report published by the UN this week warns that current policies are placing the planet on a warming trajectory of 2.9°C, and that the chances of maintaining the increase at +1.5°C are now of only 14%. The results of the first Global Stocktake, a worldwide assessment of the actions taken by countries since the Paris Agreement, will be published at the COP and should confirm the urgent need to change the trajectory of greenhouse gas emissions.
A number of financial hurdles will have to be overcome if this COP is to result in concrete action. Among the main issues brought forward by developing countries is the commitment made in 2009 by developed countries to mobilize US$100 billion of climate finance each year to support developing countries, which has not yet been delivered and will be revised upwards in 2024. Other key issues include the establishment of a fund and financial arrangements for loss-and-damage announced at COP27, and more generally, the difficult financial equation facing emerging and developing countries (EMDCs). Indeed, for EMDCs other than China, climate investment needs are estimated at around $3,000 billion a year by 2030.
Negotiations on these points are likely to be tough, but a number of signals suggest that they may not lead to deadlock. The first promising element is the strong mobilization of all stakeholders: indeed, this year’s meteorological events have reinforced awareness that the current level of warming is already causing considerable human and material damage. Secondly, progress has been made on the rethinking of the global financial architecture. The call for reform of the financial system and multilateral development banks was an important outcome of COP 27, and proposals to reduce the financing gap for developing countries have since been put on the table. These include, among others, the recycling of IMF-issued Special Drawing Rights to the countries that need them most and the setting up of guarantees to limit exchange rate risk. Finally, the final positive signal concerns the development, by countries, of financing strategies for the transition, and the four Just Energy Transition Partnerships (JETPs) that have been signed in South Africa, Indonesia, Vietnam and Senegal over the past two years. These partnerships aim to raise funds on a multilateral basis to help countries move away from their dependence on fossil fuels, while ensuring a just transition for societies.
Will these elements be enough to bring forth results that measure up to the stakes? The blogpost in the newsletter provides more detail on the advances that could make this COP a success on these issues.
Part of the I4CE team will be at COP28, where we have scheduled a series of side-events on issues around financing the transition, details of which are provided in this newsletter. Don’t hesitate to contact us if you’re there!
