Bonn or bust: How can we get the most from limited climate finance?
September 30, 2022
September 30, 2022
Since COP26, the world has been lurched into new crises. How will this impact COP27 promises of climate finance?
Under an intense spotlight, many nations declared new climate commitments and pledges at COP26 last year. They also reiterated promises of financial support for those who most urgently need to adapt the impacts of rising global temperatures. But since then, much of the world has lurched into new crises around basic living—including costs of food, energy, and water.
At the Bonn Climate Change Conference in June, John Kerry, US climate envoy, warned that the war in Europe can’t serve as an excuse to prolong reliance on coal. Experts also raised flags saying that wealthy nations could continue to renege on their climate adaptation and mitigation financing promises to low-income nations.
At November’s COP27 in Egypt, leaders are being looked upon to carry out important actions. They include implementing carbon markets, embedding more ambitious nationally determined contributions (NDCs) and long-term strategies, doubling finance for adaptation measures, and for the global north to live up to its commitments under the Paris Agreement. But as inflation soars and stock markets struggle to recover, where will climate action fall in the priority list for nations? Will we see it drop as countries deal with an increasing number of citizens struggling financially?
Action on CO2 may be local, but the CO2 emission account is a global one. To transition to a net zero future as fast as we can means prioritizing projects that reduce or remove carbon quicker and in greater quantities. This is regardless of where they are in world or whether they are accounted for in national policies or private-sector targets.
Net zero policy and action needs to respond to this global-local balance to challenge where we can get the best results. While early actions on carbon emissions locally may be cheap, it’s not long before the easy wins are won. then the cost of carbon abatement goes up. With the limited amount of global economic firepower on display in 2022, it seems foolish to use capital to remove carbon at around US$12,000 per ton in developed nations when emerging economies still have not actioned their quick wins.
Our teams are involved in some projects that are “easy wins” in low-income countries. These projects also support adaptation and other ecosystem services goals. They include enabling the participation of Africa’s private sector in climate-related investments, supporting countries to develop their intended NDCs, and helping Ethiopia achieve climate change ambitions.
Some energy-efficiency measures that seem basic in some parts of the world—more efficient lighting and better building insulation—represent untapped potential in less developed countries.
In many areas, securing reliable electricity via microgrids and home solar systems could reduce CO2 emissions. As an example, West Africa still relies on dirty and expensive diesel to run backup generators to cover more than 40% of its electricity needs.
Directing money to emerging economies requires developed nations to be smarter about the best use of equity. The cost of carbon abatement, as part of whole life carbon analysis, is a critical metric to direct limited financial resources and get maximum benefit in the near term.
This does not mean developed nations and the private sector should buy their way out of their emissions. Governments and the private sector need to work together. We know competition encourages action, innovation, and investment. It’s how we encourage global executives to implement changes, drive improvements, and create better services.
But at the same time, we are all connected across the world. Private sector peer-to-peer collaboration and public-private partnerships have a key role to play to adapt to and mitigate climate change. By working together and sharing clever ideas, we can produce thought leadership, innovation, and implement change—with some healthy competition thrown into the mix to drive it on that much further. Indeed, this need for partnerships to tackle climate change and other global challenges has been recognized for some time and is reflected in the U.N.’s Sustainable Development Goal 17: Partnerships for the Goals.
However, it requires a shift from purely thinking about shareholders and stock prices. It’s essential to include the global human, environmental, and economic factors while supporting a global transition to a net zero future.
But as inflation soars and stock markets struggle to recover, where will climate action fall in the priority list for nations?
Some recent examples of inspiring cross-sector partnerships and collaborations include:
We are in this together. Only together will we help safeguard environmental and human well-being and accelerate the technological innovations we still need.