The impending UN climate conference, COP28, faces unprecedented scrutiny primarily centered on its efficacy in addressing climate finance, writes Kevin Mofokeng, a developmental writer and digital PR strategist based in Gaborone, Botswana
The host nation, the United Arab Emirates (UAE), has indicated a significant emphasis on this facet through its outlined summit objectives.
These objectives hinge on four crucial pillars: expediting the energy transition, rectifying issues within climate finance, prioritising the well-being of individuals and their livelihoods, and ensuring comprehensive inclusivity.
Climate finance, once viewed in isolation, now intertwines intricately with various agendas, directly or indirectly.
Its pivotal role extends beyond being a singular concern; it’s become indispensable for the realisation of almost every objective on the climate spectrum.
This significance isn’t confined solely to formal UN summit negotiations but permeates discussions held beyond the COP as well.
The emphasis placed by the UAE on climate finance is evident in this year’s COP agenda.
Building on past traditions, a dedicated day, December 4, 2023, has been set aside specifically for delving into the intricacies of climate finance.
What’s even more noteworthy is the integration of finance as a pervasive theme throughout the entire two-week duration of COP, amplifying the drive for decisive action on financial matters beyond the formal negotiation spaces.
Revamping climate finance to render it more affordable and accessible stands as a critical imperative.
A glaring shortfall emerges from the failure of developed nations to meet the pledged USD 100 billion annually by 2020, initially committed in 2009 to aid climate actions in developing countries.
However, this sum dwindles significantly when juxtaposed with the staggering figures elucidated by recent research.
A recent report on global climate finance, unveiled on November 2, 2023, by the Climate Policy Initiative (CPI), unveils a stark reality: annual climate finance flows have surged to USD 1.265 trillion.
Nonetheless, this surge falls far short of the colossal USD 10 trillion required each year until 2050, as revealed by the latest research.
The disparity intensifies for developing nations, with a major chunk of this finance allocated for mitigation efforts, merely scratching the surface at USD 63 billion annually.
In contrast, the CPI estimates an essential USD 212 billion per year for adaptation measures – a stark contrast to the actual allocation.
The report paints a lopsided picture, highlighting that a substantial 90% of the increased funds have funneled into the coffers of China, the US, Europe, Brazil, Japan, and India, inadvertently sidelining most of the developing world from accessing these crucial funds.
The urgency of the situation cannot be overstated.
According to the CPI report, adhering to the 1.5°C cap on global warming, as opposed to business as usual, could potentially save a staggering USD 1,266 trillion in damages from 2025 to 2100.
The looming deadline for COP28 to address this crucial matter is pressing, given the imperative to finalize the New Collective Quantified Goal (NCQG) before 2025, superseding the previous USD 100 billion commitment.
However, the lack of significant headway on this front during COP27 has escalated the mounting pressure.
Amidst the intense scrutiny of texts and negotiations at COP28, delegates strive for substantive advancements regarding the NCQG.
Simultaneously, the presidency calls for the establishment of a new climate finance infrastructure outside formal deliberations.
This push aims to engage international financial institutions, the private sector, and governments in reshaping global and domestic financial pathways to align with the imperative goals of curbing greenhouse gas emissions and fortifying resilience against climate change.
Advocating for a revolutionary overhaul of the existing financial system holds merit for developing nations only when these alterations ensure the accessibility and affordability of finance.
It’s imperative that these changes facilitate investments in burgeoning sectors, fostering new job opportunities and industries.
Moreover, such reforms must encourage a greater risk appetite, incorporate non-debt instruments, and account for the imperative to address climate-related shocks like flooding, droughts, and rising sea levels.
Anything falling short of these benchmarks would amount to further exploitation by affluent nations, exacerbating the situation for developing countries.
Anticipate a diverse array of mitigation finance strategies emerging on the horizon.
Fossil fuels, culprits behind over 75% of global greenhouse gas emissions, stand as a focal point.
As the UAE presidency sets its sights on ambitious targets – tripling renewable energy capacity, doubling hydrogen production, and revolutionising agricultural systems – attention shifts to the delicate equilibrium it must strike.
How it navigates the interplay between these aspirations and burgeoning developments beyond the scope of COP28’s agenda will lay the groundwork for the trajectory of mitigation finance.
While the formal negotiations at COP continue to deliberate the reduction or phase-out of fossil fuels, a significant stride occurred on the sidelines of COP26, hosted by the United Kingdom two years ago.
It was there that the inaugural Just Energy Transition Partnership (JETP) was unveiled.
This novel financing collaboration aims to facilitate a fair and inclusive energy shift for several coal-reliant emerging economies.
The essence lies in orchestrating comprehensive overhauls of their energy frameworks, ensuring an equitable and inclusive transformation process.
The call from developing nations is straightforward: double the adaptation finance by 2025.
South Africa marked a significant milestone by becoming the inaugural participant in the Just Energy Transition Partnership (JETP), securing a bespoke funding pact of USD 8.5 billion from France, Germany, the United Kingdom, the United States, and the European Union.
Following suit, Indonesia, Vietnam, and Senegal are poised to initiate their individual JETPs.
Notably, multilateral development banks and development finance agencies have rallied to contribute to this consortium, bolstering the support network for these vital initiatives.
While negotiations within the formal COP discussions concerning mitigation finance face sluggish progress due to the complexity of aligning over 190 countries on payment terms and conditions, the Just Energy Transition Partnerships (JETPs) present a contrasting hope.
These initiatives, involving a more limited set of stakeholders, hold the unspoken promise of expedited advancement outside the realm of UN climate talks.
Here, proposals are less prone to the challenges posed by major oil and gas-producing nations. Regrettably, South Africa encountered hurdles in its JETP journey, facing a challenging experience.
Notably, the JETP predominantly materialized in the form of loans, exacerbating the country’s existing debt burden.
This outcome raises concerns about the attractiveness of similar propositions for developing nations grappling with financial constraints.
Prioritising lives and livelihoods stands as an urgent imperative amid the pursuit of financing for energy transitions in developing nations.
While facilitating financial access holds significance, the more intricate challenges of climate adaptation and addressing loss and damage loom large.
Developing countries advocate for a straightforward yet crucial demand: a twofold increase in adaptation finance by 2025.
This augmentation is vital for their ability to combat the escalating impacts of climate change – be it floods, droughts, or other calamities thrust upon them.
Simultaneously, there’s a pressing need for the operationalisation of the Loss and Damage Fund established during COP27, despite vehement opposition from developed nations.
This fund, designed to intervene when adaptation efforts fall short and countries grapple with climate-induced catastrophes beyond their capacity to manage, faces immense pressure for activation.
Expectations soar amidst stark realities: anticipated needs could soar to USD 671 billion annually by 2030, while the current allocation for addressing loss and damage remains meager, standing at less than USD 500 million per year – a glaring disparity.
The UAE presidency has set its sights on nothing short of revolutionizing the finance system for the future.
Yet, alongside this ambitious endeavor, they face the aftermath of the inaugural global stocktake, a significant outcome of COP28.
This review, mandated by the Paris Agreement to evaluate the world’s response to the climate crisis every five years, unveils disheartening revelations: while science insists on a 43% reduction in global emissions by 2030 to curb temperature rise below 1.5 degrees, data paints a grim picture of a 16% increase in emissions since 2010.
Confronted with this stark contrast between necessity and reality, Sultan Al Jaber, president-designate of COP28, advocates for a substantial course correction.
His stance emphasises a decisive pivot: “We are not shying away from the energy transition; we are sprinting towards it.”
The forthcoming months hold the litmus test, determining the success of these aspirations in bridging the chasm between intentions and the challenging environmental reality.
*The writer of this article is Kevin Mofokeng, a developmental writer and digital PR strategist based in Gaborone, Botswana. The views expressed by Kevin Mofokeng are not necessarily those of The Bulrushes