Yesterday, November 8th, was the second day of the ‘High Level Segment for Heads of State and Government’ with a focus on their speeches and declarations. The real business of COP will begin in earnest today when most of the senior politicians have departed.
Financing for Climate Loss and Damage in Vulnerable Countries
Climate loss and damage is quickly emerging as the key point of contention at this COP and foreshadows a more tense meeting than last year’s in Glasgow. This issue has been moving up the agenda and recent extreme climate events have increased the perceived urgency around this topic, particularly for vulnerable countries.
Indeed, the issue risks becoming a red-line for climate-vulnerable countries and NGOs, with G7 countries in the firing line for not setting up a fund to help those most affected. The leaders of Malawi, Cabo Verde, Suriname, Barbados and Palau added their voices to the need to increase funding for loss and damage, while the UN Secretary-General called for the creation of a new “climate solidarity pact” in which rich countries would help poorer nations financially.
It is noticeable in this respect that Secretary Kerry softened the U.S. government’s language on this issue, commenting that the US ‘is open to discussions’ on loss and damage albeit with a view toward two years of dialogue to agree on any commitments.
Meanwhile, Austria became the latest country to break ranks among the rich countries and make money available for loss and damage, joining Scotland, Belgium, Denmark and Germany in committing funding to a loss and damage finance mechanism. That said, the amount that has so far been pledged is still relatively insignificant. Meanwhile, the EU called on ‘The Global North’ to commit to climate financing in the Global South, noting the EU was playing its part in contributing to the annual USD 100 billion adaptation fund. Relatedly, the Irish President confirmed that Ireland’s contributions to climate justice finance would exceed its existing commitments and New Zealand announced a climate fund for land and resources lost by developing countries to the effects of climate change.
All this comes against the backdrop of a new report by Nicholas Stern (commissioned by the UK and Egyptian governments) that shows the urgent need for climate financing for mitigation and adaptation in developing countries. The Report concludes that it will require investment of USD 2 trillion/year to cover the needs of the world’s developing economies except China. Importantly for companies, the report concedes that funding cannot come from governments alone, but should be made available from international financial institutions (“IFIs”) and the private sector.
- The UK announced a Forest and Climate Leaders’ Partnership building on a COP26 initiative to halt and reverse global forest loss by 2030. The new Partnership will almost double the scale of the original program from USD 12 billion to USD 23 billion in funding and include countries accounting for almost 60 percent of global GDP, such as Australia, Canada, the U.S., France, Germany, Japan, Kenya, among others.
- France announced a doubling of its domestic decarbonization budget from EUR 5 to EUR 10 billion to help heavy industry in France decarbonize.
- A UN group that was set up to crack down on greenwashing of net zero pledges has called for “red lines” to stop support for new fossil fuel exploration and overuses of carbon offsets. The group’s report received the full support of the UN Secretary-General.
- The U.S. is working on a plan to harness cash from the world’s largest companies to help developing countries cut their use of fossil fuels by developing a new framework for carbon credits to be sold to business. The proceeds could then fund new clean energy projects.
- The UN launched a plan for a USD 3.1 billion global early warning system for extreme weather events, which would collect and analyze data, forecast, build response capabilities, and inform people about climate-related risks.
- Tuvalu issued a demand for an international fossil fuel non-proliferation treaty to phase out the use of coal, oil, and gas.