In a few days, the 2022 United Nations Climate Change Conference (COP27) will begin in Sharm El-Sheikh, setting in motion the series of negotiations and deliberations to save the planet and all life on it from the catastrophic consequences of climate change.
Against a tumultuous global backdrop shaped by the war in Ukraine and other mounting geopolitical crises, and economic deterioration strangling growth, driving up prices and propelling developing countries further into the maws of debt, the summit must find ways to grapple with the climate crisis in a practical and comprehensive way, in fulfilment of the provisions of the 2015 Paris Agreement.
“Comprehensive” does not just refer to the various courses of climate action and funding to reduce greenhouse gas emissions, accommodate to their effects and address the loss and damage climate change has inflicted on the biodiversity, natural resources and general wellbeing of societies. It also refers to the need to rebel against deliberate attempts to reduce sustainability to the reduction of carbon emissions because, as pernicious as they are, these are not the only emissions that harm the climate. Comprehensive also requires setting climate action in the framework of the sustainable development goals (SDGs) that must be reached without delay by 2030, as world leaders had pledged in a special UN summit in September 2015.
Sadly, the world is worse off today than it was seven years ago when those pledges and commitments to climate action and development were made. According to the most recent report of the UN Intergovernmental Panel on Climate Change (IPCC) we are continuing to deviate to an alarming degree from emissions reduction targets. Instead of a 45 per cent decrease by 2030, the emissions will increase by about 14 per cent.
As for the eradication of poverty, not only has the international community failed to reduce the number of people suffering from extreme poverty; their number increased to 719 million by the end of 2020. That figure, moreover, did not take into account the rising prices of food and energy after the war erupted in Ukraine and the residual economic and social effects of the Covid-19 pandemic that have driven even more people into destitution. But as I have said before, we cannot blame the failure of public policies, the poor performance of developmental institutions and the waste of resources at their disposal on the war or Covid-19. As the UN secretary-general had warned before the pandemic, the world was already off target on this and other SDGs.
In October, as part of the preparations for the summit in Sharm El-Sheikh, we organised three dialogues with prominent experts in funding, development and climate economics on climate action priorities. The following summarises the main conclusions:
- The notion of a contradiction between development and climate action flies in the face of both scientific evidence and practical experience. In a lecture on synergies and trade-offs between climate action and sustainable development, Stéphane Hallegatte, a senior climate change adviser at the World Bank, offered proof that the failure to factor in poverty and developmental needs in the formulation and implementation of climate action policies harms both the climate and development. Hallegatte cited a study on five African countries that showed that those who fell below the poverty line had been affected by sharp increases in food prices, loss of agricultural incomes, natural disasters such as floods and droughts, and health crises. By contrast, a comprehensive approach to development is one that increases investment in education, healthcare, agricultural productivity, and infrastructural development to support production, financial inclusion, private sector development and more efficient social safety nets. Hallegatte said that investing in infrastructure that was more resilient to climate shocks would raise the cost of the infrastructure by an average of three per cent; however, it would yield $4 worth of benefit for the economy and society for every $1 spent on resilience. He simultaneously observed that spending on accommodation for the adverse effects of climate change had to go hand in hand with huge investments in emissions reduction and in the alternative and renewable energy sectors using sophisticated modern technologies. This, Hallegatte said, necessitated international cooperation which, as Homi Kharas, an economist at the Brookings Institution stressed, meant surmounting funding obstacles and the slow sharing of the fruits of scientific and technological advances.
- Successful climate action requires integration between funding and science and changes in behaviour in order to achieve the SDG priorities and, above all, the elimination of extreme poverty. This conclusion was supported by the studies on the practical experiences in developing nations conducted by the French American economist Esther Duflo who was awarded the Nobel Prize in economics for her applied work on poverty alleviation. While the wealthiest 10 per cent of the world who live in industrialised nations are responsible for 50 per cent of global harmful emissions, she said, the inhabitants of the world’s poorest nations live in the hottest regions which makes them more vulnerable to the climate shocks that are constantly damaging their livelihood and health. Accordingly, for any just transition to an economic mode that was better for climate and development required more investment in and efficient use of research and development, benefitting from the available science and technology in agriculture, irrigation and forest conservation. Duflo cited examples of projects in India and Africa that achieved tangible results in these areas and underscored the need for sufficient funding in conjunction with shifts in the behaviour of all stakeholders in government, civil society and the private sector in addressing the priorities of climate change and sustainable development.
- The actual annual funding that developing nations need for climate mitigation and accommodation are at least 10 times the $100 billion per year pledge that industrialised nations made in the Copenhagen climate conference in 2009. The distinguished Indian economist Montek Ahluwalia explained that the estimates of the amount of money needed a year to finance climate change vary considerably in the reports of international agencies. He cited the following:
The UN IPCC’s estimate for funding requirements for energy: $2.8 trillion.
The International Energy Agency’s estimate for energy sector funding needs: $3.5 billion.
The McKinsey Global Institute’s estimate for energy needs and land use: $4.5 trillion.
The IMF’s estimate for energy and related sector investment: $3.3 trillion.
The Climate Policy Initiative’s estimate for the same sector: $3.7 trillion.
A recent working paper that Ahluwalia co-authored with Utkarsh Patel, soon to be published in book form by the Brookings Institution, observes that these estimates, which vary from between $2.8 trillion and $4.5 trillion, amount to about three to four per cent of the global GDP.
Excluding the industrialised nations and China, which presumably has the capacity to meet its financing needs without external financial assistance, the paper found that developing nations would need $1.3 trillion a year of investment in the energy and related sectors. This is 13 times more than the $100 billion Copenhagen pledge and even a significant chunk of that has never reached developing nations. The authors and other economists, such as Amar Bhattacharya whom they cite in their study, suggest that half the amount could be financed domestically and that the other half would have to come from foreign public and private sources. They add that just coming up with that half of the $1.3 billion, which is five times the $100 billion pledge, requires international financial institutions to undertake an unprecedentedly huge role in direct funding and supporting private funding. The latter involves costly guarantees in order to allay private sector concerns about economic risk and political instability. In this regard, I believe it is vitally important to expand the rules of the International Development Association (IDA) on long-term concessional loans to include low-middle-income countries in addition to the lowest-income countries, thereby benefiting all African and other developing countries.
The foregoing issues will certainly be raised in Sharm El-Sheikh in the course of its extensive agenda which Egypt, as COP27 president, has designed to be practical, comprehensive and inclusive. The Egyptian presidency has taken it upon itself to ensure that COP27 holds the summit’s participants to their pledges. The presidency also worked closely with the UN’s five economic regions, climate pioneers and specialised advisory and financial institutions to prepare lists of projects that merit investment and funding. A set of objective criteria were applied in this process, such as their compatibility with the priorities of their target societies and their local sustainability.
I was particularly encouraged by the proposals on reforming the global financial architecture which has become overly reliant on costly debt instruments as opposed to investment and long-term concessional finance for climate and sustainable development. One of these proposals hails from Bridgetown, Barbados, whose energetic Prime Minister Mia Mottley has vowed to rally international support behind it.
In the coming days, people from around the world will have their eyes on Sharm El-Sheikh, eager to see whether the spirit of international cooperation can prevail over the excess of political crises, tensions and divisions, and lack of trust in the world today. The task of saving the planet outweighs disputes and conflicts driven by the thirst for temporary geopolitical gains and manipulations of the loopholes of an international order inherited from the aftermath of World War II. It is time to make way for fairer and more efficient arrangements that pave the way for a new global order that truly safeguards peace, achieves prosperity and benefits all people in this rapidly changing world.
An Arabic version of this article appeared on Wednesday in Asharq Al-Awsat.
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