INTERVIEW: Funding the future

Niveen Wahish , Monday 15 Aug 2022

Al-Ahram Weekly interviews UN Climate Change High Level Champion for Egypt Mahmoud Mohieldin about efforts to ensure climate financing pledges pay more than lip service

Funding the future


Thirteen years ago, at the United Nations Climate Change Conference — the Copenhagen Summit — advanced economies pledged $100 billion to help developing economies meet climate action goals. The figure was subsequently endorsed by the Paris Agreement, a legally binding international treaty adopted by 196 Parties at COP21 in Paris in 2015. It entered into force in 2016 with the goal of limiting global warming to 1.5 degrees Celsius.

The $100 billion is a symbolic figure, UN Climate Change High Level Champion for Egypt Mahmoud Mohieldin told Al-Ahram Weekly. “It was presented as a minimum, but so far the minimum has not been met.”

Today, says Mohieldin, there are many question marks over the adequacy of the figure. It is estimated that developing countries alone need $2 trillion a year to deal with just one issue, energy transformation.

To help ensure existing pledges are delivered, and push for the implementation of the Paris Agreement, Egypt, which will host COP27, together with the UN Regional Commissioners and the High Level Climate Champions Mohieldin and Nigel Topping, are holding a series of round tables to match carbon-cutting and adaptation projects with financiers.

The first of the meetings took place at the UN Economic Commission for Africa in Addis Ababa, Ethiopia, last week. According to Mohieldin, it was the first initiative of its kind to adopt a regional approach to the finance and investment opportunities presented by action on climate change, bringing investors, project owners, and line ministries responsible for climate-related investments together under one roof.

The goal was to match new projects and those that already exist but need to be replicated or scaled up with the finance and investment required, either from development finance institutions or the private sector, he explained.

At last week’s meeting 19 sample projects were presented, chosen from among 150 projects currently being considered. Egypt presented four, with a total cost of $17.4 billion, around 40 per cent of the combined cost of all the projects on the list. With some funding already secured, one project is seeking $11.4 billion in new investments and aims to replace 17 fossil fuel power stations with wind and solar power. A second project involved the construction of two electric light rail lines, one to link the New Administrative Capital to a subway station near Cairo International Airport, the other linking Alexandria to Port Said. The third project aimed to increase crop resilience in the Nile Valley and Delta while the fourth involved the building of six solar-powered desalination plants.

Mohieldin argues that the greater focus on food and energy security caused by the war in Ukraine should be seized on as an opportunity. Everyone now realises that they need to change the way they do business, he says, and interest on the part of development financial institutions and investors in securing food and energy supplies is at an all-time high.

The projects that were presented could help get Africa on the right track. Mohieldin points out that though countries of the south are responsible for a very small proportion of carbon dioxide emissions globally, future development needs to be climate sensitive. “We do not need these countries to spur growth by adopting technologies that are harmful to the environment. It is better to get them to do the right thing early rather than regret it later.”

The meeting aimed to overcome the separation that has grown between the climate action agenda and the rest of the UN’s sustainable development goals (SDGs).

The idea is not just to promote projects that reduce the climate threat, says Mohieldin, but to ensure they also align with other SDGs at country level.

“We don’t need projects that claim to be in line with climate action but which increase poverty or negatively impact on the welfare of the general public and the inclusive agenda pursued by the SDGs.”

“Rather, we need investments and projects that push the climate action agenda and have a positive impact on the SDGs overall.”

The meeting also sought to guarantee that stakeholders put their money where their mouth is. For years financial institutions have claimed they have the money but do not have the projects. At the same time, line ministries say they have feasible projects but don’t have the financing. Last week’s round table, Mohieldin points out, encouraged the various parties to commit.

It discussed finance mechanisms, including debt swaps. A new generation of such swaps not only links debt reduction to specific projects, but also to performance indicators and policy, an approach, says Mohieldin, that helps scale up the opportunities for debt reduction mechanisms and gets more international organisations involved in reducing debt.

Mohieldin is promoting debt reduction and investment over new loans for climate action on the grounds that developing economies are not responsible for the climate crisis. Given that Africa is responsible for just three per cent of global emissions annually, it is unfair, he argues, to ask countries who bear no responsibly for climate change to borrow, even at concessionary rates, to mitigate its impacts.

Further meetings are scheduled, each in a different region. The second meeting will take place in Bangkok, Thailand, hosted by the UN Economic Commission for Asia; the third in Santiago, Chile, hosted by the UN Economic Commission for Latin America and the Caribbean; the fourth, for the Middle East and Arab countries, will be hosted by the UN Commission for West Asia in Beirut, with a final meeting hosted by the UN Economic Commission for Europe (ECE).

*A version of this article appears in print in the 11 August, 2022 edition of Al-Ahram Weekly.

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