At COP28, the annual United Nations (UN) climate conference in Dubai, countries raised their climate commitments and signed a voluntary agreement to “shift away from fossil fuels in climate change systems.” energy system in a fair, orderly and reasonable manner.”
But how to finance the energy transition and who pays remains a controversial topic.
More than $85 billion in climate finance was pledged at the conference, according to organizers in the United Arab Emirates (UAE). The UAE reached an initial agreement on the first day with a commitment of $700 million to the Loss and Damage Fund, providing financial support to vulnerable countries facing huge economic losses due to the impact of climate disasters. However, many officials believe that this number is still too low compared to what needs to be achieved.
“Finance is a great accelerator for climate action,” said UN Secretary-General on Climate Change Simon Stiell. “The loss and damage fund is a success, but we would be deluding ourselves if we thought such work was done at this COP; we need more. We need to increase transparency and deliver on our promise to fund climate action around the world.”
Mr Stiell's comments are also consistent with findings of a climate finance gap between current commitments and the level needed for a just transition. According to a UN study, countries will need to spend a total of $300 billion by 2030 and $500 billion by 2050 to adapt to climate change. The UN also estimates that developed countries will need 10 to 18 times more finance than is currently allocated for adaptation.
A range of leaders at COP28 pointed to the need to accelerate climate finance and fill the gap, as the energy transition will become increasingly expensive as countries delay investments. private. However, there has been some progress over the past year.
According to the OECD, for the first time in 2022, developed countries may have achieved their 100 pledge of $2009 billion to developing countries. This unfulfilled promise has undermined goodwill. between countries at previous COPs and was given as an example of the gap between ambition and action.
“This has probably been the most progress we’ve seen in the last 12 months on finance,” Barbados Prime Minister Mia Mottley told reporters in Dubai. “But we're not where we need to be yet.”
“This is probably the biggest financial development in the last 12 months,” Barbados Prime Minister Mia Mottley told reporters in Dubai. “But we are still far from the progress we need to make.”
Loss and damage fund: $792 million
As of December 10, countries have pledged a total of $12 million to help vulnerable countries recover from climate disasters. According to the US National Resources Defense Council, France, Italy, Germany and the UAE are the biggest contributors, with pledges of at least $792 million each, while the US contributed $100 million. la.
The Fund was established in 2022 to address fundamental inequalities between countries; Although poor countries have the lowest greenhouse gas emissions in the world and bear less responsibility, they are especially vulnerable to the effects of climate change, such as rising sea levels and heat waves. , droughts, wildfires and other extreme weather events.
Organizations estimate that the annual cost of climate change damage globally ranges from $100 billion to $580 billion, with a recent study indicating that climate change damage is on the rise. to more than $400 billion per year. This figure means that commitments to support loss and damage costs account for only 0,002% of annual losses due to climate disasters.
In his closing remarks, United Nations Secretary-General António Guterres noted that the new funding commitments represent “building blocks for progress … even though financial commitments remain very limited. ”
Adaptation financing: $61 billion
Additional funding has been unlocked to help launch climate projects that accelerate the global energy transition and support countries in adapting to climate change.
On December 1, the UAE announced the $12 billion ALTÉRRA fund, “with the goal of shaping private markets towards climate investments and focusing on transforming markets and emerging economy.” The fund aims to attract $30 billion in investments by 250 to bring private finance to the ‘Global South’.
Millions of dollars have also been secured for climate change adaptation funds, helping countries implement their transition plans.
Multilateral development banks have committed $31,6 billion to climate funds. Among them, the World Bank has raised its funding target for climate projects to 45% of overall funding by 2025, from 35% previously. The roughly $9 billion annual increase comes with expanded provisions allowing countries recovering from climate disasters to suspend debt payments, a reform supported by Ms. Mottley, the prime minister of Barbados.
At the same time, the UAE has also committed $200 million to the Special Drawing Rights (SDR) of the International Monetary Fund's (IMF) Sustainability and Resilience Trust Fund.
Not only that, $134 million was provided in new commitments to the Adaptation Fund, while the Least Developed Countries Fund was committed to an additional 129.3 million and the Climate Change Fund received $31 million.
Green Climate Fund: $12.8 billion
Largest international fund for climate action in developing countries achieves highest level of funding to date.
In total, 31 countries have committed $12,8 billion to the second replenishment of the Green Climate Fund. The fund's capital raising in 2014 and its first addition in 2019 generated about $10 billion.
The United States is the largest contributor to the Green Climate Fund, following through on its initial commitment of $3 billion, while the next three largest contributors – the UK, Germany and France – pledged average about 2 billion USD.
Over the next four years, the Green Climate Fund will use this funding to implement climate mitigation and adaptation projects, from flood risk management to increasing access to renewable energy.
Food, water, health and other support initiatives: $8.75 billion
Financial resources are also being poured into climate issues that concern lives and livelihoods.
The UAE promised $150 million in support for water scarcity solutions, and as part of the summit's final exchanges, the countries acknowledged the significance of worsening water problems. due to climate change, from water scarcity, sanitation to resilience after water-related disasters.
According to information from the UAE, an additional $2,9 billion was also committed to health initiatives, including $58 million allocated by the Bill and Melinda Gates Foundation, $7 million from the European Development Bank Asia and $100 million from the Rockefeller Foundation, the World Health Organization said.
Sustainable food growth is also a priority, with countries and organizations dedicating $3,1 billion to reduce agricultural emissions, reduce deforestation and mitigate climate-related crop loss. Participants praised the growing focus on the issue at the summit, although they also commented that, like other climate-related financial commitments, progress towards addressing The problem will depend on how well those commitments are realized.
Governments and other organizations also mobilized $2,6 billion for nature protection activities, including $186,6 million in new funding for forests, mangroves and oceans.
Stephen Cornelius, deputy director of global energy and climate at the World Wildlife Fund (WWF), said in a statement: “Many of the commitments we heard at COP28, while welcome, But this resource is still very small compared to what we need. Funding will now need to be increased by an even greater degree to be appropriate for affected groups.”
*Source: Yahoo Finance