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Analysis: Drops Of Climate Finance Start To Fill An Ocean Of Need

Estimates of how much external funding emerging nations need to adapt to the ravages of climate change are around $1 trillion a year by 2030, one report released during the COP27 conference found

Analysis: Drops Of Climate Finance Start To Fill An Ocean Of Need
At COP27, what many climate campaigners saw as an unambitious final deal was redeemed by agreement on a "loss and damage" fund to help developing countries

Sharm El-Sheikh: The biggest deal to date to forge the kind of private-public sector low-carbon collaboration sought at U.N. climate talks promises $20 billion to shut down Indonesian coal-fired power plants – and it’s a drop in the ocean. Estimates of how much external funding emerging nations need to adapt to the ravages of climate change are around $1 trillion a year by 2030, one report released during the COP27 conference that ended at the weekend found. Most of the deals sealed on the sidelines were relatively small, though the Egyptian hosts, who retain oversight of the U.N. process until COP28 in the United Arab Emirates next year, hope to have laid the foundations for more.

Rob Doepel, UK and Ireland Managing Partner for Sustainability at consultants EY said,

When you see the announcements, it never feels significant enough. And pretty much as soon as the announcements are made, there’s that feeling that … it’s a drop in the ocean of what’s required.

Also Read: India Among Top 5 Countries In Climate Change Performance

The Indonesian deal, announced at G20 talks in Indonesia that overlapped with COP27, brings together public and private money and is more than double the $8.5 billion pledged for a similar agreement with South Africa at climate talks in 2021.

Both are badged as a Just Energy Transition Partnership (JET-P) – one of the many types of financing that have been engineered by those trying to bridge the enormous climate financing gap.

Getting the second JET-P done during COP27 was seen to have injected energy into the U.N. negotiations on helping developing countries finance their shift to low-carbon energy.

At Sharm el-Sheikh, what many climate campaigners saw as an unambitious final deal was redeemed by agreement on a “loss and damage” fund to help developing countries. It tempered the bitterness caused by the rich world’s failure to meet a pledge to provide $100 billion a year in climate finance to emerging markets.

In 2020 it paid only around $83 billion, the Organisation for Economic Co-operation and Development’s most recent estimate found.

The hope of the wealthy nations is that leveraging private sector money will ultimately prove to be enough.

Governments are particularly keen for private investors to contribute to what they call “blended finance”, whereby states or development agencies form partnerships with the private sector to deliver projects such as solar power or helping farmers struggling with drought to switch to less water-intensive crops.

Also Read: Explainer: Who Will Pay For Climate ‘Loss And Damage’?

So far, the biggest cheques are still being written by governments.

“We need to get better coordination between public and private moving at the same time,” EY’s Doepel said.

Project Pipeline Spanning Continents

Developing countries keen to secure private sector investment could yet find an answer in another financing model Egypt unveiled, which is meant to build on the JET-Ps.

Its plan, dubbed the Nexus of Water-Food-Energy, together with a second platform for transport and environment projects, has so far secured nearly $10 billion worth of pledges for climate finance covering nine projects.

A global team of high-level climate champions, designated by the United Nations to lead change, is trying to involve investment banks and other private sector investors, as well as governments and aid bodies in more than 100 projects across four continents.

Egypt’s climate champion Mahmoud Mohieldin said,

Directly after the end of this month, we’ll be pushing into realising these programmes.

While Egypt is seeking to lead and others such as Mexico have laid out a clear plan detailing how they would move to a low-emission economy, most have yet to do so, making it hard for investors to assess the risks and opportunities.

Also Read: Key Takeaways From The COP27 Climate Summit In Egypt

“If a country has a transition plan, then … the private sector will know what it can finance,” said Jon Williams, Global Banking & Capital Markets ESG Leader and chair of the UK Sustainability & Climate Change practice at consultants PwC.

Further confidence could also come from the bold reforms many at the COP27 are pressing for to shake up the development banks and remove bottlenecks in the system that delay the release of funds.

Despite the relative lack of big announcements, smaller deals were presented at COP27 ranged from car-makers promising to end gasoline-powered vehicles to clothing retailers saying they will buy more climate friendly fibres.

Others focused on removing policy or market hurdles to investment.

Japan, Germany and the United States were among countries to say they would work together to clarify steps needed to decarbonise high-emitting sectors such as steel, power and transport.

Mindy Lubber, chief executive of sustainability non-profit Ceres, said these kind of deals were in their own way as important as the headline-grabbing “grand commitments”.

“It is about the plumbing, it is about the details of moving trillions of dollars into cleaner cement, into cleaner steel, and we saw commitments on all of those fronts. So, collectively, they’re huge.”

Also Read: Explainer: How Far Has COP27 Inched Beyond Past Climate Deals?

(This story has not been edited by NDTV staff and is published from a syndicated feed.)

NDTV – Dettol have been working towards a clean and healthy India since 2014 via the Banega Swachh India initiative, which is helmed by Campaign Ambassador Amitabh Bachchan. The campaign aims to highlight the inter-dependency of humans and the environment, and of humans on one another with the focus on One Health, One Planet, One Future – Leaving No One Behind. It stresses on the need to take care of, and consider, everyone’s health in India – especially vulnerable communities – the LGBTQ population, indigenous people, India’s different tribes, ethnic and linguistic minorities, people with disabilities, migrants, geographically remote populations, gender and sexual minorities. In wake of the current COVID-19 pandemic, the need for WASH (Water, Sanitation and Hygiene) is reaffirmed as handwashing is one of the ways to prevent Coronavirus infection and other diseases. The campaign will continue to raise awareness on the same along with focussing on the importance of nutrition and healthcare for women and children, fight malnutrition, mental wellbeing, self care, science and health, adolescent health & gender awareness. Along with the health of people, the campaign has realised the need to also take care of the health of the eco-system. Our environment is fragile due to human activity, which is not only over-exploiting available resources, but also generating immense pollution as a result of using and extracting those resources. The imbalance has also led to immense biodiversity loss that has caused one of the biggest threats to human survival – climate change. It has now been described as a “code red for humanity.” The campaign will continue to cover issues like air pollution, waste management, plastic ban, manual scavenging and sanitation workers and menstrual hygiene. Banega Swasth India will also be taking forward the dream of Swasth Bharat, the campaign feels that only a Swachh or clean India where toilets are used and open defecation free (ODF) status achieved as part of the Swachh Bharat Abhiyan launched by Prime Minister Narendra Modi in 2014, can eradicate diseases like diahorrea and the country can become a Swasth or healthy India.

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