In 2023, the figure reached 26.4 million worldwide as a result of floods, storms, wildfires and other disasters, according to the Internal Displacement Monitoring Centre (IDMC).

Climate change is not solely responsible, but the frequency and intensity of extreme weather is increasing as global temperatures continue to rise. As a result we can expect that more and more people will face losing their homes and their livelihoods.

It is commonplace to see people boarding up their homes and literally battening down the hatches before a major hurricane is predicted to make landfall. For those facing extreme weather, this mentality is no longer confined to one-off events, but a regular mindset as the climate crisis continues to bite. Many communities around the world know that building resilience against intense storms, floods and heat waves is now essential to daily life.

“No country is immune to disaster displacement,” Alexandra Bilak, IDMC’s director, said in a recent press statement. “But we can see a difference in how displacement affects people in countries that prepare and plan for its impacts and those that don’t. Those that look at the data and make prevention, response and long-term development plans that consider displacement fare far better.”

This kind of planning is happening in countries on the front line of the climate crisis. Some small island nations, for example – many of them low-lying – are seeing their homes permanently washed into the Pacific Ocean.

Paradise lost

According to Fiji’s government, disaster events in the Pacific island state over the past 40 years have led to annual economic damages of around US$16 million, with 40,000 people impacted each year. This is due to increase to an average of US$85 million per year in losses, as a result of cyclones and earthquakes. These figures are high for a country with a population of under 1 million people.

Many of the people most impacted by climate disasters live in informal urban settlements. Their homes are extremely vulnerable to the regular cyclones that hit the island nation, especially as they are often located near riverbanks or around the coast.

The subtle art of scaling up climate adaptation

A recent Adaptation Fund project in Fiji was designed to build resilience against regular extreme weather events and “climate proof” housing for the foreseeable future. The project, implemented by UN-Habitat, looked at ways to protect thousands of homes when storm surges overwhelm local water and sanitation infrastructure. The settlements were located across four main urban areas on the island: Lautoka, Sigatoka, Nadi and Lami.

Low-cost, high-impact

Constructing cyclone-resilient buildings was an essential component of the work.

Moving new homes away from vulnerable hot spots, such as foreshores, floodplains and riverbanks, was a first step. As many settlements are self-built, training local people in new construction methods ensures future homes can be built with extreme weather in mind. An innovative element from the project was so-called ‘stilted safe rooms’ – low-cost and simple raised structures intended to provide refuge during periods of intense flooding.

Flood control is a key component of climate-proofing infrastructure. In Fiji, priorities included building upgraded site drainage to reduce runoff; upgrading water sources and storage; and improving access ways, to ensure people can respond when cyclones put pressure on local infrastructure.

School’s out

In Haiti, a very poor and conflict-torn country beset with repeated natural disasters, climate-proofing infrastructure is still at an early stage. The country’s education sector, for example, has been repeatedly hit by extreme weather, including in 2016 when Hurricane Matthew damaged a quarter of its schools. Rebuilding after such frequent turmoil now requires new ways of thinking.

With the help of around US$10 million of funding from the Adaptation Fund, UNESCO is currently supporting the restoration of 620 schools across the country. Their work has included raising awareness of disaster risk reduction, improving knowledge of safety levels, and retrofitting existing buildings.

As climate disasters grow, early warning systems become essential

Panaroty Ferdinand Prophete, UNESCO’s national coordinator, told Climate Home that “nearly 200 technicians, students and experts received training on new construction techniques, an early warning system and the management of temporary shelters.” This training included working directly with the Ministry of Education to develop new construction standards for schools.

Over 150,000 students have so far benefited from the project, a success Prophete attributes to “very good synergy” between the different stakeholders. “This makes it easy to put in place a community emergency plan as well as the execution of the national action plan for resilient school infrastructure,” he added.

Best defence

Experts agree that we need to change the way we live in response to climate disasters. Moving settlements away from major water sources is, if possible, a simple solution. More projects supported by the Adaptation Fund – from Indonesia to Antigua and Barbuda – are focusing on blocking, redirecting or draining excess water as it comes in, to keep homes intact and habitable. These responses will remain some of our best defence against more unpredictable and extreme weather.

“A key sector for the Adaptation Fund is averting and reducing loss and damage through disaster risk reduction and early warning systems, which account for about 16% of the Fund’s current portfolio. Many additional multi-sector projects also include elements that are building resilience to disasters,” said Mikko Ollikainen, head of the Adaptation Fund.

“From climate-proofing homes and community centres to making informal settlements resilient to floods, it’s a vital aspect of the Fund’s work. Many of the projects are replicable and scalable so we hope they will also serve as models to create a larger positive impact on additional vulnerable communities beyond those served by the projects,” he added.

There is only so much adaptation can achieve if the flood waters get too high, or if cyclones increase in intensity and destructive force. But there are many cost-effective solutions to offer people a better chance of keeping their homes intact when extreme weather hits.

These investments can’t come soon enough for communities living in climate hot-spots and can serve to tackle long standing poverty issues at the same time. Fast-tracking these solutions will become ever more important if we want to reduce the millions of newly displaced people each year.

Sponsored by the Adaptation Fund. See our supporters page for what this means.

Adam Wentworth is a freelance writer based in Brighton, UK.

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ALTÉRRA was billed as the world’s largest private investment vehicle to “focus entirely on climate solutions”. COP28 President Sultan Al-Jaber hailed its launch as “a defining moment” for creating a new era of international climate finance.

Yet four months later, one of the initial funds ALTÉRRA backed with a $300-million commitment agreed to buy a major fossil gas pipeline in North America, Climate Home has discovered.

In March, BlackRock’s “Global Infrastructure Fund IV” acquired half of the 475 km-long Portland Natural Gas Transmission System, with Morgan Stanley taking the rest in a deal worth $1.14 billion overall.

That acquisition would not have come as a surprise to the fund’s investors.

When US-based BlackRock pitched it to the State of Connecticut’s Investment Advisory Council back in 2022, the world’s biggest asset manager gave a flavour of where their money would likely end up. Its presentation – seen by Climate Home – featured a list of “indicative investments” including highly-polluting sectors such as gas power plants and transportation networks, liquefied natural gas (LNG), airports, terminals and shipping.

Climate Home does not know whether ALTÉRRA saw the same presentation, nor did the UAE firm respond directly to a question asking if it was aware before the COP28 announcement that the BlackRock fund might invest in those sectors.

An ALTÉRRA spokesperson told Climate Home its “investments seek to build the energy systems of tomorrow, while supporting the transition of existing energy infrastructure towards a just and managed clean energy ecosystem”.

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In addition to the gas pipeline, BlackRock’s infrastructure fund has so far invested in carbon capture, waste management, utilities maintenance services, telecom infrastructure, data centres and the production of industrial gases, according to regulatory filings, a BlackRock job advertisement and press reports accessed by Climate Home.

A BlackRock spokesperson said its global infrastructure fund franchise “targets investments in solutions across the energy transition value chain, driven by the long-term trends of decarbonization, decentralization, and digitalization to support the stability and affordability of energy supply around the world”.

Andreas Sieber, associate director of global policy and campaigns at climate advocacy group 350.org, said Climate Home’s findings “confirm our worst fears”. “The ALTÉRRA fund uses a masquerade of green progress while funnelling investment into fossil fuel pipelines and gas projects, which are the biggest causes of the climate crisis,” he told Climate Home.

Climate finance is a hot topic at UN negotiations, with countries expected to set a new global goal at COP29 in Baku, Azerbaijan, this November, amid persistent calls for higher amounts to help poorer nations boost clean energy production.

The COP28 presidency said last year that ALTÉRRA would “drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South”. Al-Jaber added that “its launch reflects… the UAE’s efforts to make climate finance available, accessible and affordable”.

But the sparse details provided at the time prompted climate justice activists to question the real impact it would have in countries that most need financial support to adopt clean energy and adapt to a warming world. Only about a sixth of the fund – $5 billion – was earmarked as “capital to incentivize investment into the Global South”.

Follow the money

ALTÉRRA is a so-called ‘fund of funds’. Instead of directly investing money in individual companies or assets, it puts its cash into a series of funds run by other investment firms. At COP28, it committed a total of $6.5 billion to funds managed by BlackRock, Brookfield and TPG, without setting out how the remaining $23.5 billion would be spent.

Since then, ALTÉRRA has not announced any further investments. Its chief executive, Majid Al Suwaidi, told Bloomberg this month that the fund is “actively planning the next phase of allocations”, without giving further details.

The launch of #ALTÉRRA marks the start of three unique alliances with global asset managers, @Brookfield, @BlackRock, and @tpg.

Together, we share the same vision, to bridge the climate investment gap and finance a new climate economy. pic.twitter.com/7yEXOyZqpK

— ALTÉRRA (@Alterrafund) December 1, 2023

Most of the funds picked by ALTÉRRA remain at an early stage and have yet to announce completed transactions or are still trying to raise more capital from investors. The most notable exception is BlackRock’s fourth Global Infrastructure Fund. By the time it won the $300-million commitment from ALTÉRRA in Dubai, the vehicle was ready to deploy its money.

ALTÉRRA told Climate Home its investment in the BlackRock vehicle is in line with its goals of getting climate finance “flowing quickly and at scale” and of partnering “with funds that invest in the energy transition and accelerate pathways to net-zero”.

Announcing its first $4.5-billion closing in October 2022, BlackRock said the fund would “continue to target investments in climate solutions, while also supporting the infrastructure needed to ensure a stable, affordable energy supply during the transition”.

In private conversations with potential investors, the asset manager spelled out more clearly what that meant.

Its presentation to the State of Connecticut in December 2022 showed that the fund would not only invest in things like renewable energy, electrification and battery storage, but also in fossil gas power plants and pipelines, LNG and transportation infrastructure like airports, shipping and terminals.

A slide from BlackRock’s presentation of the Global Infrastructure Fund IV to investors

In line with this strategy, BlackRock agreed a deal this March for its Global Infrastructure Fund IV to acquire half of the Portland Natural Gas Transmission System (PNGT), a fossil gas pipeline stretching from the Canadian border across New England in the United States to Maine and Massachusetts.

When it began operations in 1999, the pipeline helped shift New England’s power generation away from coal and oil, but it has also created a stronger dependency on fossil gas, leaving citizens vulnerable to price spikes. The region is now planning to accelerate the rollout of renewable energy sources.

Comment: To keep its profits, Big Oil stole our future

The PNGT was not the first fossil fuel infrastructure the BlackRock team behind the Global Infrastructure Fund had snapped up. In a written testimony submitted this March to the State of New Hampshire, a senior executive listed a dozen oil and gas pipelines backed by earlier rounds of the fund. They included one operated by ADNOC, the UAE state-owned oil company whose CEO is Sultan Al-Jaber, COP28 president and chair of ALTÉRRA’s board.

Responding to Climate Home’s findings on where ALTÉRRA’s money is going, Mohamed Adow, director of Nairobi-based think-tank Power Shift Africa, said it is “extremely concerning to see a fund hailed by a COP president as a solution to the climate crisis investing in fossil fuels”.

“This needs to be a wake-up call to the world that these funds created by COP hosts are little more than PR stunts designed to greenwash the activities of fossil fuel-producing nations,” he added.

Oil-backed carbon capture

BlackRock does not disclose the infrastructure fund’s complete portfolio, but it has invested another $550 million in Stratos, the world’s biggest direct air capture (DAC) project being developed in a joint venture with oil giant Occidental. The plant under construction in Texas promises to suck as much as 500,000 tonnes of carbon dioxide out of the atmosphere annually and bury it underground.

Its proponents see DAC as a key technology to balance out emissions in the race to achieve net zero by 2050, although so far it remains expensive and largely unproven at scale. Stratos won a grant from the US government to fast-track the construction of the facility, and it has struck deals to sell carbon offsets generated in future from the plant with corporate giants like Amazon.

Scottish oil-town plan for green jobs sparks climate campers’ anger over local park

When the DAC partnership was announced last November, BlackRock CEO Larry Fink said Stratos “represents an incredible investment opportunity for BlackRock’s clients… and underscores the critical role of American energy companies in climate technology innovation”.

But Stratos’ critics have questioned Occidental’s motivations and dismissed its DAC investments as a greenwashing ploy to keep pumping oil and slow down the transition away from fossil fuels.

“We believe that our direct capture technology is going to be the technology that helps to preserve our industry over time,” Vicki Hollub, Occidental’s chief executive, told the CERAWeek energy industry conference last year. “This gives our industry a license to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed.”

Call for safeguards

While BlackRock’s infrastructure fund deploys its cash largely in the Global North, ALTÉRRA’s promised investments in developing countries are still taking shape.

Brookfield in June launched a new “Catalytic Transition Fund” backed by ALTÉRRA with a $1-billion commitment. The fund’s stated focus is “directing capital into clean energy and transition assets in emerging economies”.

Climate Home asked ALTÉRRA if it had adopted any exclusion policies that would, for example, rule out investment in certain types of fossil fuels.

The UAE fund did not respond to the question, but a spokesperson said its investment approach is aligned with the goal “of accelerating the climate transition, with a focus on clean energy, industry decarbonization, sustainable living, and climate technologies”.

Climate activists protest against fossil fuels during COP28 in Dubai in December 2023. REUTERS/Thomas Mukoya

350.org’s Sieber called on Al-Jaber – who was widely criticised by green groups for his dual role as president of COP28 and head of a fossil fuel corporation – to “act swiftly to enforce stringent safeguards” for ALTÉRRA’s investments.

“The UAE is on the brink of losing the little credibility it still has left in addressing the urgency of the climate emergency,” Sieber added. “The world, especially communities who are being hit the hardest by climate impacts every day, cannot afford to have one more cent invested in fossil fuels.”

The key question now is whether Azerbaijan – the host of COP29 and itself a substantial producer and exporter of oil and gas – will do things differently. Last week, it announced a new voluntary fund that it said will invest at least $1 billion for emissions reduction projects in developing countries. Baku is hoping to secure contributions for it from fossil-fuel producing nations and companies.

Power Shift Africa’s Adow said developing countries need state-backed climate finance from rich nations, negotiated through the UN climate process, and “not just cooked up in voluntary schemes”. That funding “can be used where the need is greatest, not just where it might make most money for some private profit-seeking businesses,” he added.

(Reporting by Matteo Civillini; fact-checking by Sebastián Rodríguez; editing by Megan Rowling and Sebastián Rodríguez)

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As discussions wrapped up on Tuesday, representatives of countries on both sides expressed disappointment with the process that is intended to result in an agreement on a new collective quantified goal (NCQG) at COP29 in Baku in November.

They will leave the German city with a 35-page informal “input paper” stuffed with wildly divergent views and repeatedly described as “unbalanced” by negotiators during the final session of the talks.

“It is time we get down to serious business,” said a negotiator from Barbados, pleading with colleagues to accelerate discussions before “more and more SIDS [small island developing states] and LDCs [least-developed countries] disappear from this gathering because we disappear from this planet”.

Show us the money

For most developing countries, the sticking point is the lack of negotiations on the size of the new goal – known as the “quantum” in technical language. Governments have already agreed that the new target should be set “from a floor of $100 billion per year” – the existing commitment – and should take into account “the needs and priorities of developing countries”.

Developing countries suggest rich nations tax arms, fashion and tech firms for climate

The Arab and the African groups landed their proposals for a new dollar amount on the table in Bonn – between $1.1 trillion and $1.3 trillion a year for the five years from 2025. Meanwhile, they accused rich states of failing to do the same and refusing to talk about numbers.

“We haven’t heard anything from them on their vision for the quantum,” said Egypt’s negotiator. “Every time there’s been [one] excuse or another why we couldn’t discuss quantum,” reiterated Saudi Arabia’s delegate.

Egypt’s negotiator Mohamed Nasr (middle) speaking with other delegates in Bonn. Photo: IISD/ENB – Kiara Worth

China echoed the same sentiment, but went further in its tirade against some developed countries. “We have been dealing with [a] few insincere and self-serving nations that have no intention of honoring international treaties,” the country’s negotiator said, referring to the 2015 Paris Agreement.

“We have no intention to make your number look good or be part of your responsibility as we are doing all we can to save the world,” he added, hinting at rich countries’ long-standing attempts to broaden the list of finance contributors to developing countries that are wealthier and more polluting.

‘A long way to go’

Developed countries accused their counterparts of entrenching their established positions instead of looking for areas of common ground.

Australia’s representative said the current document – which is not a negotiating text – shows “how much we disagree”. She added that there won’t be an agreement in Baku “if we engage in a game of striking out each other’s texts […] or a tug-of war”.

She expressed her government’s view that a numerical dollar target is “the star on the top of the Christmas tree” and should only be decided once the structure of the goal has been settled.

The UK’s negotiator noted that “we have a long way to go”, as “we are not in a process that will help us get to a final text”.

A delegate from the United States called for a “step change” in the process. “I feel most of what we’ve been doing is repeating views and not going into details on what folks mean,” he added.

No shortage of public money to pay for a just energy transition

Following the comments from developed nations, Saudi Arabia’s negotiator took to the floor again for the Arab Group. “I have to defend members of my group,” he said. “We are being gas-lit”.

It is now be up to the co-chairs of the talks to prepare a new informal document laying out a path forward based on the divergent views. The new paper will be sent to governments ahead of the next round of talks, which are yet to be scheduled.

“We encourage you to reach out to others using the inter-sessional period [between meetings] to discuss areas where you see fertile common ground,” said co-chair Zaheer Fakir in closing remarks. “Up until now we have not seen concrete efforts to reach out to your partners.”

(Reporting by Matteo Civillini and Joe Lo; editing by Megan Rowling)

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Frontline communities around the world are shouldering the deleterious injustices of climate change, especially in Africa despite it emitting only around 4% of total global carbon emissions. 

A case in point is the nomadic Amazigh tribes in the southeastern reaches of Morocco. The Amazighs are the oldest known inhabitants of Northern Africa. Their ancestral lifestyle is threatened by climate change, manifest in consecutive years of drought, relentlessly eroding their rights, including access to water and education, and their heritage. 

The story is personal to me, as I am from this region, and these are my people. My father was a nomad but was forced to give up nomadic life and settle in a village due to drought in the early 1980s. 

Among our tribe, “we’ve gone from nearly 600 tents in 1961 to just a few dozen today”, my father declares. According to the national census, Morocco’s total nomadic population in 2014 stood at just 25,274, a 63% drop from 2004. 

“Great enabler of climate action” – UN urges Bonn progress on new finance goal

As pastoralists reliant on livestock, particularly sheep and goats, nomadic families depend on suitable pastures, but drought increasingly has rendered pastures and water sources barren. “This is the eighth consecutive year of drought, this situation is unprecedented,” a 91-year-old nomad told me. 

This is also a story of loss and damage to the nomads’ very culture and way of life. As someone familiar with the experience of displacement, I have witnessed how climate change strikes at the heart of our culture and identity. It’s not just about losing homes or livelihoods — it’s about losing the very essence of who we are.  

Each drought-induced exodus undermines our traditions, leaving us adrift in a world that seems less and less familiar.  

This is an existential crisis for my community. 

In search of water 

In Morocco, the frequency of droughts has increased fivefold, from one dry year in 15 between 1930-1990 to one dry year in three over the last two decades. Now, the Intergovernmental Panel on Climate Change predicts a doubling of drought frequency in North Africa to come.  

Water is being lost, and much is lost with it. As Moha Oufane, another nomad, said to me: “Water is everything. It’s the most important thing for us. We can buy food and feed livestock with what’s left in the mountains or by going into debt, but water can’t be bought. It’s priceless.”

Water shortages are disrupting traditional pastoral routes, forcing families to give up nomadism or put themselves at risk. In the past, the year would be structured around a well-defined nomadic pattern: summer months were devoted to Agdal-to-Imilchil, while winter months were spent on the Errachidia side, with a return to Assoul (a village in Tinghir) and the surrounding area when the cold set in.  

Today, this traditional route no longer exists. Nomads go where little water remains, to preserve their livelihoods and the lives of their livestock. 

Only one new water point exists on this traditional route, a project led by the Moroccan state. “This project is extremely beneficial for us,” Moha says. “Similar projects in other nearby areas would be of immense help to us.”

Loss and damage sub-goal

Many nomads are forced to go into debt to feed their livestock, their main source of income, which worsens their situation. According to Moha, some accumulated debts of nearly 30,000 dh ($3,000) between October 2023 and January 2024”. Debt has long been used by these communities, but this was when nomads were confident of being able to pay it back after good rainfall seasons, which is no longer the case. 

Conflicts over territory and diminishing water-dependent resources, once unthinkable, now disrupt the social cohesion and hospitality for which nomadic communities are renowned. 

The plight of Morocco’s nomads illustrates the need for international support for climate-affected communities. Rich historic-emitter countries must honour their obligations to provide climate finance under the United Nations Framework Convention on Climate Change (UNFCCC).  

Quality – not just quantity – matters in the new climate finance goal

Economic costs of loss and damage in developing countries are estimated to reach $290-580bn/year by 2030. Grant finance, not debt, must be provided for communities to repair and recover. Developing countries should not have to spend a penny to cope with loss and damage they did not cause. However, despite the celebrations, the new UN Loss and Damage Fund has only received $725 million in pledges. 

We need a sub-goal for loss and damage in the New Collective Quantified Goal (“NCQG”) on climate finance, to be debated over the coming days at the mid-year UN climate negotiations in Bonn and the agreed at COP29 in Baku. It is immoral for developed countries to be blocking such a sub-goal. 

It is outrageous that nomads and frontline communities should be left to fend for themselves and see their ancestral lifestyles, identities and cultures eroded, while some wealthy nations prosper from investment in fossil fuels and find public finance for their own purposes but not for climate finance. We refuse to be collateral damage in a game of power and profit. 

The post North Africa’s disappearing nomads: Why my community needs climate finance appeared first on Climate Home News.

With climate negotiators gathered at mid-year UN talks in Bonn, Germany, to prepare for COP29, a critical question hangs in the air: how can we ensure that the money mobilized to address the climate crisis is not only sufficient in quantity, but also effective in quality? 

Negotiators have been tasked to set a new collective quantified goal, or NCQG, on climate finance, which rapidly scales the amount of money we need globally for climate action. In the face of stark needs, the NCQG must be ambitious.  

Experts estimate that by 2030, $2.4 trillion will be required annually to support the needs of developing countries alone. 

“Great enabler of climate action” – UN urges Bonn progress on new finance goal

With just five months before the goal is on the decision-making table at COP29, it is also critical that negotiators consider the issue of quality – such as the type of financing, the ways money is accessed, alignment with national priorities, the predictability of funds, and their impact. 

High-quality climate finance should not create additional burdens and has clear pathways to access for countries and communities in need. However, many developing countries have expressed concern that the current quality of finance is far from where it needs to be. 

Concessional and accessible 

An important signal of quality in climate finance is the degree of concessionality – or how favorable the terms of financing are. Concessional finance includes grants and loans with low interest rates and longer repayment periods, which are easier for recipient countries to manage.  

Concessional tools also have potential to scale action by mobilizing private finance. These ‘blended finance’ approaches can often do far more than a traditional grant or loan. For example, to build a solar plant in Uzbekistan, the World Bank utilized concessional loans to mitigate financial risk and incentivize private-sector participation. 

However, in recent years, more than 70% of public climate finance has been delivered through loans, most of which have been non-concessional. This poses a challenge as many developing countries face burgeoning debt crises, and non-concessional loans risk further indebting these vulnerable states.  

Yet, countries in debt distress like Ghana and Zambia still received 17% of their climate finance through loans in 2021. Without proper concessionality, climate finance meant to build resilience can paradoxically make things worse. 

Rich nations meet $100bn climate finance goal – two years late 

Another measure of quality is the accessibility of finance. Increased climate finance must come with clear channels of access for developing countries, but bureaucratic hurdles, limited transparency, and rigid funding terms can hinder governments from accessing international funding streams.  

For example, small island states have struggled to access resources from climate funds due to capacity constraints in navigating the finance landscape. Access to private finance is also lacking as private funders perceive high risks of investing in emerging markets. If climate finance flows remain unavailable or inaccessible to developing countries, it will be impossible to meaningfully address their needs and priorities. 

Multi-layered goal 

The structure of the NCQG can incorporate elements of impact, concessionality and access. Negotiators should pursue a goal with multiple layers – setting a support target for providing public finance to developing countries, alongside an investment target for mobilizing all sources of finance globally. 

The support goal should be underpinned by concessional finance, targeting the national priorities of developing countries through grant and other non-debt financial instruments fit for purpose. These layers can foster blended approaches that scale available finance and enable greater access without creating new debt burdens. 

Lastly, for public finance to more effectively open new channels of access, we need steady reform in the broader financial system, including the multilateral development banks (MDBs). The MDBs are undertaking reforms to simplify access and increase lending capacity, and made new announcements at the World Bank’s Spring Meetings in April, which will allow public financing from MDBs to catalyze greater private finance flows and mitigate risks of debt distress. 

Pairing quantitative and qualitative elements should be at the top of the agenda in Bonn. Many countries have already called for qualitative elements to be incorporated into the goal. Now, delivering this quality – via greater concessionality, accessibility, and innovation – will be vital to ensure that climate finance can play a transformative role in addressing the complex challenges posed by climate change. 

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Calling climate finance the “great enabler of climate action”, Simon Stiell told negotiators at the start of the annual June session in the city of Bonn that they must come up with concrete options for the New Collective Quantified Goal (NCQG) on finance.

The goal is one of the main decisions expected from the COP29 UN climate summit in November in Azerbaijan’s capital.

“We cannot afford to reach Baku with too much work to do. So please, make every hour here count,” Stiell said on Monday in his opening speech to the June 3-13 conference.

Following delays caused by an unauthorised pro-Palestinian protest and a complaint from the Russian delegation that not all its members had received visas to travel to Germany, government negotiating blocs made statements revealing sharp divisions on who should provide climate finance and how much it should be.

South African & Argentinian climate justice activists Tasneem Essop & Anabella Rosemberg were removed & de-badged after peacefully demonstrating (standing & singing) to alert to the unfolding genocide in Palestine at @UNFCCC #BonnClimateConference opening plenary. pic.twitter.com/xUWXY8dilU

— Center for International Environmental Law (@ciel_tweets) June 3, 2024

While developing countries have repeatedly called for the current $100 billion-a-year goal to be replaced with “trillions”, developed nations have yet to propose any numbers for the target.

Several developing countries said that at least the bulk of the money should come from developed-country governments, whose responsibility it has been so far under the UN climate regime.

Developed countries, in turn, said some of it should come from the private sector and global taxes on carbon-heavy goods, as well as from the public purses of wealthier, higher-polluting developing countries.

Other divides that need to be resolved by November include a common definition of climate finance, the period the new goal should be set for, how funding flows should be monitored, and what the money should be spent on.

A longstanding target to provide $100 billion annually from 2020 was met only in 2022, according to the Organisation for Economic Coopreation and Development (OECD), two years later than the deadline developed countries agreed to back in 2009.

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Diego Pacheco, a negotiator from Bolivia, told the room in Bonn that the level of ambition on the new finance goal will affect developing countries’ level of ambition in their UN climate action plans – which all nations are supposed to publish by early next year. The NCQG will determine “how words translate into actions”, he said.

Billions to trillions

To date, very few governments have made precise demands on a top-line amount for the new goal – although all have agreed it will be set from a floor of $100 billion a year.

India and the Arab group of countries, led by Saudi Arabia, have said rich countries should provide at least $1 trillion a year, while other developing country governments have repeatedly pointed to needs reaching into the “trillions”.

At a press conference in Bonn, Michai Robertson, the lead finance negotiator for small island states, warned: “The cost of inaction if we don’t spend those trillions just far exceeds the seed money we’re putting in”. War and conflict “get trillions already”, he added.

He added that many developing countries have not yet specified a precise amount as they are doing modelling and waiting for a UN “needs determination report” which is due out in October, ahead of COP29.

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In their speeches, neither the European Union or Canada gave any sense of how large the target should be.

Iskander Erzini Vernoit, founder of a Moroccan think-tank called the Imal Initiative, told journalists that developed countries have not been willing to enter into discussions about how much the goal should be.

Wide or narrow sources

Vernoit said the only dimension rich nations have been willing to discuss so far is “their proposal entailing money coming from sources other than themselves”.

The EU’s delegate said in Bonn that the money should come from “a wide variety of sources, instruments and channels including innovative sources while making all financial flows consistent with the Paris Agreement”.

“While we attach great importance to the public core of the new goal, public resources alone will not suffice,” the EU negotiator said.

Rich nations meet $100bn climate finance goal – two years late

“Innovative sources” refers to a variety of money-raising proposals such as taxing billionaires, shipping emissions, planes and financial transactions. A French and Kenyan-led taskforce is currently examining these options.

Developed countries, including those in the EU, have highlighted Article 2.1c of the 2015 Paris Agreement on making finance flows, including private finance, consistent with tackling climate change. They are also pushing to widen the pool of government donors.

The EU negotiator added in Bonn that “the provision and mobilisation of climate finance should be a global effort, reflecting solidarity – notably with the most vulnerable countries and communities, and capturing the evolved global circumstances and the dynamic nature of economic capabilities”.

Developed countries have argued that, since developed and developing countries were last categorised by the UN in 1992, some developing nations have grown much richer and more polluting – and should therefore contribute to climate finance not receive it. China, the Gulf nations and South Korea are among the most prominent examples.

Speaking on behalf of a negotiating group that includes the US, Japan, the UK and Australia, Canada's negotiator said the new goal must be "multi-layered and incorporate all sources of finance - public and private, domestic and international - it should draw from the efforts of a broad set of contributors that reflects economic realities and capabilities".

However, speaking on behalf of the biggest group of developing countries, Uganda stressed the responsibility lies with the traditional set of developed countries.

Speaking through a translator on behalf of the Arab Group, Saudi Arabia's negotiator said the new goal must reflect "the responsibilities of advanced countries" based on the rules of the Paris Agreement.

Brazil's negotiator said public finance should be "at the very core" of the goal, and that climate finance should be defined so there is transparency and accountability on whether it has been provided as promised.

The OECD - a club of wealthy nations that last week announced the $100-billion target had been met - "does not have multilateral legitimacy" to make such judgements, she added.

The great COP food systems illusion: UN climate talks deliver no real-world action

Referring to the OECD announcement, Bolivia's Pacheco said: "We see much exaltation in delivery of climate finance in the form of loans at market rates".

Over two-thirds of the climate finance recorded by the OECD came in the form of loans. Of the loans provided directly by governments, about one-fifth was offered at market rates, while nearly three-quarters of loans from multilateral development banks were categorised as non-concessional but still carrying better terms than commercial lenders.

Vernoit warned that developed countries were likely to get their way at the talks in Bonn unless the public - through civil society groups - raised "moral indignation about how the conversation is going".

"This is not a response to an emergency, it is not a response to any moral responsibility," he said.

(Reporting by Joe Lo, editing by Megan Rowling)

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Many countries in the Global South are burdened with huge public debts. These rising debts are a drain on public resources that are urgently needed for sustainable development programmes, and further pressure Southern governments to prioritise debt service over climate actions. 

Global South countries allocate more funds for debt service – 65% in lower- income countries and 14% in lower-middle-income countries – than their combined budgetary spending for education, health and social protection.  

Included among the public debts of Global South countries are those from projects tainted with fraud and whose negative impacts on people, economies and the planet far outweigh the benefits, if any. Furthermore, many debts arose from projects that did not involve democratic consultations nor the free, prior and informed consent of affected communities including indigenous peoples. Prime examples of these debts are those arising from or related to fossil fuel projects. These debts should be seen and treated as illegitimate.   

World Bank climate funding greens African hotels while fishermen sink

For several decades, international financial institutions and public finance institutions have lent hundreds of billions of dollars to Southern governments to support fossil-fuel energy projects. Many of the loans extended by the World Bank, Asian Development Bank (ADB), and other public finance institutions such as the Japan Bank for International Cooperation (JBIC), remain part of the current outstanding public debts. 

There is already a clear consensus among governments and many public financial institutions that fossil fuel energy – from its extraction, production and consumption – is the main driver of climate change.  

This is evidenced by outcomes from the Conference of Parties (COPs) summits of the UN Framework Convention on Climate Change, calling for the phase-out or transition away from fossil fuels, as well as outcomes from G7 and G20 summits committing to the phase-out of fossil fuel subsidies. Individual governments including China and Korea, have announced decisions to stop their financing of overseas coal projects. Further evidence is in the decisions made by public financial institutions to stop or phase out financing of coal and fossil fuels.   

These decisions, commitments and policy shifts should be taken as acknowledgement of their co-responsibility in the promotion of fossil fuels and the harms fossil fuel projects have caused to people, communities, the environment and climate systems. 

Owning up to their co-responsibility for fossil fuel projects and their impacts, and consistent with their avowed commitments to combat climate change, governments and public financial institutions, including international financial institutions, should cancel all outstanding public debts that arose from fossil fuel projects. These outstanding debts may be transformed into grants for renewable energy systems.  

UN climate chief calls for “quantum leap in climate finance”

The same can be said for private banks, financial and investment institutions and corporations that have lent money to governments for fossil fuel projects. Many have also recognised fossil fuels as the main drivers of climate change and have shifted their policies towards reducing or phasing down their lending and investments in coal and fossil fuels.   

From April 17 to 19, the IMF and the World Bank (IMF-WB) will hold their Spring Meetings in Washington D.C. These meetings take place amidst an ever-worsening debt crisis, most harshly felt by 3.3 billion people living under governments that spend more on interest payments than education or health.  

Bankruptcy risk from climate spending  

A new report released on the eve of the meetings found that developing countries will pay a record $400 billion to service external debt this year. It said climate spending could bankrupt developing countries due to huge debt costs and called for debt forgiveness for those most at risk. The report from the Debt Relief for Green and Inclusive Recovery Project (DRGR) warned 47 developing nations would reach external debt insolvency thresholds in the next five years if they invested the necessary amounts to meet the 2030 Agenda and Paris Agreement goals.

Spring Meetings can jump-start financial reform for food and climate

It is deplorable that the IMF-WB continues to push loans as the solution to multiple crises facing developing countries, including loans for climate action. At the height of the COVID-19 pandemic, when financial resources were most urgently needed, they supported and promoted the debt relief schemes of the G20 and Paris Club for the mere postponement of debt payments. These have all but proven flawed and futile. The suspended payments fall due in 2025 – by which time debt accumulation will have sped up even more. Private and commercial lenders, who now hold over 60% of sovereign debt, remain free to refuse participation in debt reduction. 

Total public debt, domestic and external, reached $92 trillion in 2022, increasing five-fold since 2000. Southern governments account for almost one-third of the total debt and are accumulating debt much faster than their richer counterparts. The number of countries with public debt levels exceeding 60% of GDP continues to rise, from 22 in 2011 to 59 in 2022. The long-term public external debts alone of low- and middle-income countries, excluding China, amount to a staggering $3.3 trillion. 

The consequences of World Bank projects, coupled with IMF neoliberal, policies have been devastating for vulnerable communities in the Global South. Large-scale infrastructure projects financed by the World Bank have led to displacement of communities, loss of livelihoods and destruction of ecosystems, and in the process, deepened inequality and impoverishment. Its fossil fuel subsidies and project loans impacted communities already struggling to survive economic hardships and environmental degradation. It also continues to subsidise the fossil fuel industry through direct and indirect financing, estimated at $885 million in 2022 and at least $194 million in 2023.  

The World Bank and the IMF, now in their eighth decade of committing to fight poverty, have yet to account for loans that are clearly illegitimate and must be canceled outright, nor for harsh loan conditionalities that have deepened inequality and impoverishment.

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The World Bank – the fund’s expected host – said on its website last week that its own board anticipates approving a formal plan to become the fund’s “financial intermediary” by mid-April, with a final operating deal due to be in place with the fund by the end of July.

But would-be recipients of the loss and damage fund’s resources are already jostling for position in a growing queue of nations hoping for help – and its board faces an unenviable task: figuring out how to fairly divide very little money among too many people in desperate need of it, as climate impacts accelerate in a warming world.

Timetable of steps the World Bank plans to undertake to become host of the new UN loss and damage fund (Source: World Bank)

Pakistan, for instance, is still seeking about $16 billion to rebuild roads, bridges, schools and more, after 2022 floods inundated a third of the country. In southern Africa, Zambia – hit by a severe drought that has ruined half of this season’s staple maize crop – wants support to shore up its dwindling water supplies.

Vulnerable countries – from Pacific and Caribbean island nations to Bangladesh – are looking for money to cover growing losses as warmer seas drive stronger hurricanes and cyclones. And in Senegal, where higher oceans are accelerating coastal erosion, families watching their ancestors’ skeletons float out to sea from flooded graveyards are asking for cash to rebuild crumbling coastal communities.

“The need is for trillions (of dollars) – and what we have is millions, not even billions,” said Ritu Bharadwaj, a climate finance and governance researcher at the UK-based International Institute for Environment and Development who has closely followed the new fund’s evolution. So far, it has garnered about $700 million in pledges.

With the residual costs from loss and damage projected to reach a total of $290 billion to $580 billion by 2030, according to a 2018 study, the loss and damage fund aims to ramp up its resources significantly, largely by persuading donor governments it can use their money effectively.

In partnership with a new taskforce on international taxation, it is also exploring how to harness innovative but politically tricky funding sources such as levies on fossil fuels, aviation, shipping and financial transactions.

UN’s climate body faces “severe financial challenges” which put work at risk

To make limited resources stretch further, fund observers like Bharadwaj have urged the board to consider ways to reach vulnerable people directly, such as cash transfers when a pre-set trigger point is passed – for example, a top-strength hurricane hitting an at-risk zone.

That approach would cut out middleman delivery agencies that critics say now claim too much of climate finance flows and reduce the amounts getting to the frontlines.

Bharadwaj and some others also believe the fund should consider supporting so-far inadequate efforts to build resilience to worsening climate shocks, rather than just responding once they happen – in order to curb future demands for assistance.

That could include helping Zambia’s farmers build community irrigation systems to avoid them coming back to the fund repeatedly to cover crop losses from warming-fuelled drought.

“We need to be more responsive to the comprehensive risks the communities are facing,” said Bharadwaj.

Between relief and resilience

However, Avinash Persaud, a loss and damage fund board member from Barbados representing Latin American and Caribbean nations, said the fund should focus on its core mission – helping the worst-hit communities and countries recover and rebuild after climate impacts – rather than responding to well-intentioned pleas to expand its work.

“This fund is not replacing relief agencies. This is not a resilience-building fund,” he told Climate Home. “This is doing the stuff in the middle – what happens the day after the relief agencies pack up and leave your people fed and watered but under blue tarpaulins.”

The fund could support the reconstruction of devastated towns in a safer location, repairs to roads, bridges and schools – or anything else that “reboots the community”, said Persaud, an economist noted for helping design the Bridgetown Initiative, which aims to reshape international finance flows to help debt-strapped countries boost climate protection.

Damage in a Miskito indigenous community called Wawa Bar, after being the epicenter of Hurricane Eta, on the Caribbean side of Nicaragua. The North Caribbean, one of the poorest regions of Nicaragua, was plunged into uncertainty and despair after the double blow of hurricanes Eta and Iota, which sowed death and destruction in Central America, Puerto Cabezas, Nicaragua, November 23, 2020 (Photo: Katlyn Holland/CRS / Latin America News Agency via Reuters)

With the loss and damage fund’s 26-strong board now in place – albeit several weeks late and yet to name one developing-world member with only an alternate from India listed for that seat – it is expected to start work in April to establish its operating rules. 

The board is set to grapple with a range of contentious discussions, including whether a share of support should be given as concessional loans rather than simple grants.

Also up in the air is whether money should move straight to governments and local organisations or also through international partners – including development banks and UN agencies – and how much direct access to the fund vulnerable communities should have.

African dismay at decision to host loss and damage advice hub in Geneva

With the UN-backed Green Climate Fund, for example, about three-quarters of funding has been channeled to countries via international organisations and only a quarter has been delivered directly to developing countries and regions for projects.

Harjeet Singh, who has tracked efforts to establish the fund for more than a decade and is now global engagement director at the Fossil Fuel Non-Proliferation Treaty Initiative, said he was hopeful “this fund is going to be different from the ones we’ve had so far”.

Fund with ‘a clean slate’

Michai Robertson, a senior advisor for the Alliance of Small Island States and a research fellow at the UK-based global affairs think-tank ODI, said language in the agreement setting up the fund should help ensure it operates in new ways.

In making allocations, for instance, the board – which aims to disburse money far faster than existing climate funds – will have to balance the needs of countries that have sustained large climate losses with setting aside a basic floor of support for poorer or highly vulnerable nations where the overall bill is smaller but some communities are hit very hard.

Currently, small island developing states get just 2% of international climate finance and least-developed countries, largely in Africa, about 8-10%, Robertson noted.

“You don’t want one country to take up all the scarce resources,” he said.

In Somalia, Green Climate Fund tests new approach for left-out communities

The fund’s agreement also says that vulnerable countries and communities should have a large say in deciding priorities for using its money – and that Indigenous and other community knowledge of local risks should be considered as a valuable source of information, especially when climate risk modelling is lacking in some countries.

The fund will also address some “non-economic” losses and damage – such as the disappearance of nature a community relies on, or cultural institutions – in the form of finance to help rebuild a ruined museum or replant lost mangroves, Singh said.

Bharadwaj said she hoped the fund can act in a way that is catalytic, helping countries fill the gaps in other funding streams – from climate adaptation and resilience, to development and humanitarian aid.

“When an existing institution or organisation does things in a certain way, it takes a lot of effort to change that. But the loss and damage fund is not carrying any baggage behind it. Here we have a chance for a clean slate,” she said.

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In the Danish port city, as dozens of ministers fired the starting gun on the annual climate diplomacy race, the focus was on putting December’s landmark Cop28 decision into practice. In Dubai, governments agreed for the first time to start shifting away from fossil fuels. But officials are now contemplating how to make that work in the real world – and, crucially, who will pay for it.

Meanwhile, in oil and gas-rich Texas, top fossil fuel executives took to the stage at the energy industry conference CERAWeek, where they cast doubt on the transition away from fossil fuels agreed at Cop28, with Saudi Aramco CEO Amin Nasser calling it a “fantasy”.

In the courts, Republican-led US states sued the Biden administration over its recent decision to pause new approvals for fossil gas exports.

Energy transition crossroads

For climate policy observers, these opposing forces are not entirely surprising.

Romain Ioualalen, global policy manager at campaign group Oil Change International, said the Cop28 decision puts the fossil fuel industry at a crossroads: either it pours more investment into renewable energy, or it doubles down on oil, gas and coal in a bid to undermine the green shift as much as possible.

“It seems to have chosen the latter – and unless governments immediately intervene to end fossil fuel expansion, people and planet will pay the price,” he added.

Pushing for faster adoption of clean energy certainly appears to be the intention on the international climate policy stage, where the political machinery is clanking back into gear after what Danish climate minister Dan Jørgensen dubbed “historic progress” in Dubai.

“Important decisions have been made on the action,” he told the start of the Danish summit. “Now, how do we pay for it?”

Cop28 president, Sultan Al Jaber, delivers remarks at the Copenhagen Climate Ministerial, flanked by Cop29 incoming president Mukhtar Babayev. REUTERS/Ali Withers

The question of finding money for the energy transition in developing countries will be front and centre this year as countries need to agree on a “new collective quantified goal” (NCQG) for climate finance at Cop29 in November, which will kick in from next year.

The battle lines are already drawn: developing nations want their richer counterparts to stump up the highest amount of cash with the fewest strings attached. Developed countries want other governments, including China and fossil fuel-rich Gulf nations, to join the list of donors.

The size of the money pot – and the conditions to tap into it – will be particularly important for emerging economies. They want help to finance the costly emission-slashing measures they are being asked to take.

For Mukhtar Babayev, Azerbaijan’s incoming Cop29 president, the negotiations on the new finance goal represent an opportunity to rebuild trust. Unlocking more funds, he told fellow ministers in Denmark, “will empower all parties to raise the ambition” of their upcoming climate plans.

Cop Troika urges “high-ambition” NDCs

The updated nationally determined contributions (NDCs) that all countries have been asked to submit by early 2025 was the other main talking point in Denmark on Thursday and Friday.

The so-called ‘Troika’ of the hosts of Cop28 (UAE), Cop29 (Azerbaijan) and Cop30 (Brazil) has tasked itself with building momentum and prompting countries to get moving.

On the eve of the Danish summit, the Cop presidencies sent a letter to all parties calling for “early submissions of high ambition NDCs that decisively take forward the UAE Consensus [the agreement struck in Dubai]”.

UN’s climate body faces “severe financial challenges” which put work at risk

The Troika “will aim to raise and reframe ambition for the development process” of the national climate action blueprints, pushing for more support, resources and finance, it added.

But the missive did not go down well with developed countries – and, above all, with the United States.

Its deputy special envoy for climate Sue Biniaz said she was “quite surprised” at the Troika’s suggestion that this year’s “focus on NDCs should be all about support” and that the Cop hosts defined a “high ambition NDC” for developed countries as one that includes finance for developing countries. Using that kind of wording could be “highly prejudicial” to climate finance negotiations, she warned.

Do as I say, not as I do

In the letter, the Cop host governments also pledged to demonstrate their own commitment by submitting NDCs that are aligned with the Paris Agreement goal of limiting global warming to 1.5C.

That announcement raised some eyebrows. The UAE and Brazil have some of the world’s biggest plans to expand fossil fuel production between now and 2050, while Azerbaijan’s economy primarily relies on fossil fuel extraction and it is poised to hike gas exports.

African dismay at decision to host loss and damage advice hub in Geneva

Those intentions clash with what the International Energy Agency (IEA) says is required to remain on a 1.5C trajectory: fossil fuel demand needs to fall 80% by 2050, meaning no new upstream oil and gas projects are needed, as of now.

Harjeet Singh of the Fossil Fuel Non-Proliferation Treaty Initiative said that discrepancy “raises serious questions about the alignment between [the Troika’s] words and their actions”.

“These countries must disentangle themselves from fossil fuel interests and lead climate action by example, pressuring wealthier nations that continue to shirk their historic and moral responsibilities,” he added.

Fossil fuel reality check

The rhetoric coming from the fossil fuel industry assembled at Houston’s CERAWeek suggests strong pressure will be needed.

Saudi Aramco CEO Nasser called for more, not less, investment in oil and gas, as he claimed that the current energy transition strategy is “visibly failing on most fronts”.

President and CEO, Amin Nasser, asserts at #CERAWeek 2024 that energy consumers around the world need lower-carbon energy with minimal disruptions to their daily lives and calls for a new, multi-source, multi-speed, and multi-dimensional road to a realistic transition#aramco pic.twitter.com/OEkQvuK9HD

— aramco (@aramco) March 19, 2024

Meg O’Neill, chief executive of Australian oil and gas firm Woodside Energy, said the shift to clean energy cannot “happen at an unrealistic pace”. The bosses of oil giants Shell, ExxonMobil and Petrobras echoed similar views.

One fossil fuel executive who is equally at home in industry talking shops and climate diplomacy circles is Cop28 president Sultan Al Jaber.

On Tuesday, he told attendees at the oil and gas conference in the US that “there is just no avoiding that the energy transition will take time”.

Two days later, over in Denmark, he emphasised that “governments and all relevant parties” have to be honest about what moving away from fossil fuels will involve.

“We can’t misguide or mislead anyone anymore,” he said, sending out a message that could apply on both sides of the Helsingør-Houston divide. “We must confront the facts very early. Those who are in this room. It is our job, our duty to do that.”

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With rich countries failing to deliver promised amounts of their taxpayers’ money to help developing countries tackle warming, global attention has turned to so-called “innovative” sources of climate finance – like levies on ships, planes or fossil fuel firms – to make up the shortfall.

But at the International Maritime Organisation (IMO), the United Nations’ shipping arm, governments have made clear they want the bulk of the revenue from a shipping emissions levy to go towards making it cheaper and easier for companies to put clean fuel in their vessels.

Sitting in the 7th-floor boardroom of the IMO’s riverside London headquarters, Arsenio Dominguez, the IMO’s new head, said “we need to focus on shipping as a sector, as that is what we regulate and that’s where we need to focus the efforts”.

IMO secretary general Arsenio Dominguez (March 18/IMO)

Asked if the money could go into a new UN fund to repair and reduce loss and damage from climate change, Dominguez told Climate Home: “That’s another UN agency – we have no remit there.” The fund, set up under UN climate change talks, is set to be hosted by the World Bank.

While conversations are at an early stage, Dominguez’s view is broadly echoed by the shipping industry – as well as by most governments that have so far submitted formal proposals at the IMO, although Pacific nations want some of the funds to be used outside of shipping.

Loss and damage fund board member Avinash Persaud, from Barbados, urged finance and environment ministers to intervene at the IMO to secure a share of any future shipping levy for addressing the harm caused by worsening extreme weather and rising seas.

Big-emitting sector

As it moves goods around the world, the international shipping industry emits a similar amount of greenhouse gases to Germany but has lagged behind when it comes to setting targets to reduce that pollution.

In July last year, governments at the IMO agreed to aim for net zero emissions in the sector “by or around, i.e. close to 2050” – with interim targets for 2030 and 2040.

At the same time, they agreed to look into putting a price on the industry’s emissions. On Monday, Dominguez said he was confident such a levy would be agreed by this time next year, although the details are still to be fought over.

While nations are split on how high the charge should be – with a group of island nations arguing for the highest tax of $150 per tonne of greenhouse gas emissions – submissions from governments, industry and campaign groups all specify that the funds should be used mainly for cleaning up shipping.

Climate protesters dressed as mermaids lie on the floor at an IMO drinks reception last year (Photo credit: Guy Reece)

Kept in house?

A joint submission from the European Union, South Korea, the International Chamber of Shipping, the Environmental Defense Fund and others says a portion of the money should go to cleaning up shipping through investments, research funding and rewards for using clean fuels. 

The money should also address “disproportionate negative impacts” of the transition to clean shipping through training, technical advice and finance for green investments, it adds. An impact assessment is currently being carried out by experts under the guidance of the IMO.

Another joint submission from eight Pacific nations and Belize says the funds should be collected and spent using the principle of “the polluter pays”. That would require the shipping industry as the polluter to stop burning planet-heating fossil fuels “whilst making reparation for the impact on the environment, including people and communities”, the submission specifies.

A shipping negotiator from the climate-threatened Marshall Islands, Albon Ishoda, said the money should be “reinvested in the shipping industry to trigger research, development and deployment into zero-emission maritime technologies and to address climate mitigation efforts”, as well as in “an equitable transition” for small islands and the world’s poorest countries.

How to hold shipping financially accountable for its climate impacts

A Pacific negotiator, who was not authorised to speak to the media, told Climate Home that this transition funding should go to projects both in and outside of the shipping sector according to “the priority needs of the climate most vulnerable”.

A Canadian proposal says each ship’s operator should decide, within certain limits, where the money it pays should go.

International climate finance sought

Loss and damage expert Persaud said shipping industry executives – and even maritime ministers – could not be expected to support a plan to spend money raised from the sector outside the industry. “It’s almost beyond their remit,” he said.

Rather, finance and environment ministers “would need to be part of the push to get the world’s most significant economic system – the trading system – to contribute to the loss and damage caused by current and past emissions in the production, consumption and transportation of goods”, he added.

Friederike Roder from Global Citizen, an anti-poverty campaign group, agreed it is “not surprising” that the IMO and the shipping sector “are trying to retain the proceeds for themselves”. But, she said, the polluter pays principle should apply more broadly to at least part of the proceeds raised from a shipping emissions levy.

Aoife O’Leary, head of shipping-focused environmental think-tank Opportunity Green, also called for some of the money to be spent on protection from climate impacts, such as projects to help flood-hit communities in Bangladesh or build sea walls on Pacific islands.

In Somalia, Green Climate Fund tests new approach for left-out communities

A global finance summit in Paris last year, attended by about 50 heads of state, came to a similar conclusion and led to the launch of a taskforce by France and Kenya to explore “innovative sources” of climate finance ahead of the Cop30 climate summit in late 2025.

Danish climate minister Dan Jorgensen, meanwhile, has called a shipping tax “a potential global source” of “international climate finance”.  

At the IMO, a working group of government shipping negotiators has been formed to hammer out how to raise and spend the money, with a decision expected by this time next year.

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In response to the review by the Independent Commission for Aid Impact (ICAI), climate and development groups accused the UK government of using accounting tricks to meet its climate finance goal for the five-year period from 2021-2026 after pandemic-related fiscal pressures led it to slash its overall aid budget.

The ICAI assessment said the government had “moved the goalposts” by changing the way meeting the target is calculated and including all eligible aid such as a 30% share of humanitarian funding in the 10% of countries most vulnerable to climate change.

Reaching the £11.6-billion goal would be “challenging”, the ICAI added, with 55% of that amount still to be spent in the last two years of the commitment, including up to £3.8 billion due in the final year following a 2024 general election.

Last summer, climate negotiators from developing countries told Climate Home News media reports that Britain would break its flagship international climate finance pledge were “disappointing” and undermined trust, although the government denied it would miss the goal.

In confidential government documents made public this month during a court case, civil servants again warned of “material risks” to meeting the commitment.

A spokesperson for the Foreign, Commonwealth & Development Office (FCDO), the ministry that oversees the aid budget, said on Thursday the government welcomed the ICAI review and confirmed the UK “remains on track” to meet its international climate finance commitment.

Countries draw battle lines for talks on new climate finance goal

Chief Commissioner Tamsyn Barton, who led the review, said the ICAI was “concerned that by altering its accounting methods and identifying existing spend as International Climate Finance to include that funding in the total, rather than providing new money, the UK is offering less additional assistance than was originally promised”.

Aid groups and opposition politicians were highly critical of the move by the Conservative government, warning it risked losing its international climate policy leadership by not providing more support for those on the frontlines of worsening extreme weather and rising seas.

“The government’s sums on climate finance simply don’t add up and this creative accounting does nothing to help people in lower-income countries – those least responsible for the climate crisis – deal with the devastating impacts they are facing,” said Chiara Liguori, Oxfam GB’s senior climate justice policy advisor.

“Instead of raiding a dwindling aid budget, the UK should be setting an example and increasing climate funding by making the biggest and richest polluters carry a fairer share of the cost,” she added.

Parliamentarian Caroline Lucas, former Green Party leader, said the accounting change would “further erode any last trust in the UK as a climate leader and country of its word”.

Growing demands on aid budget

The ICAI acknowledged that the UK aid budget had come under pressure in recent years amid escalating humanitarian crises and conflicts and the rising cost of hosting asylum seekers and refugees in Britain, particularly those fleeing the Russian invasion of Ukraine.

It also noted that media reports last year had far overestimated the share of the aid budget that would need to be used for climate change projects to meet the target.

The ICAI recommended that the government craft a detailed internal plan on how the remaining portion will be met, including through which channels, and produce an annual report to demonstrate publicly how that is being done.

It also said gender considerations should be integrated into all climate finance and tracked with a marker, which so far has covered only about half of the amount.

In addition, it urged the government to monitor climate finance for small-island developing nations, fragile and conflict-affected states, and least developed countries, after raising concerns that current spending may not be fully suited to their needs.

Loss and damage must be a focus of IPCC’s next reports

The accounting changes mean that more of Britain’s climate aid was translated into loans rather than grants, the review found, noting that this is less appropriate for the poorest and most vulnerable countries, many of which are highly indebted.

The FCDO spokesperson said the government would respond to the recommendations “in due course” – which the ICAI said is expected in April.

‘Playing with lives via a spreadsheet’

Tom Mitchell, executive director of the International Institute for Environment and Development, said discussions about “clever accounting by politicians” often obscured the human cost of climate change, with people in the Global South already losing their lives and incomes to weather disasters and longer-term climate pressures.

“If Britain wants to continue claiming a spot in the vanguard of the climate battle, it must do everything it can to help, and deal honestly with countries worst affected by global warming,” he said in a statement.

Zahra Hdidou, senior climate and resilience adviser at humanitarian charity ActionAid UK, urged the government to commit to new and additional climate funds in line with the urgency and scale of the climate crisis.

“No more playing with lives via a spreadsheet,” she added.

The post Aid watchdog questions UK’s climate finance accounting appeared first on Climate Home News.

But, as Eurodad’s new joint report with ActionAid shows, it can perpetuate climate coloniality through the extraction of renewable resources from the global south to power Green New Deals in the global north.

Financial actors outside of recipient countries are favoured in these projects. The largest recipients of blended finance for climate action have been corporates and project developers, who got four-fifths of the finance throughout between 2019 and 2021.

Problems mount for Sahara gas pipeline, leaving Nigerian taxpayers at risk

A report by Follow the Money shows that big climate-based funds from the global north charge extractive commissions in countries which are in dire need of resources, further impoverishing their economies.

The high salaries and commissions of such funds are a problematic example of who is actually profiting from the emerging privatised green climate agenda in global south countries.

New debt

Furthermore, blended finance often brings new debt, which needs to be repaid, even if the beneficiaries are provided with softer terms than purely commercial loans.

This can contribute towards recipient countries’ indebtedness. A lack of transparency around projects, and poor  accountability to the communities they are supposed to serve, are also pressing  problems.

Another issue is the limited amount of private finance currently mobilised by blended finance.

In 2021, Development Finance Institutions financed long-term projects totalling US$13 billion supported by blended concessional finance.

Argentine resistance hinders Milei’s forest and glacier destruction

Of this, the total volume of private finance mobilised was approximately US$5 billion, while the rest was either from the institutions’ own-account ($5 billion) or from other public sources.

Zambian example

Many of these issues were evident in Zambia’s Scaling Solar programme, an initiative launched in 2015 by the International Finance Corporation (IFC) – the World Bank Group’s private sector arm.

To implement a solar energy project in the country, the investors received subsidies which ultimately raised the project’s costs to the public.

In fact, estimates show that around US$3.50 of public international finance was used to attract each dollar of private finance.

Indonesia turns traditional Indigenous land into nickel industrial zone

If governments are to continue promoting blended climate finance, they need to ensure that public money could not have achieved better impacts if spent in alternative, cost effective ways. Improvements to transparency are also crucial.

Ultimately, climate change has been caused by the global north’s extraction and exploitation of natural resources. Blended finance must not be seen as a substitute for delivering on existing climate finance commitments and reducing emissions in the global north.

Farwa Sial is senor policy and advocacy officer at the European Network on Debt and Development (Eurodad)

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The Cop29 summit in Baku in November will focus on climate finance.

Government negotiators in the Global North always tell us that their ambition on finance depends on their parliaments.

This has been highlighted by developed countries in so many negotiations.

They stress that they have no mandate, or possibility to scale up funds, as parliaments will not approve.   

So, as parliamentarian debates about budgets and allocations begin early in the year, they need to act now.  

Biden misses chance to tackle “huge” US landfill emissions

Just a few weeks ago, Cop28 concluded. The result has been presented as a success, with a new fund for loss and damage, a global goal for adaptation and the first steps towards a transition away from fossil fuels.

But all commitments, and promises at Cop28, as well as previous summits, depend on available, scaled up and accessible climate finance.  

This is why the next summit, Cop29, will become so important. In Baku, governments will set a new post-2025 finance goal  and this will have implications for all previous agreements about scaled up ambition on cutting emissions, adapting to climate change, loss and damage and technology transfer.

The climate finance gap is huge, and yet growing. Without more, and accessible funding, humanity will never manage or tackle the climate crisis.  

Mobilisation of more climate finance is crucial, especially for the least developed countries, where access to funding has been lacking, not for years, but for many decades.

US government pauses new gas export terminals in ‘historic win’ for climate

Without more grant-based funding, our plans to adapt to climate change and cut emissions will not be implemented; our efforts to ensure green and sustainable growth and development will not be successful and our possibilities to address the growing threat of climate-related loss and damage will never occur.

So the Cop29 decision on climate finance is vital. Apart from an agreement about scaled up funding, it must also address timeframes, measures and tools for tracking and accounting, and an agreement about where and how funding should be spent and directed.   

Scaled up funding can be achieved in different ways. Some parties stress the possibilities for “innovative finance”. That is certainly an area which must be explored. The Least Developed Countries group proposed an air ticket levy already in 2008, and since then many suggestions have been proposed.    

However, innovative finance will only become a supplement, to the funding commitments by the Global North, building on historical responsibility and capability.

I hope governments of the global north will arrive at Cop29, with strong and ambitious parliamentarian mandates, including scaled up climate finance, to engage in the negotiations.

We must all remember that without finance, there is no action, and without action we will never be able to manage the climate crisis.  

Evans Njewa is the chair of the Least Developed Countries group and an official in Malawi’s environment ministry

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Climate Home analysis shows that renewable energy investments make up four-fifths of all projects seeking a transfer from the old Clean Development Mechanism (CDM) to the new system under article 6.4 of the Paris Agreement.

Experts have long written off the vast majority of credits produced from renewable energy as junk because they often already provide the cheapest sources of power in most of the world and selling offsets to fund them does not have any additional impact on emissions.

Some of these projects have also been accused of human rights violations such as forced evictions for the construction of large dams.

Harry Fearnehough from New Climate Institute told Climate Home that “it could definitely undermine the credibility of the mechanism because, while there’s still uncertainty over what it will look like, as a starting point you have a huge supply of low-quality offsets that are potentially available at a very low cost”.

Established in 1997 by the Kyoto Protocol, the UN’s CDM allowed rich countries to meet some of their climate obligations by financing emission-cutting projects in poorer ones.

The programme has received widespread criticism for its patchy human rights record and for failing to deliver promised climate benefits. Supporters of a new mechanism currently being developed under article 6.4 of the Paris Agreement say it is an improved, higher-integrity successor to the CDM.

Winning a lifeline

Countries are still wrangling over many aspects of the future market, but one much-debated issue was settled at Cop26 in Glasgow.

Under pressure from Brazil, Russia, China and India, countries agreed that a vast number of projects originally created under the CDM were allowed to migrate to the new mechanism. This handed them the chance to significantly extend their lifespan and their potential credit sales.

Project developers had until the end of December 2023 to fill in a simple two-page form and submit their transition requests.

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Of the nearly 3,500 eligible projects, over a third (1,284) seized that opportunity.

In total, the projects that have requested transition by the deadline could supply 1.4 billion tonnes of carbon credits between 2021 – the start year for accounting purposes set by the regulation – and 2035, according to a preliminary analysis by NewClimate Institute shared with Climate Home. That is more than the annual CO2 emissions of Germany.

While a relatively small share of the projects opted in, they account for approximately three-quarters of the potential supply of carbon offsets.

That’s because some of the programmes seeking to move could produce an outsized volume of credits. The two biggest ones – a hydro plant and a nitrous oxide emission reduction scheme, both in Brazil – each have the potential to issue around 6 million tons of offsets a year. That’s similar to the annual emissions of Sierra Leone.

Fearnehough says that “very few, if any, of these credits are genuinely likely to be additional”, going beyond what countries would do anyway without the carbon finance.

“A key reason for this is that the CDM was really only scheduled to run up to the end of 2020,” he added. “No investor would have made a decision purely based on expecting revenues from credits in the 2020s because, quite simply, there was no political indication that the possibility to move over to a new mechanism would exist”.

Climate and social concerns

That is particularly true for the renewable energy projects vastly dominating the list. Experts say they are highly likely to fail the additionality test, meaning their credits do not bring any climate benefit. When used to compensate for real emissions elsewhere, they result in more greenhouse gases entering the atmosphere.

The reason is simple. Many renewable offsets came into existence just as solar and wind power were becoming the cheapest source of energy in most countries. After years in operation, they are likely to be profitable from the sale of the electricity alone, without the need for additional revenues from carbon offsetting.

A 2016 study commissioned by the European Commission concluded that the vast majority of these projects “are not providing real, measurable and additional emission reductions”.

The Jirau hydropower plant is located on the Madeira River, in Brazil. Photo: UHE em Jirau/Flickr

Hydropower projects carry even more concerns as their implementation is often marred by human rights problems. Vulnerable communities relying on rivers for their livelihoods are particularly at risk of forced displacement.

The largest project applying for the transition to the new mechanism – the Jirau mega-plant in Brazil’s Rondonia state – is a case in point.

Over the years the project has faced multiple accusations of stoking tensions, pushing indigenous people away from their territories and breaching the rights of the workers that built it. Engie, the project’s developer, previously rejected any accusations.

Other categories of activities featuring prominently on the transition list have raised major concerns in the past.

Credits from projects which claim to cut or stop the emission of industrial gases such as nitrous oxide (N20) and trifluoromethane (HFC-23) were banned by the EU in 2013 for use in its emission trading system.

That’s because, according to studies, they created “a perverse incentive” to increase the production of gases depleting the ozone layer.

Countries’ authorisation dilemma

While the CDM projects have now made their move and requested transition, they are not automatically through to the new system.

Standing in their way is the need to receive a formal authorisation to proceed from the countries where their activities are located. Governments have until 2025 to make a decision and, experts predict, it won’t be a straightforward one.

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“It’s not a guarantee that all host countries will want to approve all of these projects”, according to Jonathan Crook from Carbon Market Watch, who said there would be contrasting forces at play.

“If they authorise them, they have to do corresponding adjustments, which they might not be so keen on since those emission reductions will be deducted from their [NDC climate plans]. But, at the same time, most projects are located in very large countries and it may not make a big difference to their plans”.

The answer to this dilemma will rest primarily in the hands of China, India and Brazil. Between them, the countries host around three-quarters of all projects that are looking to migrate under article 6.4.

Spotlight on three countries

Observers of climate talks said their governments all pushed for rules that would grant a lifeline to as many CDM projects as possible when those negotiations took place at Cop25 in Madrid and Cop26 in Glasgow. But, since then, they have been conspicuously quiet on the topic.

Climate Home approached the respective carbon market authorities in the three countries but did not receive a response at the time of publication.

Trishant Dev is a carbon market expert at the Delhi-based Centre for Science and Environment. He expects there will be “a lot of pressure on the Indian government to let projects through from the carbon industry, which is thriving in the country”.

But, at the same time, he thinks the government will take time to properly understand all the pros and cons of allowing such authorisations. “It’s a chaotic process. Countries want to make sense of what the final outcome of the article 6 discussions will be and how that will interact with domestic carbon markets they are constructing”, he said.

Who will buy the credits?

Article 6 talks collapsed at Cop28 last December after attempts led by the EU to introduce tighter controls and further integrity safeguards had been rebuffed by the US. Negotiators will try again this year to hammer out a deal on many technical issues that need to be resolved before trading of offsets can begin.

Meanwhile, questions also remain on who will be interested in using those credits, once the market is up and running. Countries, corporations and individuals could all be potential buyers.

Comment: High stakes for climate finance in 2024

New Climate Institute’s Fearnehough said there doesn’t seem to be much appetite from countries based on what they are saying in public. “But it’s hard to predict what will happen when suddenly the offsets are available and you have an easy option to meet your NDC targets”, he added.

The credits may gain more interest from polluting companies. Banks, airlines and industrial heavyweights keep buying large volumes of questionable renewable energy offsets despite the known concerns, a Bloomberg investigation found. Dressing them up with the UN stamp of approval may add to the appeal.

Carbon Market Watch’s Crook believes much will depend on the transparency of the system – something still largely unknown. “If there is a very transparent register disclosing who purchased how many credits and for what purpose, that would disincentivize companies from transacting low-quality credits out of reputational fears,” he said. “But if it isn’t transparent, buyers may not be as careful with due diligence or may be even encouraged to buy bad credits since there won’t be scrutiny”.

A previous version of this article stated that projects requesting transition could provide 700 million tonnes of credits until 2035, while the correct figure is 1.4 billion tonnes. That was due to a computational error in the model used by NewClimate Institute for their analysis of which we were informed after publication.

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Like every year, the quick answer is more than nothing but less than enough. To dissect that in more detail, here are our six takeaways from the year in climate.

1. Oil and gas felt the heat

Phasing out or down fossil fuels? Abated or unabated? Scaling up renewables, carbon capture and storage (CCS) and techno solutions. Energy dilemmas, and their buzzwords animated international talks in 2023.

The headline breakthrough came at the end. The Cop28 agreement included for the first time a goal to move away from all fossil fuels in energy systems.

It was the centrepiece of a bigger package that included a call for the tripling of renewables and doubling energy efficiency by 2030.

But it also gave a platform to “transitional fuels” (read gas) and CCS, which some politicians and campaigners regard as “dangerous loopholes” for continued fossil fuel use.

Cop hosts the UAE and most developed countries welcomed the deal as “historic”. For small island states and other vulnerable nations it did not go far enough.

Like most Cop agreements, it was the result of a hard-won compromise struck in overtime – after Saudi-led opposition threatened to leave oil and gas out of the text altogether.

Cop28 president Sultan Al Jaber applauds in the closing plenary (Photo: Flickr/Cop28/Christopher Pike)

The road to Dubai had been equally bumpy. The G7 saw fights over gas and coal with hosts Japan attempting to push controversial strategies like ammonia co-firing.

The G20 in Delhi offered a dress rehearsal of what was to expect at Cop with broad agreement over renewables and bitter disputes over fossil fuels.

In the background, Sultan Al Jaber, oil executive turned Cop president, garnered constant curiosity and scrutiny. He was initially adamant that the focus should be on emissions and not on the fuels themselves, raising more than an eyebrow. But, amid a series of controversies and apparent slip-ups, his position gradually shifted.

Al Jaber contended the Dubai deal would be enough to keep the 1.5C goal in sight. A day later he told the Guardian that Adnoc, the oil firm he runs, would press ahead with a massive oil and gas expansion.

Other rich nations, like the US, keep him company on that front. Such chasms between words and actions will continue to be closely watched.

2. Slow progress on climate cash

The other side of the coin from the fossil fuels debate is finance. When rich countries ask their developing counterparts to sign on to ambitious energy transition plans, many reply: ‘who is going to be paying for that?’

When governments wrangled over targets for adapting to climate change, similar questions were asked.

A clear answer was never forthcoming. We might get more clarity in 2024, with governments set to discuss, and hopefully agree on, a new collective goal at Cop29 in Baku in November.

But a lack of trust has taken root. Rich countries have so far not respected the previous commitment to provide $100 billion a year in climate finance to vulnerable countries.

That was “likely” met in 2022, two years after the original deadline, according to the OECD. We will be looking out for the receipts for confirmation.

Countries were also invited to refill the coffers of the Green Climate Fund. The four-yearly replenishment round got off to a decent start, but an underwhelming pledging summit in October put ambition at risk.

Then the US landed in Dubai in December with a $3 billion funding promise. It brought total pledges to $12.8 billion – setting the GCF on course for a “middling” level of ambition.

But that comes with a gigantic caveat. To deliver the dollars, the Biden administration will have to persuade Republicans in Congress or take control of it by winning elections. Both are tall orders.

Graphic: Joe Thwaites/NRDC

Money talked outside UN diplomacy too. Lots of attention centred on the much-touted reforms of multilateral development banks inspired by the Bridgetown Agenda.

Progress has been slower than many were hoping for. The World Bank lowered its equity-to-loan ratio, freeing up $4 billion a year.

It also installed a new more climate-aware president, officially changed its mission statement and promised pauses in debt repayments for disaster-hit countries. Encouraging steps, but far short of the trillions of dollars developing countries have been calling for.

3.US-China climate talks thawed

Formal diplomatic relations between the world’s biggest polluters suffered an ice-age-like deep freeze in the latter part of 2022 after US Congressional leader Nancy Pelosi visited Taiwan. Climate talks were collateral damage.

But 2023 saw a slow but steady thawing. It culminated in a momentous bilateral meeting held in Califonia’s Sunnylands resort a few weeks before Cop28.

The countries’ respective climate envoys, John Kerry and Xie Zhenhua, agreed to revive a climate working group and sketched out the outline of a potential alignment in the upcoming negotiations.

It proved decisive. In particular, their joint support to “accelerate the substitution for coal, oil and gas generation” helped find the right formula to unstick the thorny energy language in Dubai.

U.S. Special Presidential Envoy for Climate John Kerry shakes hands with his Chinese counterpart Xie Zhenhua before a meeting in Beijing, China July 17, 2023. (Reuters/Valerie Volcovici/ File Photo)

The special personal relationship between Kerry and Xie was a big factor in these improved relations.

When formal diplomacy was on hold, the two kept talking. Xie even brought his grandson to Dubai because the 8-year-old wanted to say “happy birthday to my good friend Mr. Kerry”, who turned 80 during the summit.

But Cop28 was most likely their last hurrah together. Xie is set to retire soon ending a 16-years on-and-off stint. He is likely to be replaced by Liu Zhenmin, a former vice foreign minister.

Kerry has been vague about his future with US elections looming large on the horizon. He recently told Reuters that he would “continue as long as God gives me the breath and work on it [climate] one way or the other”.

4. Carbon credits terrible year

To say 2023 won’t be remembered as carbon credits’ finest year is an understatement. It began with a now-infamous report pouring cold water on forestry-based offsets and ended with talks over Article 6 falling apart spectacularly in Dubai.

In between, scandal after scandal dented the reputation of carbon markets. From the collapse of the world’s second largest project to the suspension of dozens of schemes over exaggerated claims or alleged human rights violations. The blowback prompted even some of the most enthusiastic corporate credits buyers to cool on the idea.

Co-chairs of negotiations at Cop28 on carbon trading rules
(Photo: Flickr/Cop28/Kiara Worth)

Many carbon market supporters had pinned hopes on Cop28 for a spot of good news. Ahead of the talks, it looked like governments could finally fire the starting gun on the creation of a long-awaited global carbon market under the Paris Agreement.

But those hopes were misplaced. Negotiations ended without an outcome following a bitter disagreement over integrity rules between the US and the EU.

Leaping on the string of failures, some critics have been pushing for the whole concept of carbon offsetting to be chucked into the dustbin of history.

But others claim carbon markets provide an essential source of finance for developing nations, love it or loathe it. They are trying to build them back up from the nadir with more stringent climate provisions and better social safeguards.

5. Coal-to-clean deals reality check

As  promises turned into proper plans, Just energy transition partnerships (Jetp) hit the cold wall of reality in 2023. The three initial deals – with South Africa, Indonesia and Vietnam – have all been beset by issues.

The type of money put on the table by rich nations has been a source of common grievance. Grants make up a very small percentage of the funding packages, fuelling fears over debt. As a result, recipient countries revised climate targets downwards.

The energy transition deal aims to wean Indonesia off coal, which now takes up nearly half of the country’s electricity mix. Photo: Kemal Jufri / Greenpeace

Indonesia has watered down coal retirement plans. It now aims to start shutting down on-grid plants before their scheduled closure no earlier than 2035 – five years later than originally planned.

So-called captive plants, that power specific industries, have also caused a massive headache. Wrong assumptions meant a much lower number of them were baked in the original modelling. Struggling to find a way out, the Indonesian government has so far excluded them – and their emissions – wholesale from the Jetp blueprint.

Vietnam’s investment plan, unveiled during Cop28, has no timeline at all for retiring coal. It expects instead to operate plants “flexibly” and to rely on the controversial co-firing of biomass and ammonia with coal.

The authoritarian Vietnamese government has also all but buried the ‘just’ aspect of the partnership. It has jailed five environmentalists on tax evasion charges, which human rights groups say are trumped-up accusations.

Vietnamese campaigner Hoang Thi Minh Hong was sentenced to three years in prison. Photo: CHANGE/350Vietnam

In South Africa, the transition is meant to be reasonably easier as its Apartheid-era coal plants are nearing retirement. But crippling blackouts prompted President Cyril Ramaphosa to say the timetable “must be relooked at” earlier this year.

The plan is also facing fierce opposition from the powerful coal lobby. Our investigation with Oxpeckers discovered the sector partnered with politicians and even managed to water down or delay key policies in a bid to sink the scheme.

6. Loss and damage fund’s good start

As the Cop27 president gavelled the landmark decision on a loss and damage fund in Sharm-el-Sheik, a question loomed large: will countries manage to agree on how it should work within the following 12 months?

‘Yes, definitely’ was the answer.

Governments adopted the decision on operationalising the fund on the very first day of Cop28. It gave the summit’s president Al Jaber an early win and prevented loss and damage from being used as a bargaining chip in the ensuing negotiations.

The success is down to the painstaking work of a 24-member transitional committee that hashed out the details over five gruelling meetings. At the outset, developed and developing countries were at odds on just about everything: who should benefit from the fund, who is expected to pay into it, where it’s meant to be hosted.

Distances gradually narrowed and a compromise deal was eventually struck a month before the climate summit. The World Bank will initially host the fund for four years, despite strong resistance to its involvement from developing nations.

Campaigners at Cop27 call for a loss and damage fund to be set up (Photo credit: Kiara Worth/UNFCCC)

All developing countries “particularly vulnerable” to the effects of climate change will be eligible to benefit from the mechanism. However, the definition of vulnerability – one of the thorniest issues – has not yet been defined.

The decision “urges” developed countries to provide financial resources to the fund, while other nations are only “encouraged” to do so “on a voluntary basis”. Rich nations have been strongly pushing to broaden the donor pool and will likely keep up their efforts.

Pledges from a slew of countries should inject over $700 million for the start-up of the fund. The UAE won plaudits by committing $100 million. The US was lambasted for offering a paltry $17.5m, despite being the world’s largest economy and biggest historical emitter.

The post Six takeaways from 2023’s climate change news appeared first on Climate Home News.

As contributions from traditional donors flatline, the Green Climate Fund’s new leadership is looking to private sources to make the money stretch.

Japan and Norway were the only major donors to announce new contributions at a pledging conference for the Green Climate Fund (GCF) in Bonn, Germany, on Thursday. They offered less money – in US dollar terms – than in the previous fundraising round in 2019.

Other potential big contributors like Sweden, Italy and Switzerland, flagged their intention to make pledges in the coming weeks, saying they were not yet ready to do so for internal budgetary reasons.

Germany, the United Kingdom and France made pledges ahead of the conference.

The United States, which did not provide any money in 2019 under then-President Donald Trump, failed to announce any contribution citing “ongoing uncertainty in our budget”.

Australia said it would rejoin “with a modest contribution” to the fund from which it had withdrawn under a previous right-wing government in 2018. The exact figure is expected to be announced before the end of the year.

Mafalda Duarte, the Green Climate Fund’s executive director, hailed the fundraising as a “success” during a press conference. Contributors “recognise that addressing the climate crisis is a shared responsibility and that developing nations are not alone in this fight”, she said.

But campaigners told Climate Home News they were disappointed by the pledges. “It is just unacceptable,” said Erika Lennon, who monitors the GCF for the Center for International Environmental Law (CIEL). “The climate crisis has only gotten worse and it is ridiculous countries are not meeting that urgency with the level of finance needed”.

Who is contributing?

A critical financing mechanism of the Paris Agreement, the GCF was set up to channel money needed by poor states to meet their targets to reduce carbon emissions and adjust to the effects of climate change.

It is seeking donations to fund its activities between 2024 and 2027, hoping to exceed the $10 billion it raised in the previous fundraising round four years ago.

UN puts climate ‘course correction’ on Cop28 negotiating table

Germany is set to become the fund’s biggest donor with a €2 billion ($2.2 billion) pledge – 30% higher in US dollar terms than its previous contribution.

It is followed by the United Kingdom with £1.6 billion ($2 billion) – slightly higher than its 2019 pledge – and France with €1.61 billion ($1.75bn), a 4% cut in US dollars given the less favourable exchange rate.

Once the fund’s biggest contributor, Japan has not raised its financial commitment from four years ago, meaning a nearly 19% decrease in real terms.

The US, which is a co-chair of the GCF’s board, has “strong and steadfast confidence” in the fund, according to a statement read out to the attendees in Bonn on behalf of Alexia Latortue, Assistant Secretary for International Trade and Development.

But no financial commitment is forthcoming. “The US is currently working on its announcement but can’t pledge today given ongoing uncertainty in our budget process,” she added.

Joe Thwaites, a senior advocate at the Natural Resources Defense Council, said it was a “missed opportunity”, and there were now “great expectations the Biden administration will make a pledge no later than Cop28”.

Lower ambition

A stagnation in overall contributions may force the GCF to rein in its ambitions.

Current and expected pledges put the fund on course to only marginally exceed $10 billion, which was labelled as a “status quo” or “low” scenario in an internal strategy document seen by Climate Home. That is contrasted with a mid-level target of $12.5 billion and a “high” scenario of $15 billion.

Exposed: carbon offsets linked to high forest loss still on sale

The different levels of ambitions have real-world significance.

In the “status quo” scenario, the bulk of resources would be taken up by projects already in the pipeline – the document says – with new programming only achievable through “significant trade-offs”.

Under a “mid” scenario, the fund plans to extend early warning systems to four more countries, help five million more smallholder farmers and develop climate-friendly food systems and ecosystems.

In the “high” scenario, the fund would help developing countries’ financial systems work towards a green transition and promote clean technology innovation, the document says.

Liane Schalatek from the Heinrich Böll Foundation told Climate Home that this is the “wrong signal” to send with only a few weeks to go before Cop28. “If we are staying at 10 billion it is an effective reduction because of the significant inflation that we have seen since the last fundraising. This is simply not good enough.”

Calls for other money flows

The lack of more commitment from wealthy governments may also deal a blow to the new vision for the fund outlined by Mafalda Duarte less than two weeks ago. The executive director wants the fund to have a capitalisation of $50 billion by 2030, up from $17 billion today.

A key pillar of the plan is the ability to draw in dollars from the private sector. “Public resources will not be enough”, said Duarte on Thursday. “They need to be enablers of a much larger flow of investment.”

Cop28 boss’ appeal to raise climate targets met with total indifference

Major donors are increasingly calling for an expansion to the donor base beyond the countries historically defined as “developed”. Germany pointed the finger, in particular, at the oil-rich Gulf States and China, saying they had a “responsibility” to pitch in with contributions.

“We accept our responsibility and do our fair share,” said federal development minister Svenja Schulze after the conference. “On this basis, we can also ask others to do their fair share too.”

The post Green Climate Fund ambition at risk after ‘disappointing’ pledges appeared first on Climate Home News.

The document signed by heads of state at the inaugural Africa Climate Summit underscores a missing consensus between countries championing renewable energy and those arguing fossil fuels – and gas especially – are needed for economic development.

The leaders united behind an appeal for financial reforms, including new global taxes and debt relief, to fund climate action on the continent.

Old pledge

The eight-page declaration mentions fossil fuels only in calling on the global community to “uphold commitments to a fair and accelerated process of phasing down coal and abolishment of all fossil fuel subsidies”.

That is a reference to the key pledge the governments agreed upon at Cop26 in 2021. Since then, however, campaigners and a number of nations have been pushing for the extension of that commitment to all fossil fuels.

Draft UN plastics treaty threatens Big Oil’s plan B

An attempt to achieve that at last year’s Cop27 was backed by a broad coalition including India, the EU, US, UK, Chile and Colombia. But it ultimately flopped following opposition from oil-producing countries led by Saudi Arabia and Russia. Africa’s negotiating group did not take a public stance on the issue in Sharm el-Sheik.

The battle is likely to resurface at this year’s climate summit. Its hosts, the United Arab Emirates, have put the phase-down of fossil fuels on the agenda, with president-designate Sultan al-Jaber saying this is “essential” and “inevitable”.

Decarbonisation vs development

At the three-day gathering in Nairobi, talk of fossil fuels was notable for its absence. Kenya’s president William Ruto led calls for fast-tracking green growth, saying the continent has “untapped renewable energy potential”. Ninety percent of Kenya’s electricity is delivered by renewables.

Other African nations have significant fossil fuel interests. Nigeria and Angola are major oil producers, while Senegal and Mozambique have been expanding their gas industries. South Africa is implementing a clean energy transition plan, but it still relies on coal for the vast majority of its power generation.

UAE pitches itself as Africa’s carbon credits leader

Fossil fuels are at the heart of the tension between decarbonisation and development. Around 592 million people lack access to electricity across Africa and the continent’s historical contribution to the climate crisis is a fraction of that from rich nations.

To grow their economies African countries must be able to use gas power, alongside renewable energy, African Development Bank (AfDB) president Akinwumi Adesina said during a fiery speech on Monday.

“People think it is controversial, but for me, it is not,” he said. “We are going to use all the renewable energy sources we have, but they are variable resources. Africa needs stable grids to industrialise. Gas is a very critical part of the energy mix.”

The AfDB has supported the construction of gas infrastructure across Africa, including a controversial LNG terminal in Ghana.

Climate finance demands

With a clear focus on finance, the Nairobi Declaration is heavy on demands that polluters major polluters channel more money toward poorer countries bearing the brunt of the climate crisis.

African leaders urged the introduction of global taxes on financial transactions and carbon emissions to fund investment in climate actions. The declaration also advocates for reforms to the multilateral financial system, an increase in financing with favourable terms and debt pauses following climate disasters.

The heads of state have also repeated pleas that rich countries “honor the commitment” to provide $100 billion in annual climate finance – a target that has been missed repeatedly.

Lily Odarno, a director at the Clean Air Task Force, told Climate Home the summit had a “narrow focus on finance” and did not sufficiently explore broader trends facing Africans. “There are lots of targets without an actionable framework to achieving them, so we expect to see a lot more detail in Dubai.”

The post African leaders skirt over fossil fuels in climate summit declaration appeared first on Climate Home News.

The government’s export credit agency has released its draft policy for the provision of guarantees in the energy sector in what it described as an attempt to tie them to climate protection targets.

The guidelines were expected to belatedly align the German agency’s operations with a pledge made at Cop26 in Glasgow to end funding for coal, oil and gas projects overseas by the end of last year.

Under the proposal, the German government will no longer support coal and oil operations except when needed to decommission infrastructure or reduce methane emissions.

But the inclusion of a series of exceptions for fossil gas has come under heavy criticism.

‘Anti-science’ policy

Adam McGibbon from campaigning group Oil Change International said Germany’s claims to be a climate leader are “laughable” after the release of this new policy.

“This policy is anti-science, it runs against everything that the world’s scientists are telling us. No new fossil fuel infrastructure can be built if the world is to meet climate targets”, he added.

G20 divisions over key climate goals pile pressure on Cop28 hosts

The agency would continue supporting the development of new gas fields and related transport facilities until 2025 when justified by national security and in compliance with the Paris Agreement targets.

The pledge to end international finance for fossil fuel allows exceptions in “limited and clearly defined circumstances that are consistent with a 1.5C warming limit”. The International Energy Agency warned last year that investment in new coal, oil and gas production was incompatible with limiting global warming to 1.5C.

There is similarly a “large consensus” among climate scientists that developing any new gas fields is “incompatible” with limiting warming to 1.5C, according to a study by the International Institute for Sustainable Development (IISD) reviewing energy pathways.

Germany, which relied on Russia for a third of its gas, has opted for alternatives overseas, even equipping itself with new LNG importing capacity with new floating terminals.

In late 2022, the country even signed a 15-year deal to import gas from the UAE’s North Field, deemed a carbon bomb for its large untapped supplies.

2025 deadline

The German guidelines would also allow for the provision of export guarantees for the maintenance of existing gas extraction and transport projects until 2025 in industrialised nations and until 2029 in developing countries. This would only apply to activities that do not extend the lifetime or the production capacity of the projects.

The retrofitting of existing gas power plants with carbon capture and storage (CCS) technologies would also be eligible for public financing.

The German economy ministry said the sector guidelines implemented international commitments and that conditions for gas were very strict and very limited, Reuters reported.

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The policy is expected to come into force towards the end of the year after undergoing a consultation process.

Export credit agencies, like the German agency, are influential in directing investment towards specific sectors. They do this by offering exporters government-backed loans, guarantees or insurance.

Thanks to those benefits, companies selling services and goods in countries or industries considered high-risk can offset them.

Cop26 pledge

Germany was among 39 countries and financial institutions that signed a pledge at Cop26 in November 2021 to stop public finance for overseas fossil fuel projects by the end of 2022.

Among the biggest signatories, the United Kingdom, France and Canada have published policies that meet the promise made in Glasgow.

Italy has already u-turned on its commitment, carving out a wide range of exemptions for the continued support of fossil fuel projects on energy security grounds.

The United States has not yet published its policy. Last May its export credit agency approved a loan worth nearly $100 million for the expansion of an oil refining facility in Indonesia.

The post Germany plans to keep funding new gas projects overseas despite pledge appeared first on Climate Home News.

The commitment to provide £11.6 billion ($14.7bn) between 2021 and 2026 was first made by former prime minister Boris Johnson in 2019. It was repeated again by prime minister Rishi Sunak at Cop27, where he said it was “morally right to honour our promises”.

But, according to an internal government document seen by The Guardian, the UK has constantly underspent and would now find it a “huge challenge” to respect that pledge.

A government spokesperson refuted the claims, saying the UK is still committed to the pledge and delivering on it.

They said the UK spent £1.4 billion on international climate finance over the course of the 2021-22 financial year. This is less than the average £2.32 billion a year which would need to be provided up to 2026 in order to respect the pledge.

‘Sad’ climb down

A source within the African Group of Negotiators told Climate Home News “the news is disappointing, especially since the UK, while Cop26 president, took up a very promising leadership role and breathed hope and trust in the process”. They added that “to climb down from the pledge is unfortunate and sad, especially for developing countries bearing the brunt of the climate crisis”. 

The sentiment was echoed by Madeleine Diouf Sarr, chair of the Least Developed Nations group, who said climate finance “must be scaled up, not back”, highlighting rich countries’ ongoing failure to provide $100 billion a year in climate finance by 2020. Originally made in 2009, that pledge has not yet been respected.

Our people bear the brunt of the climate crisis & need support more than ever to address its escalating impacts. Already not meeting the $100 bn/yr goal, #ClimateFinance must be scaled up, not back. Global solidarity and cooperation remain critical for tackling #ClimateChange https://t.co/djfl3JMbrN

— LDC Chair (@LDCChairUNFCCC) July 5, 2023

“[Our people] need support more than ever to address its escalating impacts,” Diouf Sarr added in a tweet. “Global solidarity and cooperation remain critical for tackling climate change”.

Aid cuts

Former prime minister Boris Johnson vowed in 2019 to double the amount of international climate finance destined for projects to cut emissions in developing countries and help them adapt to the effects of climate change. The UK spent £5.8 billion on the programme in the five years up to 2021. 

But, since the pledge was made, the UK cut aid spending to 0.5% of GDP, down from 0.7%. Some climate initiatives immediately felt the impact of the budget cuts. A programme protecting poor communities around the world from floods and fires had its budget slashed by 70%. At the time, its lead in Nairobi, Joanes Atela, warned this would “directly harm the life chances of the most vulnerable”.

In order to meet the £11.6 billion pledge, government officials have calculated that it would have to spend 83% of the total overseas aid budget on the international climate fund and “squeeze out room for other commitments”, the Guardian reported.

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Another government document reported on by the British newspaper suggests underspending is set to continue. A civil servant from the department in charge of the programme wrote in a note that spending for 2022-23 was £1.3 billion and initial analysis of business plans put the figure for 2023-24 at £1.58 billion. This is below the trajectory set by the government, according to the report.

The publication of the documents’ content follows the resignation last Friday of Zac Goldsmith, a foreign office minister, over what he described as prime minister Rishi Sunak’s “apathy” towards climate change.

Broken trust

Bolivia’s Diego Pacheco, who represents the Like-Minded Developing Country coalition, told Climate Home News the news “will continue undermining the trust in the UNFCCC process”. He also claimed this is “part of the same behavior not aligned with the respect of the Convention and its Paris Agreement”, pointing to disappointment with the UK’s role in securing a Glasgow Climate Pact he described as “without equity”.

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The looming threat of a broken pledge is likely to sow further divisions between developed and developing nations at a time when tension is already running high at climate talks.

In Bonn last month negotiations teetered on the brink as the two camps fought for nine days over the inclusion of emissions reduction measures and climate finance in the agenda. In the end, they reached a compromise rescuing the talks but leaving many disappointed. 

Future implications

A row back on the previous pledges could also stoke fears over rich nations’ future commitments under current considerations. Countries are discussing how the loss and damage fund, secured at Cop27 last year, should be filled. A future climate finance pledge, building on the $100 billion a year one, is also being talked about. 

Laetitia Pettinotti, an economist at Overseas Development Institute (ODI), says the UK’s breaking its promise would have “really stark implications” as it sends the wrong signals to the ongoing negotiations. “The UK is already among the laggards in climate finance,” she added, “this would be the final straw after years of distrust”.

The UK has so far only provided 55% of its “fair share” under a calculation done by the ODI that includes the size of its economy and historical emissions.

The post Developing nations decry risk of UK breaking climate finance pledge appeared first on Climate Home News.

What does a just energy transition mean for the world’s least developed countries where energy access, especially in rural areas, is a priority for national development?

Last week, a Just Energy Transition Partnership (JETP) between Senegal, France, Germany, and the EU was announced at the Summit for a New Global Financial Pact in Paris.

This means Senegal’s government has committed to reaching 40% of renewable energy in the electricity mix, in exchange for €2.5 billion ($2.7bn) from France, Germany, the UK, Canada and the EU.

As the director of the Senegalese think-tank ENDA Energie, my colleagues and I worked to ensure that this deal would not hinder Senegal’s national development goals and that energy access remains a priority of our country.

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First, let us address the elephant in the room – Senegal has been gearing up to become a major gas producer to help develop its economy.

It has been said that revenues from gas will help with the country’s investment in transport, electrification, health, and education. Other arguments for gas have asked whether Global North countries financing renewables in Senegal are merely dictating what we need to do, stopping us from being a prosperous country.

These arguments can be convincing but they are misleading. First, climate and development goals can be achieved together and second, we are changing the way international cooperation works. Our experience with JETP Senegal has given national actors the agency to actively participate in crafting an international deal with the Global North.

International cooperation between the Global North and the Global South is usually done with barely any inputs from the beneficiary countries. This must change if we want to see success in the implementation of such projects.

Public banks agree to check investments against countries’ climate plans

This is why we ensured that JETP Senegal is shaped by national actors. We led a process in Senegal that gathered a broad range of local stakeholders – from government, research, civil society, and the private sector – where we worked on a realistic vision for our country.

After a series of discussions we came to a consensus that 40% of renewable energy in the electricity mix is an ambitious yet achievable target, especially provided with international support.

This bottom-up approach has given us lessons on how international cooperation must be conducted. First, having a domestically inclusive and nationally-led process empowers countries like Senegal to achieve their vision for national development.

Instead of being treated merely as beneficiaries where climate targets are dictated to us, an inclusive process gives us the agency to decide, based on scientific data and the realities of our country, what can be realistically achieved without compromising on other national development goals. As a result, the JETP-Senegal has remained in line with our vision of universal energy access in the country.

Additionally, this bottom-up process creates buy-in into the vision from national stakeholders and given broader support, can help facilitate its implementation.

Given that the vision of the JETP was supported by different groups nationally through multi-actor dialogue, it ensures that the priorities remain the same over time, even through changes in government leadership. This is opposed to traditional top-down approaches that risk national and climate goals are abandoned as national leadership changes.

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Second, aligning climate and development goals is crucial for developing and least developed countries. Exclusively focusing on climate targets is a lost opportunity for national development, especially when there is enough evidence to show that both can be achieved simultaneously.

Further, a narrow focus on climate targets is unlikely to garner support from domestic actors for the energy transition, especially in lower- and middle-income countries.

In Senegal, a country where 30% of households lack access to electricity (as of 2018), universal electricity access has been an important development goal. In this case, JETP aligns the target of 40% renewable energy with very ambitious targets for reaching universal electricity access by 2025

Third, we learned that while the focus on energy transformations is important to achieve national development, it is only one part of the solution. A clean, affordable and reliable supply of energy is a key driver of transformations in other sectors, including agriculture, industry and transport.

However, during the process of identifying Senegalese vision, we have also identified the need to transform agriculture, industry, and urban systems. JETPs are therefore not a one-stop solution and must be complemented by financial cooperation that will enable a low-greenhouse gas and resilient transformation of the whole economy. This is particularly so given that other sectors than energy experience even greater challenges in accessing adequate amounts of finance.

Our experience in leading the national process to achieve the best deal on energy transition in Senegal has been an opportunity to show how international cooperation should be conducted. Contrary to some arguments that the Senegalese have no say in international agreements like JETP, we were able to create an international agreement that was shaped by national actors. We are not just passive subjects, we will lead the way in shaping the future of our country.

Secou Sarr is the director of ENDA Energie

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Ten multilateral development banks (MDBs) – including the World Bank – have defined a multi-step process to establish whether projects meet the goals of the Paris Agreement, which aims to limit global warming to well below 2°C and to “pursue efforts” to keep it under 1.5°C.

The principles, which make good on a commitment first made by MDBs in 2017, require projects to line up with national climate plans and include a list of acceptable activities.

But analysts and campaigners are sceptical whether the rules will divert public money away from polluting activities and prevent global warming. A key criticism is that the framework does not explicitly prohibit financing for fossil fuel activities.

Focus on national plans

For a proposed investment to be considered under the new principles, it needs to align with countries’ climate strategies submitted to the UN, known as nationally determined contributions (NDCs).

If an activity – even a highly polluting one – appears in the relevant NDC, it will be waved through to the next step. The exceptions to this are support for coal mining, coal power plants and peat extraction, which are not considered Paris-aligned in any circumstance .

Laura Sabogal, policy advisor at E3G, considers it “very likely” that the banks’ portfolios will actually overshoot the Paris Agreement threshold because of the heavy reliance in the decision-making process on national climate plans that are “not robust enough”.

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“These documents are extremely vague, not uniform or comparable,” Sabogal told Climate Home News. “Many NDCs are not aligned with a 1.5C, or even 2C, trajectory. If you aggregate all of these investments it is very likely the banks are not actually aligning with the goals of the Paris Agreement.”

According to Climate Action Tracker, no country’s NDC is compatible with 1.5C of global warming.

The UN Environment Programme says the current pledges made collectively by countries in their NDCs put the world on track for a temperature rise of between 2.4C and 2.6C by the end of the century.

First step in reforms

MDBs hold over $1.8 trillion in assets, giving them an outsized influence over the direction of funding flows toward developing countries in particular. They have long been accused of continuing to fund polluting projects and not doing enough to support climate-friendly ones. A growing coalition of nations, gathered in Paris last week, has been calling for deep reforms.

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The new principles were agreed on by the African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Council of Europe Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank Group, Islamic Development Bank, New Development Bank and the World Bank Group.

Each lender will now have to adopt them into their own methodologies and use them in vetting investment proposals.

Across the ten lenders, the work to turn high-level principles into something tangible is at very different stages. At one end, the European Investment Bank says all its new investments have been Paris aligned since the start of 2021. Meanwhile, the African Development Bank hopes to reach that target by 2025.

If fully implemented, the new framework could mark a degree of progress toward more climate-friendly operations for some lenders.

Although mining and electricity generation from coal and peat are in an exclusion list of projects considered incompatible with the emission reduction goals of the Paris Agreement, this does not amount to an outright ban on investing in these activities. But experts believe it should further discourage development banks to fund them.

Multilateral banks’ investments in industrial livestock undermine their Paris climate commitments

Of the MDBs that signed up to this initiative, the Islamic Development Bank and the African Development Bank are the only ones without an explicit commitment to end coal finance. The African lender’s president Akinwumi Adesina pledged to scrap coal funding in 2019, but this has yet to be formally reflected in the bank’s energy policy.

Aki Kachi, an analyst at the New Climate Institute, told Climate Home News that “inevitably, it was always going to be the lowest common denominator between all the banks”.

“Some may go further and interpret it in a more ambitious way, others will use all of the flexibility to carry on almost with business as usual,” he added.

Campaigners pushing for MDBs to stop funding all fossil fuel operations were also left disappointed by the exclusion of any mention of oil and gas in the framework. “As they are not part of the exclusion list these will continue to be assessed on a case-by-case basis,” said Sabogal.

Political considerations

The document agreed on by the development banks draws a scenario in which a country is seeking funding for a fossil-fuel-powered technology. If, for instance, the country’s climate strategy states specifically that technology needs to be phased out by 2035, a project with a ten-year lifetime submitted in 2025 would not be considered aligned. But, if the NDC does not mention that fossil fuel activity at all, it will be allowed to progress to the next stage of assessment.

The other steps in the process look at the consistency with sector-specific decarbonisation pathways, the feasibility of cleaner alternatives and the risk of creating stranded assets.

Kachi said ultimately a lot would depend on the interpretation given by the banks’ officers, which is often driven by the political dynamics of their governance.

“We can’t assume this is merely a technical exercise,” he said. “It is very much a political one. The strategies are driven by political agendas within the banks’ management and shareholders. It’s only going to have an impact if the shareholders want that result.”

The post Public banks agree to check investments against countries’ climate plans appeared first on Climate Home News.

Animal agriculture contributes up to a fifth of global greenhouse gas (GHG) emissions, including a third of the world’s methane emissions. Because methane has over 80 times the global warming potential of carbon dioxide (CO2) over a 20-year timeframe, swift and absolute reductions from the livestock sector are vital to keeping the Paris Agreement climate targets within reach.

According to leading researchers, even if fossil fuel emissions were immediately halted, livestock emissions could make it impossible to limit warming to 1.5°C and difficult to limit it to “well below” 2°C.

MDBs livestock investments

Despite this, since 2010, the World Bank and other Multilateral Development Banks (MDBs) have invested over $4.6 billion of public money to help expand large-scale livestock production, exacerbating the climate crisis while also driving deforestation, biodiversity loss, and air and water pollution.

Tomorrow world leaders will meet in Paris for the Summit for a New Global Financing Pact, organized by French President Emmanuel Macron and Barbadian Prime Minister Mia Mottley.

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The summit will address key issues, including reform of multilateral development banks, with the goal of “addressing climate change and the global crisis.” Central to such reform should be a commitment by MDBs to end their support for GHG-intensive and highly environmentally destructive industrial livestock operations.

On his first day as World Bank President, Ajay Banga made climate change a clear priority by directing his staff to “double down” on their climate efforts. But words aren’t enough. The World Bank and other MDBs must take concrete steps to preserve the best possibility of limiting global warming to “well below” 2°C. In agriculture, this translates into shrinking, not expanding, the global industrial livestock sector.

Fatal flaws

MDBs are fueling the global expansion of factory farming while failing to account for the sector’s impacts on climate.

In a new report we co-authored on behalf of the Stop Financing Factory Farming Campaign (S3F), we argue that flaws in MDBs’ frameworks for aligning their investments with the Paris Agreement are resulting in the misclassification of industrial livestock investments as compatible with the Agreement’s mitigation and adaptation goals.

A key flaw is that the frameworks are based on countries’ Nationally Determined Contributions (NDCs)–the climate plans they submit to the United Nations Framework Convention on Climate Change (UNFCCC). But the UN’s climate body itself actually finds that NDCs are “not on track to meet climate goals.”

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Equally important, only 40% of countries incorporate livestock into their NDCs, and none have set methane reduction targets from the sector. MDBs’ Paris Alignment frameworks also fail to account for the extreme vulnerability of intensive, highly centralized livestock operations to climate-related heat stress, disease spread, and water shortages.

None of the world’s leading MDBs currently require that industrial livestock sector borrowers provide comprehensive (Scope 1-3) emissions reporting or commit to absolute, time-bound GHG reduction targets.

IFC’s poor record

Even more concerning, a comprehensive analysis by Bank Climate Advisors reveals that the World Bank’s private sector arm, the International Finance Corporation (IFC), has systematically failed to apply its own GHG-related environmental standards which are already insufficient to the task of reducing absolute emissions from industrial livestock production.

Only last month, IFC approved a $32 million loan to Brazilian dairy giant Alvoar Lacteos and a $47 million loan to GXYX, a massive pig farm operation in China, despite civil society concerns and opposition to each. Neither company has committed to comprehensive GHG reporting or reductions or time-bound zero-deforestation targets, and neither has addressed other negative l impacts of value-chain activities, including biodiversity loss from feed production and grazing.

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Often, MDBs use arguments about food security and the need to keep food prices low to justify investments in resource-intensive factory farming operations.

In reality, however, a shift away from industrial livestock production toward agroecological systems could more efficiently and equitably feed the planet. These systems prioritize smaller-scale farmers and communities, help facilitate a shift toward sustainable, plant-forward diets, conserve natural resources, and yield significant climate and biodiversity-related benefits.

To honor their commitments to Paris Alignment, MDBs should shift their agricultural investments toward climate-friendly agroecological farming systems that support food sovereignty and food security, and end their investments in intensive, polluting and high-emitting industrial livestock operations. Shifting investments in this way would deliver economic, public health, food security, and climate dividends now and for future generations.

Kelly McNamara is a senior research and policy analyst and Kari Hamerschlag is deputy director of food and agriculture at Friends of the Earth U.S.

The post Multilateral banks’ investments in industrial livestock undermine their Paris climate commitments appeared first on Climate Home News.

The UAE’s climate envoy Sultan Al Jaber has requested donor countries to provide a definitive assessment on the overdue delivery of the commitment before the climate summit in Dubai at the end of November.

“Expectations are very high. Trust is very low,” he told attendees of the Petersberg Climate Dialogues in Berlin.

In 2009 wealthy nations committed to collectively mobilise $100bn a year by 2020 to help developing countries cut their emissions and adapt to climate impacts.

Broken promise

But they have so far failed to respect that pledge. In 2020 rich nations mobilised $83.3 billion of climate finance, according to data published last year by the Organisation for Economic Co-operation and Development (OECD).

At the annual Petersberg Climate Dialogues in Berlin today, Al-Jaber contrasted rich countries’ failure to provide $100bn of climate finance with this year’s $100bn in military expenditure and pledges for the war in Ukraine and the $9,000bn that were mobilised to respond to Covid-19.

Speaking before Al-Jaber, German foreign minister Annalena Baerbock said that a meeting of rich countries in Berlin yesterday suggested they are “on a good track to finally make good on the promise” this year.

A plan drawn up by Germany and Canada ahead of Cop26 in 2021 indicated that the pledge would be met this year, three years later than the original deadline.

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For Jule Könneke, a policy advisor at E3G, meeting the pledge is one of the keys to changing course at Cop28.

“For donor countries, it is about proving to be a credible partner by delivering on commitments and ensuring that poorer countries have the means to meet climate and development goals,” she said.

US biggest culprit

The bulk of the climate finance gap can be attributed to just a handful of developed countries, according to analysis by the Overseas Development Institute (ODI).

The United States shoulders the biggest responsibility providing only 5% of its “fair share” under a calculation done by the ODI  that includes the size of its economy and historical emissions.

The US should have provided $43bn but sent just $2bn, the ODI said, making it “overwhelmingly responsibile for the climate finance gap.

Australia, Canada, Italy and Spain have also been singled out as laggards.

Underlying several times the importance of "trust", Sultan Al Jaber said meeting this obligation is "vital" to the political credibility of the UN's climate process.

Alpha Kaloga from the Africa Group of Negotiators told Climate Home the delay has been eroding trust. "Which credibility do developed countries have in requesting us for more climate action, while not providing the resources promised," he asked.

"Sowing division"

Sarah Colenbrander, climate programme leader at ODI, is critical of Al Jaber's statements. She told Climate Home that Al-Jaber should work with the biggest donors, like France, Germany and Japan, to raise ambition rather than sowing division.

"There are also important questions to be asked about when newly wealthy countries should assume responsibility for providing climate finance," said Colebrander. "The Cop28 presidency is shirking such questions."

Countries like the Cop28 host United Arab Emirates, Qatar and Singapore have per capita incomes that exceed those of some developed nations obliged to provide climate finance.

Just a "symbol"

Fourteen years after its inception, the $100 billion pledge may not even be enough for developing nations.

Avantika Goswami from the Delhi-based Centre for Science and Environment told Climate Home it is "more of a symbol" at this point. "Meeting the pledge this year might assuage wealthy countries' guilt, but the needs have now escalated and so must the financial reparations", she added.

Developing countries may need up to one trillion dollars every year for climate action, according to an estimate by the Cop27 and 26 hosts. That's ten times more than $100 billion.

Developing and vulnerable countries also want to see more grants and lower interest rates on loans so that climate finance does not add to debt piles.

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Archi Rastogi, lead author of the independent report, said there were clear risks in implementing climate-related projects such as new infrastructure. But projects could also result in maladaptation, where instead of helping communities adapt to climate change they actually make the effects worse, and may have more complex fiduciary risks.

Not recognising or properly managing these made the organisation too cautious, he said. 

Developing nations have long pushed the fund to take more risks and provide grants to smaller, more innovative schemes that other funds won’t back.

In 2016, the GCF board agreed that it should “take on risks that other funds/institutions are not able or are willing to take” and adopt a “high level of risk appetite”.

Projects gone wrong

The Green Climate Fund was set up in 2010 and formed part of a compact between poor and rich countries that was the basis for the Paris climate agreement in 2015. It has spent around $12bn so far funding climate projects around the world.

But although the latest review accused it of being overly cautious, some of the fund’s investments have been controversial and former employees have raised concerns about the GCF’s project vetting.

In 2021, concerns were raised about a $66 million flood management project financed by the GCF in Samoa, after river walls failed to protect a hotel from flash flooding. 

The fund was also recently in the spotlight for greenlighting a Nicaraguan project which Indigenous people have accused of exacerbating violence with settlers invading their land. At its latest meeting, the board deferred a decision on the complaint until July. 

Speaking at the board meeting, outgoing executive director Yannick Glemarec accepted that the GCF was responsible for projects that it was financing along with other organisations, saying that, when it comes to a violation of Indigenous people “it’s irrelevant where the money comes from”.  

But he said the GCF was a very large international financial institution with “maybe a third” the level of risk of a social impact investor, and suggested it could take on more. “It’s extremely important to ensure that your risk management system will keep pace with your ambitions,” he said.  

Notable progress

The review team analysed reams of documents, carried out case studies and interviewed more than 700 people around the world, and found the GCF had made “notable progress” in its governance procedures since 2020.  

It found no “insurmountable” challenges in the way the GCF is run, saying the organisation managed to effectively carry out its key roles of accrediting institutions to apply for funds and approving funding proposals. 

Andreas Reumann, head of the GCF’s independent evaluation unit, said it shows that the fund plays a “central and successful role in global efforts to combat climate change” and has responded positively to recommendations for improvement.  

This paints a more favourable picture than a 2021 staff survey which found that 40% of staff had a negative impression of senior management while just 24% had a good impression. Some people within the organisation have also been critical of the way the board responds to feedback.

The organisation has just appointed Mafalda Duarte as its new head.

Unrealistic expectations

The review helped counteract a “persistent false narrative” about the fund’s governance caused in part by unrealistically high expectations of what it would do, said Liane Schalatek, a civil society observer on the GCF board.

Developing countries had anticipated it would provide a large amount of readily available grant funding, while developed countries had wanted it to massively leverage private sector funding and thereby reduce their own financial liabilities. “Those have obviously not come to pass.”  

However, the review said the time had come to “clarify the GCF’s vision” over how it balances the urgency of the climate crisis and the long-term need to build climate finance capacity, and the extent to which it takes a direct and strategic role.  

It concluded the fund should do more to “catalyse” climate finance by, for example, investing in projects that have bigger impacts down the line even if the projects themselves run at a loss. 

But Schalatek warned that it should continue to be a core source of public climate funds, “with a focus on simplified and enhanced direct access and ensuring that affected communities and people through devolved financing have more of a say on how GCF funding support can better address their needs and priorities”.  

Efficiency compromised

A core principle of the GCF is to give developed and developing countries an equal say in board meetings, unlike donor-driven funds.  

The review says this novel governance structure “brings legitimacy but compromises efficiency”, especially given the fund’s proximity to UN climate change politics, posing challenges in setting a strategic vision and key policies.  

Rastogi suggested that more informal meetings between board members would help improve relationships and smooth negotiations.

The review also shows that less money went to adaptation projects than mitigation. With under 7% of global climate finance currently directed towards adaptation, it says the GCF’s impact on this topic is much more important than it is for mitigation, and hints that the board should reconsider how it balances these two key areas of climate action.  

Schalatek said civil society has pushed unsuccessfully for a more even split for some time. “In terms of adaptation it’s barely doing what’s under its mandate,” she said. 

GCF respond

In its formal response to the review, the GCF’s secretariat said the findings and recommendations “broadly resonate” with its experience and would incorporate most of them into its decision-making, management, operations, strategies, budgets and practices. It has, for example, already begun to update its risk register, which the review had found gaps in. 

However, it only “partially” agreed with the recommendation to reconsider civil society’s role in its work. Schalatek said it was difficult for observers to have a meaningful influence on GCF policies and the cost of travelling to board meetings was prohibitive for some developing country representatives. The secretariat countered that some of these issues had previously been considered. 

The review will inform the GCF’s next strategic plan, which is expected to be approved in the summer, and will also be part of negotiations over how much countries will commit to funding it over the next four years.

Going into the review, Rastogi said he was “a bit scared” of what he might find. But he was generally pleased with how the GCF was being governed and noted that all similar institutions go through a teething period in their first few years. “It’s going to get stronger,” he said, while its new executive director would bring in “new blood and a fresh perspective”. 

This article was amended on 3 May 2023 to correct the figure on how much the GCF has spent so far. It originally incorrectly said $20 billion but the real figure is $12 billion.

The post UN’s Green Climate Fund too scared of risk, finds official review appeared first on Climate Home News.

Yellen hosted talks with global finance officials to discuss an initial spate of balance sheet changes that will allow the World Bank to lend an additional $50 billion over 10 years while maintaining its top-tier AAA credit rating, and how to deepen those efforts with it and other multilateral development banks.

Yellen said the changes already approved had sharpened the mission of the World Bank, but more “bold action” was needed to ensure it could work to end extreme poverty, boost shared prosperity and better meet 21st century challenges like climate change, fragility and pandemics.

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“We should use the rest of the year to undertake additional reforms through a staged implementation approach that can be agreed upon by the Board and implemented on a rolling basis.”

Climate change demonstrators carry a mock oil pipeline during a “Stop Fossil Gas” protest outside of the 2023 IMF-World Bank meetings in Washington, D.C. on April 12, 2023. (Photo: Reuters/Bryan Olin Dozier/NurPhoto)

Major milestones

The bank’s steering committee – officially known as the Development Committee – met later in the day, where members welcomed the bank’s “Evolution Roadmap” and said they looked forward to additional efforts aimed at achieving “major milestones” by the October annual meetings of the World Bank and International Monetary Fund.

“They expect the Board of Executive Directors and World Bank Group management to finalize a work plan with detailed actions to be taken,” the committee’s chair said in a statement.

Members underscored their commitment to “ensuring that the World Bank Group has adequate financial capacity to respond to development challenges and support its expanded mission.”

World Bank’s private sector arm to stop supporting new coal

They called for ambitious approaches to increasing private capital, facilitating investment and leveraging the public sector.

The members also looked forward to exploring additional recommendations made by an independent panel last year, including making the bank’s emerging markets database more accessible to private investors, optimizing the balance sheet for the low-income lending arm, and exploring a voluntary channeling of IMF Special Drawing Rights.

Momentum ahead

Yellen said upcoming events could be leveraged to keep momentum strong for the evolution of the World Bank. Those included the Summit for a New Global Financial Pact to be hosted by France in June, the Group of 20 Leaders’ Summit in India in September, the annual meetings of the World Bank and IMF in Morocco in October, and the United Nations COP28 climate conference to be held in Dubai in November and December.

“We’ve all seen how threats to global health can disrupt entire societies and economies, and how fragility and conflict can lead to significant displacement and migrant flows,” she said.

She said Ajay Banga, the U.S. nominee to replace World Bank President David Malpass, who will step down on June 1, was “the right leader to take the baton from President Malpass and accelerate our work to evolve this institution.”

Malpass told the committee he felt the bank had responded with “vigor and speed” to Yellen’s call for reforms.

“There was … wide recognition that progress toward these goals requires a sharper focus on sustainability, resilience, and inclusiveness as part of our mission,” he said.

Development Committee members thanked Malpass for his leadership of the WBG during a historically challenging period, including an unprecedented surge in financing in response to multiple crises.

The post World Bank steering committee and US urge for reforms on climate lending appeared first on Climate Home News.

Nelly Sigudla, a qualified fire watcher and part-time control room operator at Duvha power station in Mpumalanga, South Africa’s energy capital, worries for her future, when her main source of income gets unplugged.

The mother of four children lives in Benicon Park, an informal settlement next to the coal-fired power station, which is scheduled to be decommissioned by Eskom – South Africa’s public electricity company – between 2031 and 2034.

Like many employees in the coal-mining industry, Sigudla fears her qualifications won’t be enough in the near future, when renewables take over coal as South Africa’s primary source of new energy, risking becoming unemployable.

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The country, which depends on coal for about 85% of its electricity, is home to one of the largest energy experiments in the world: an $8.5-billion deal with a group of rich nations – including the United States, United Kingdom and the European Union – to transition towards renewable energy.

For solar panels and wind turbines to operate, South Africa will have to redirect coal workers towards new jobs in the renewable energy sector, such as construction, electrical engineering and information technology.

But an investigation by Oxpeckers Investigative Environmental Journalism and Climate Home News found a major skills gap in coal-reliant communities and a lack of clarity on how funds for reskilling will be implemented.

Sigudla said the transition to green energy sources in Mpumalanga is difficult to welcome. From a community perspective it could bring even more poverty. The region has a soaring unemployment rate of 38%, and more than 100,000 jobs depend on coal.

“When the renewable sector kicks in, what fire am I going to watch?” Sigudha asks. “No one has come to the communities to tell us about new skills programmes that we can follow to acquire skills that will be needed in future.”

Reskilling programmes

The Just Energy Transition Investment Plan (JET-IP), a document that is guiding South Africa’s move to renewables, includes an investment of nearly R2.7-billion ($151 million) for reskilling programmes across the country.

In Mpumalanga, R750-million ($42 million) is allocated to “investing in youth” – including education, training, work experience and placements – and R5.6-billion ($310 million) to “caring for coal workers”, which includes re-skilling, redeployment, placement and temporary income support.

Funds would not only come from the JET partnership, but also from government budgets, venture capital and multilateral banks.

According to the JET-IP, the government plans to set up a national skills hub to advise on reskilling needs, and R1,6-billion ($89 million) will be allocated to creating pilot training centres known as “skills development zones” in Mpumalanga, Eastern Cape and Northern Cape provinces.

These pilot zones will be run by technical colleges and support the development of new skills and courses, aiming to “ enhance the employability of graduates”, says the JET-IP.

One of the options to set up facilities for the training centres is to use old decommissioned coal plants. This was one of the options for the Komati power station, the first one to shut down, in October 2022, according to a recently published report by environmental justice organisation GroundWork.

But details about how these training centres would actually become operational are scarce.

Development zones

Blessing Manale, spokesperson for the Presidential Climate Commission (PCC), an independent multi-stakeholder body established by President Cyril Ramaphosa to oversee the country’s transition, was unable to indicate when the skills development zones will start operations.

Additionally, he acknowledged that skills development is severely under-prioritised, adding “all stakeholder groups have raised this as a fundamental weakness in the JET-IP”.

“In the PCC’s view, much work needs to be done, both to quantify the needs for skills development, and to upskill the workforce and new entrants – in particular youth and young women,” Manale said.

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Manale added the transformation of technical and vocational colleges, typically aimed at adults looking for new technical skills, is “fundamental”. The PCC is rolling out a new programme on skills for the energy transition along with the departments of education and energy, he said. 

But there needs to be more clarity on the skills needed for the decommissioning of coal-fired plants, he said.

“This gives rise to questions around who will actually provide the training required for upskilling workers in the coal value chain, design curricula for educational institutions where skills development will take place, and how this can be funded,” Manale told Oxpeckers.

For workers in the coal industry such as Nelly Sigudla (above), the transition to green energy sources in Mpumalanga is difficult to welcome. (Photo: Ashraf Hendriks)

Vocational training

Mpumalanga has three technical and vocational education and training (TVET) colleges that fall under the department of higher education and training (DHET). They focus on “preparing students to become functional workers in a skilled trade”.

These colleges, based in Ehlanzeni, Gert Sibande and Nkangala districts, provide practical skills training for the mining and fossil fuel industries, among other courses. At the start of the year, the department reported that more than 500,000 students had enrolled at TVET colleges countrywide.

Oxpeckers and Climate Home reached out via email to all three TVET colleges, as well as the DHET and several other tertiary institutions in the province, to understand how skills development courses currently on offer could be applicable to the green energy sector. Similar questions were also sent to Eskom’s Academy of Learning and the South African Renewable Energy Technology Centre. Despite follow-up phone calls, no responses were received at the time of publication.

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The curricula of the TVET colleges and other educational facilities needs to change to achieve the energy transition, said professor Victor Munnik, co-author of the Contested Transition report recently released by GroundWork.

Training and reskilling for renewables must be “fit for purpose”, he said. “It should be aimed at a society that lives on renewable energy and understands how it works. There are specific specialised skills involved; for example, for the grid to become a smart grid it has to integrate a lot of IT technologies.”

Changes in the education system need to include school courses “to prepare young people not just to work in the new economy but to actively shape it and be part of it”, Munnik said.

Wendy Poulton, secretary general of the South African National Energy Association, added that there is a scarcity of specialist technical and managerial skills in the renewable energy sector. “This will require the education, training and upskilling of engineers and technicians to shift into renewables,” she said.

Happy Sithole, NUM health and safety chairperson in the Highveld region and an Eskom shop steward, says he has no knowledge of skills development zones in Mpumalanga. (Photo: Ashraf Hendriks)

Union concerns

The regional chairperson of National Union of Mineworkers (NUM) in the Mpumalanga Highveld region, Malekutu Motubatse, is concerned that the current courses offered at TVET colleges and other education facilities still produce learners that will be unemployed in the near future.

Next to each power station there is a coal mine that is used for the purpose of providing coal to the power station, he said. “So the reskilling should be a reskilling of everyone. If the government is talking about reskilling, who is going to be reskilled, Eskom employees or mine employees? Let’s assume that it talks to Eskom employees, then where does it leave the coal mine workers?”

Happy Sithole, NUM health and safety chairperson in the Highveld region and an Eskom shop steward, believes not many artisanal coal miners - who conduct small scale mining - will be employed in the renewables sector.

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“We are talking about artisans, a job that pays well. If you change from coal to renewables, what’s going to happen to them?”

Sithole said he has no knowledge of skills development zones in Mpumalanga: “We find ourselves trying to understand what this is, because as NUM we have not seen any development.”

NUM is also unaware of a training facility that is supposed to be set up at Komati power station, which was decommissioned in October 2022 and is punted as a model for repurposing, Sithole said.

“We have not heard of Komati becoming a training facility. All we know about Komati is that there is intent to demolish it. There’s a lot of information that needs to be cleared up, and it’s difficult to get answers,” he said.

Gaylor Montmasson-Clair, a senior economist at Trade & Industrial Policy Strategies (TIPS), an economic research institution, said Eskom’s skilled workforce has a higher chance of finding alternative jobs in other industries, such as electricians, for example.

But coal miners might not have the same luck. “To be blunt, we must stop the delusion that the bulk of the people who are employed in coal mining are going to be employed in renewable energy. That narrative just makes no sense,” Montmasson-Clair said.

Duvha power station, located in Mpumalanga, South Africa, is scheduled to be decommissioned between 2031 and 2034. (Photo: Ashraf Hendricks)

Construction jobs

Peter Venn, chief executive of Seriti Green, said the transition will create more jobs in the construction sector in the coming years. “We see a positive job growth in the renewable space for the next 10 years through the construction period,” he said.

Seriti Green is an offshoot of a mining company and will soon begin construction on South Africa’s largest wind farm in Mpumalanga, with power supply due to come online by 2025.

With Seriti being on both sides of the transition from coal mining to renewable energy supply, Venn emphasises the importance of training programmes for the skills required in the renewable sector.

“The Cape Peninsula University has partnered with Komati power station and Eskom to deliver skills in Mpumalanga. And there are other organisations offering significant renewable energy skills,” he said.

“Renewables require across-the-spectrum skills. All the back-office skills are required, civil and electrical skills are required; it goes into IT, security, data analytics, preventative maintenance,” Venn said.

Middelburg resident Emanuel Marutle says the current education system is not even able to provide skills for learners to work in the coal-mining sector, making a transition towards renewables even more difficult.  (Photo: Ashraf Hendriks)

Young workers

According to the PCC, workers in the coal-mining sector are relatively young, with a median age of 38 years. About 90% of those employed in Mpumalanga are semi-skilled (74%), or low-skilled (17%) workers.

The urgency for the skills they will need to diversify is heightened by the fact that transition planning is developing in the context of already high unemployment, poverty and inequality, the PCC says.

“These dynamics make skills diversification more complex as the just transition ought to manage job losses and create employment opportunities in a country with an unemployment rate of 33.9%,” said Manale.

Emanuel Marutle, a resident of the coal fields in Middelburg, told Oxpeckers he is worried the education system in Mpumalanga doesn’t have the resources to help affected community members gain practical skills to weather the transition.

“The current education system is not even able to provide skills for learners to work in the coal-mining sector, so how will it equip people with the skills needed in the renewables sector?”

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Marutle said during a community consultation about the transition held “by government people from Johannesburg” in 2022, locals were promised that people from their municipality would be taken to undergo training for the renewable sector. This has not happened, he said.

Given Masina, another local and a member of the Khuthala environmental group, said he hasn’t heard anything about any reskilling, training, or skills development in Mpumalanga.

“Our kids are studying in the fields of coal, but coal is dying. People will be left without knowing what they can do,” he said. “If people are skilled, they can transfer skills to other people in the communities so that they have chances of being employed.”

This investigation by Climate Home News and Oxpeckers Investigative Environmental Journalism was produced with the support of the Pulitzer Center, and is part of a series on South Africa's Renewables Revolution.

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They can make a significant contribution to global efforts to address the climate crisis – if their rights are protected.

The Green Climate Fund – the UN’s flagship climate fund – is being put to the test to heed this call.

Indigenous representatives have complained that one of the fund’s projects in Nicaragua risks fuelling escalating violence from settlers invading their land to farm cattle and exploit the forest’s resources. They say the GCF approved the project without their consent or due diligence.

Last week, armed settlers reportedly attacked two communities and killed at least five people. The Nicaraguan government has turned a blind eye.

This is the first complaint case to reach the GCF board and a test of the fund’s ability to enforce its own safeguards.

Because of its sensitivity, board members discussed the case behind closed doors at a meeting this week. But the meeting drew to a close Thursday without a public outcome to the growing frustration of civil society groups. Meanwhile, the violence continues.

Also this week, Mafalda Duarte was selected to take the reins of the GCF’s secretariat from French UN veteran Yannick Glemarec. As CEO of the Climate Investment Funds, Duarte has launched programmes that provide direct financing for indigenous communities to protect natural resources.

Perhaps, these are some of the skills she can bring to the GCF.

This week’s stories

• Green Climate Fund credibility hangs over response to violence in Nicaragua project
• Loss and damage committee ready to start talks following Asian nominations
• Argentina secures funding boost to kickstart gas exports from ‘carbon bomb’
• IMF approves first batch of climate resilience loans
• Lawyers and activists build pressure on Korean court to rule on climate
• Chinese coal boom a ‘direct threat’ to 1.5C goal, analysts warn
• Mafalda Duarte named as next chief of UN climate fund
• Vietnam’s energy transition deal is a ‘black box’, partner warns

The expansion of fossil fuel production continues to cause significant harm to indigenous peoples around the world.

In Argentina, campaigners say president Alberto Fernández’s plans to export record amounts of gas from the Vaca Muerta fields will further trample the rights of indigenous Mapuche people.

The Latin American Development Bank recently agreed to support the Néstor Kirchner pipeline, which will channel gas to Argentina’s northern Santa Fé province for export to neighbouring countries. Fernández is also eyeing exports to Europe amid plans to build an LNG terminal in Buenos Aires.

This fossil fuel buildout and a renewed coal boom in China risks pushing the world towards more violent climate disasters. As Malawi reels from what could be the longest-lasting tropical storm on record, we are once again reminded that the most vulnerable will suffer first.

The post Nature’s stewards under attack – Climate Weekly appeared first on Climate Home News.

Details of the agreement to accelerate Vietnam’s energy transition remain unclear even to the southeast Asian nation, according to Sunita Dubey, Vietnam’s country lead for the Global Energy Alliance for People and Planet (Geapp), which supports the government’s transition plans.

“The terms and conditions for… the funding are not currently clear to the broader development community, including the [Vietnamese] government. We have been asking G7 [countries]. I believe even Vietnam has been asking G7,” Dubey told Climate Home in an interview, lamenting a lack of transparency over the financing arrangements offered by wealthy nations.

She added that the details should be revealed in an investment plan expected later this year.

In December 2022, Vietnam became the third country to agree a Just Energy Transition Partnership (JETP) with a group of wealthy countries and development banks to wean itself off coal, which currently generates most of its electricity.

Criticism over the lack of transparency of the deal follows similar concerns over the secrecy of energy transition agreements struck with South Africa and Indonesia.

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The group of donor countries is known as the International Partners Group (IPG). It consists of G7 nations, plus the EU, Norway and Denmark.

The agreement will help Vietnam peak its emissions by 2030 – five years earlier than planned – and enable the country to source close to half of its power from renewable energy.

The funding is due to be mobilised over the next three to five years. Half of the money will come from governments, the Asian Development Bank and the International Finance Corporation, the World Bank’s private sector arm.

The rest will come from private investment co-ordinated by the Glasgow Financial Alliance for Net Zero.

Lack of transparency

Like in Indonesia, the contribution made by each government has not yet been revealed.

Climate Home previously reported on how the details of the Indonesian package are similarly shrouded in secrecy. The breakdown of South Africa’s financing package was kept under wrap until Climate Home obtained a summary of the breakdown.

In all three negotiations, the share of loans versus grants was a key battle line.

“We don’t have any visibility on how it will come, what the grant amounts will be, and for the loans what the concessionality will be,” said Dubey, adding that there’s “no transparency”. Concessionality refers to the terms of loans below market rate.

Geapp collaborates with the Vietnamese government on capacity-building, research and technical assistance for the country’s just energy transition plans.

“The climate crisis is one of the biggest challenges of our times,” Dubey added. “Vietnam became one of a few countries to sign a JETP last year, demonstrating their commitment to reaching net zero carbon emissions by 2050.”

A spokesperson for the European Commission told Climate Home that funding arrangements “will be subject to further discussion among the parties”.

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Jake Schmidt, of the US-based Natural Resources Defense Council, expects the Vietnam deal to mirror the South African one. “I believe grants will be a pretty small percentage, alongside loans with better terms than they would get in the market,” he told Climate Home.

The South Africa deals includes less than 4% of grants.

To receive the funding, the Vietnamese government is tasked with sketching out an outline of the investment opportunities and the measures required to deliver the energy transition. The deal gives Vietnam until November to submit an initial plan.

From coal to clean energy

Vietnam is among the world’s top 20 coal users and currently relies on the fossil fuel for around 50% of its electricity generation.

To deliver on the energy transition deal, the government must first overcome the administrative roadblocks that have thwarted the delivery of its energy plans. The country’s Power Development Plan 8 (PDP-8) - its blueprint for energy policy until 2030 - has been delayed for two years.

“The PDP-8 has to be modified because the drafts circulated before the JETP deal are not consistent with the targets they set in the agreement, especially in regards to coal capacity and gas expansion," said Schmidt.

Some political wrangling is expected. “There are still some forces in Vietnam that want to use more coal and gas," he told Climate Home.

Human rights at the fore

Vietnam’s treatment of climate activists is likely to remain a sticking point during the negotiations.

Vietnam is a one-party system in which, according to leading NGOs, the government has unleashed a “new wave of repression” against its critics. Four prominent environmental rights defenders have been imprisoned since 2021 on spurious tax evasion charges. The UN, the US, Germany and others have condemned the arrests.

The political agreement states the need for media and NGOs to be included in the process “so as to ensure a broad social consensus”. Campaigning groups like Global Witness have criticised the language as “weak”.

The activists' release is unlikely to be a deal-breaker. But Schmidt expects partner countries will continue to put pressure on Vietnam to address the situation.

“Otherwise it just becomes harder and harder to sustain the financing, because this kind of violations will make lawmakers in the US and the EU nervous," he said.

Vietnam's ministry of industry and trade, which is responsible for energy policy, did not respond to a request for comment.

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An estimated 1,400 families could be displaced by the Mphanda Nkuwa hydropower project due to be built across the river in what would be Southern Africa’s largest dam. Another 200,000 people could be affected downstream.

The government of Mozambique has touted the 1.5GW Mphanda Nkuwa dam, in the district of Marara, Tete province, as key for the southern African nation to address energy poverty and reach its goal of universal energy access by 2030.

But environmental groups say the dam threatens to negatively impact local communities and ecosystems. Local people told Climate Home News they haven’t been consulted on the project and have only heard about it through non-official sources.

Moreover, climate impacts and increasingly erratic rainfall risk making the project unviable, scientists say.

In spite of outcry from local people and green groups, both the World Bank, through its private investment arm the International Finance Corporation (IFC), and the African Development Bank (AfDB) are supporting the project and pushing for the dam’s construction.

The project is expected to “accelerate the transition to clean energy to combat climate change in Southern Africa,” said IFC.

The Mphanda Nkuwa hydro project site is located in the Zambezi river (Photo: International Rivers)

In May last year, the two development institutions acted as advisors to develop the dam, hoping it will become “attractive to reputable developers, financiers and investors to ensure competitive and least-cost power for Mozambique and the region,” AfDB said in a statement.

Sources told Climate Home that the European Union and the European Investment Bank (EIB) have considered getting involved, but have not yet made a final decision.

At the end of 2022, Mozambique became Africa’s newest gas exporter despite 72% of its population having no electricity access. The Mphanda Nkuwa dam is the country’s largest venture into renewable energy and is designed to supply power domestically.

Yet, studies have shown that large-scale hydro may not be as clean as previously thought. While considered a source of low-carbon energy, large hydropower projects emit significant amounts of methane, a greenhouse gas 80 times more potent than carbon dioxide.

The social impact of large hydro projects has also been criticised for violating indigenous peoples and local communities’ rights, and increasing the risk of over-topping and flooding for people living downstream.

The Chirodzi-Nsanangue community during a meeting with Justiça Ambiental (Photo: Justiça Ambiental)

Dam for development 

The government of Mozambique has earmarked the Mphanda Nkuwa project as a national priority in the country’s energy master plan. It’s also a priority investment for the Southern Africa Power Pool Plan.

The dam will be built in the lower part of the Zambezi river basin, around 60 km downstream from the existent giant hydropower plant at Cahora Bassa, known as HCB. Under current plans, the project is expected to reach financial close in 2024 with commissioning to start in 2031.

Government officials, the IFC and AfDB say that Mphanda Nkuwa is key to bringing energy and development to Mozambique.

“The project reinforces our efforts to combat climate change in a region that is desperately short of power but equally in need of transformation and a just energy transition,” said Kevin Kariuki, AfDB’s vice president for power, energy climate and green growth.

Carlos Yum, managing director at the project’s office under Mozambique’s energy ministry, said that Mphanda Nkuwa will support the country’s industrialisation and provide “reliable transmission infrastructure”.

Governments sworn to secrecy on ‘$20bn’ for Indonesia’s energy transition

Resettlement anxiety

The Mphanda Nkuwa project is poised to result in the eviction of farming communities from their land. But people in the affected areas told Climate Home that nobody has yet come to inform them about the plans or seek their consent.

“No one has ever sat down with us to explain about the project or about our rights,” said Horlando Elias Djaquissone, who has lived in the Chacucoma community for 14 years.

The community of Chirodzi-Nsanangue, in Marara district, lies at the heart of the project area. Fisherfolk, artisanal miners and farmers who “rely on the river and its banks for everything” have the most to lose, says a report sent to the EU and EIB by environmental group Justiça Ambiental (JA), which is part of Friends of the Earth International.

The group estimates that more than 1,400 families living in the region could be displaced, and a further 200,000 people living in the delta area would be affected.

A fisherman in the Zambezi river in Mozambique, a sector that is threatened by the Mphanda Nkuwa hydro project (Photo: Justiça Ambiental)

Farmers in the communities of Chacucoma and Nhahacamba live off growing maize on small-holding plots, fishing and artisanal mining, as well as raising cattle, goats and chicken.

But the province of Tete does not have plenty of arable land to resettle the communities of mostly subsistence farmers, the report highlights.

And it’s not the first time some communities have been asked to move. 15 years ago, a coal mine in Marara resettled farmers to infertile lands where they couldn’t grow crops, and where housing conditions were unsafe. In the 1970s, the HCB dam, developed under Portuguese colonial rule, displaced around 30,000 people in the region.

Cornélio Juliano Pacate, of Chacucoma, who sells fish and produces crop all year round, fears he might lose his livelihood if he is resettled. “I don’t want to leave because there might be problems where [the government] will relocate me to,” he told Climate Home.

A preliminary assessment carried out by TMP Systems, a development consultancy agency, suggested the project could see an increased cost of $1.3bn due to resettlements negotiations and social disputes around displacements.

Wrong direction

Civil society groups have been sceptical about the benefits and sustainability of the project.

The country already produces enough energy to meet domestic needs, but most of Mozambique’s population cannot access electricity, said Anabela Lemos, director of Justiça Ambiental.

Electricity is one of Mozambique’s largest exports. In 2021, it came third after aluminium and coal, and generated nearly $570m in revenue. Last November, the country exported its first liquified natural gas (LNG) to the European market.

“The vast majority of Mozambique’s energy output is exported to South Africa at prices that are unfavourable to us, and what we import back is largely used by industry rather than by people,” Lemos said.

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Under current plans, the energy generated by the Mphanda Nkuwa dam will be channelled by transmission lines to Mozambique’s capital Maputo, which is located 1,500km away from the project site.

Because Mozambique’s population is widely dispersed and two thirds of its population live in rural areas, “it makes no sense to invest in transmission lines that cover long distances,” Lemos argued. Instead, the government should  “promote local solutions adjusted to the potential of each place,” she said.

Climate shocks

The Zambezi delta is under severe threat of droughts worsened by climate change, which researchers think could grow even worse after accommodating another large dam in its basin.

Along its course, the river is already powering around 5GW through the Kariba dam, between Zambia and Zimbabwe, and Mozambique’s HCB, also in Tete province. As the impacts of climate change become more pronounced, there is a serious risk that the lower Zambezi will not be able to provide the best conditions for the 1.5GW hydro plant to function.

A farmer along the banks of the Zambezi river in Mozambique, a sector threatened with displacement to new infertile lands (Photo: Justiça Ambiental)

A 2012 study by advocacy group International Rivers found that climate change could reduce water availability in the basin and risk hydropower production. According to the study, rainfall levels could decrease up to 15% over the next century.

Meanwhile, rising temperatures could lead to more evaporation, said Miguel Uamasse, researcher at Eduardo Mondlane University, in Maputo, who has studied the impact of climate change in Mozambique’s hydro landscape for years.

Less rainfall coupled with increased evaporation “will result in lower river flow and lower revenue from energy production,” Uamasse said.

Losses on the local ecosystems and on the Zambezi delta will be “irreversible,” Lemos added, explaining that the dam will alter and disrupt sediments in the river. This will affect the “productivity of the floodplains, the soil and the health of the vegetation,” she said.

“Here, I am doing fine,” said farmer Tafere Juliano, who lives by the river margins. “I don’t know if there will be enough water for my animals to drink wherever they put me,” she added, in anticipation of her resettlement.

Community members argue they can only leave their homes given fair compensation – a matter yet to be determined.

Fungai Caetano contributed to report this story.

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The taxonomy report, produced by Canada’s Sustainable Finance Action Council (SFAC) and published today by the Department of Finance, approves investment in two different categories for activities considered consistent with meeting the country’s climate targets.

A ‘green’ label is awarded to activities that emit little or no carbon, such as solar and wind, or activities that enable them, such as hydrogen pipelines.

Unlike the EU’s taxonomy, which was formalised last year, Canada does not give a green investment label to nuclear and gas. Those definitions opened the EU up to a swathe of ongoing legal challenges by NGOs and European governments.

Canada’s is also one of the first taxonomies in the world to set criteria for ‘transition’ activities, which aim to decarbonise emission-intensive activities.

The document excludes investment in new coal, oil and gas projects, but it does potentially include carbon capture and storage (CCS) upgrades to oil sand production, concrete production with sequestration, blue hydrogen production and electrification of steelmaking.

European Commission endorses fossil gas as ‘transition’ fuel for private investment

The report says all investment activities need to be consistent with Canada’s target to be net zero by 2050 and must address scope 1, 2 and 3 emissions.

Some of its authors say it will reduce uncertainty in the market and fill a $115-billion-per-year spending shortfall needed to meet the country’s climate goal.

“It’s been great to see the 25 financial institutions sign on and endorse this framework,” said Jonathan Arnold, research lead for clean growth at the Canadian Climate Institute who provided advice on climate science for the taxonomy.

‘Endorsement for greenwashing’

But Adam Scott, director of Canadian non-profit Shift Action for Pension Wealth and Planet Health, said some of the transition activities listed do not have a “credible” decarbonisation route.

“Steel and cement and fertiliser and other hard-to-decarbonise industries will need continued finance to make a transition, but there’s a credible argument that they have a pathway or they could reach their emissions through technology.

“If you continue to finance oil and gas, though, you’re actually delaying the transition. You’re essentially saying: ‘We’re going to bet against electrification by making marginal emissions reductions which have no path to zero’.”

Governments sworn to secrecy on ‘$20bn’ for Indonesia’s energy transition

Julie Segal, climate finance senior manager at Environmental Defence, said the taxonomy gives a helping hand to Canada’s oil sands and promotes the dubious use of methane-derived blue hydrogen, which scientists say is potentially dirtier than burning fossil gas.

The taxonomy could also have international implications. Segal said it would weaken the OECD’s definition of transition, which rules out emissions-intensive lock-in. And, given the size of Canada’s pension funds, could muddy the waters globally as an “endorsement for greenwashing”.

Arnold recognised these concerns, and said the transition label should not lead to a lock-in of emissions or extend the fossil fuel industry’s social licence. “At the end of the day, [you want to] have a framework that’s credible and scientifically robust.”

He contended that there is no blanket approval for particular activities, saying investment decisions on projects will be made on an individual basis. There are strict criteria for meeting these, he added, although the thresholds have not yet been set.

‘Differences of opinion’

The taxonomy has been in development for several years, led initially by the Canadian Standards Association (CSA), but hit a roadblock due to “fundamental differences of opinion”.

Scott said that project was aimed at legitimising Canada’s carbon-intensive resource industries and was “basically a private table with banks and other financial institutions” to draw up a voluntary taxonomy.

The federal government subsequently took over under the banner of the SFAC, but some groups fear it is still over-represented by the finance and resource sectors and did not allow civil society or climate experts to make meaningful contributions.

“We’ve been complaining since it was created that that’s self regulation,” said Scott. “Essentially, the industry is able to create its own rules through the SFAC and present them directly to the finance minister.”

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“The process for drafting this taxonomy has been much weaker than in the EU,” agreed Segal.

She said prime minister Justin Trudeau should be paying attention to this given his efforts to position Canada as a global climate leader.

Scott said the lack of consultation and transparency in developing the taxonomy meant the end result would lack legitimacy.

But Arnold noted that Canada had been “playing catch up” as one of the last wealthy countries to develop a taxonomy. “It’s a difficult balancing act between moving very quickly on this and and doing robust engagement and I think the process was largely successful in that regard.”

He said the process would now be taken over by a taxonomy council, led by regulators with civil society having more of a voice alongside the financial sector. That, he said, would work out the remaining details and hopefully address all the “valid concerns that have been raised”.

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The proposal is expected to be tabled at a G20 meeting this week at Nandi Hills summer retreat near India’s tech hub Bengaluru, where financial chiefs from the bloc have gathered for the first major event of India’s G20 presidency.

The development comes as World Bank President David Malpass held a discussion with Finance Minister Nirmala Sitharaman on Wednesday on addressing debt vulnerabilities, India’s finance ministry said.

“India is writing a proposal to form a group for reforms to World Bank,” one of the sources said, requesting anonymity as they are not authorised to speak to media.

“First step”: Reformers react to World Bank plan to free up climate spending

India’s finance and foreign ministries and the World Bank did not immediately respond to a Reuters’ request for comment.

“Democratisation of World Bank has been a long term line pursued by India and other countries. Differential financing terms for least developed and developing countries is desirable,” a second source said.

India’s chief economic adviser on Tuesday said reforms at multilateral development banks would be at the top of the agenda for discussion during the G20 financial chiefs meeting.

Sitharaman told Malpass on Wednesday that climate finance was a focus area during India’s G20 presidency and multilateral development banks “can play a major role in incentivising private capital, de-risking instruments, and providing greater concessional finance”.

World Bank chief to step down early after climate controversy

U.S. Treasury Secretary Janet Yellen is also expected to press for consensus on reforming multilateral development banks to vastly expand their lending to tackle pressing global challenges such as climate change and conflict.

The World Bank Group’s climate change action plan for 2021-2025 has set a target to deploy an average of 35% of the institution’s financing in support of climate action.

The Group said in September that it delivered a record $31.7 billion financing in fiscal year 2022 to help countries address climate change, a 19% increase from the $26.6 billion all-time high in the previous fiscal year.

The World Bank has proposed lowering the loan to equity ratio of its main bank from 20% to 19%, freeing up about $4 billion a year to lend.

Refromers from the governments of Barbados and Germany told Climate Home that this was a good start but did not go far enough.

Last week, Malpass announced he would quit by June, following criticism of his climate scepticism.

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Malpass said the bank’s International Bank for Reconstruction and Development (IBRD) arm may lower its equity-to-lending ratio by one percentage point to 19%.

This means the bank will take on a bit more risk, in line with an independent report prepared for the Group of 20 (G20) major economies last year.

One of the bank’s main focuses is reducing greenhouse gas emissions and helping countries adapt to climate change.

An ongoing reform process is making  this mission more central to how the bank spends money.

Lowering the equity-to-lending ratio would free up more resources  at a time of mounting global challenges such as the Ukraine war, Malpass said.

The bank’s board, made up of governors picked by its member states, is expected to decide on the issue by the April meetings of the bank and the International Monetary Fund.

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The IBRD in December raised its sustainable annual lending limit by $2 billion, beginning in June 2023, and Malpass said there could be scope for a further 8% expansion in total IBRD lending. Its lending ceiling for fiscal 2022 was $37.5 billion.

Malpass announced his resignation from the bank on Wednesday amid mounting pressure from the U.S. Treasury to move faster on reforming the bank. He told Reuters on Thursday in his first interview since announcing his departure that the bank’s work on its “evolution roadmap” was far along.

The bank’s management has already vetted the 19% proposal with credit ratings agencies, and that was the most likely outcome of the discussions now underway, said a source familiar with the matter.

The World Bank had long argued against changing its capital adequacy rules, worried that doing so would undermine its AAA credit ratings, but two of the three main agencies last year said some changes were possible without tarnishing the ratings.

The bank’s board met on Thursday to discuss the proposal and other options, a second source said. “We recognize it could be lowered in a financially sustainable manner,” the source said.

World Bank chief to step down early after climate controversy

The United States, the bank’s largest shareholder, had no immediate comment on the proposed ratio change, but has been pushing the bank for months to take bolder and quick steps to free up urgently needed resources.

Changing the bank’s current ratio is one of many recommendations contained in last year’s independent report prepared for the G20, which concluded that the World Bank and other multilateral development bank could increase their lending capacity by several hundreds of billions of dollar by reforming the way they operate.

Kevin Gallagher, who heads Boston University’s Global Development Policy Center, said the proposal under discussion marked progress after years of resistance by the World Bank but further changes and a capital increase would be needed.

“It’s an important step in the right direction, but it’s only $4 billion of the hundreds of billions of dollars that G20 says can be stretched to meet our shared climate goals,” he said. “If this is all they do, then it’s a failure.”

Developing countries need to secure $1 trillion a year in external financing for climate action by the end of the decade and match that with their own funds, in order to cut emissions, boost resilience, deal with damage from climate change and restore nature and land, a report concluded last year.

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Malpass received strong criticism over the bank’s commitment to climate action and over his personal views on climate change.

He had been under increasing pressure since last September, when he refused to publicly accept that burning fossil fuels is warming the planet.

Malpass was asked during an event on the sidelines of the UN general assembly whether he agreed with the scientific consensus on climate change.

The World Bank chief repeatedly dodged the question, to heckling from the audience, before eventually responding “I’m not a scientist”.

Malpass’ departure comes as the World Bank signalled its intention to make climate action more central to its mission.

In its “evolution roadmap” published in January, the World Bank said it “must evolve its mission” to address the crisis facing development and “support climate action”.

This followed calls on the World Bank from US, Germany and other government to launch “fundamental reform” on its climate agenda.

“Reached new records in climate financing”

Malpass did not say why he was leaving, only publishing in a statement that “after a good deal of thought, I’ve decided to pursue new challenges”.

Malpass said he was proud of what was achieved during his term. “We’ve worked hard to reduce poverty, increase economic growth, reduce government debt burdens, and improve living standards across the full range of human development”, he said.

He also added that under his tenureship the World Bank “reached major new records in financing levels, including climate financing”.

Study: IPCC asks emerging countries to drop coal faster than rich nations did

The World Bank said it delivered $31.7 billion in the fiscal year 2022 to help countries address climate change – a 19% increase on the previous period.

The bank, however, has come under fire for how it counts its climate spending.

Research by Oxfam – based on the World Bank’s climate funding in 2020 – claimed up to 40% of its spending could not be independently verified.

A Trump-appointee

A former investment-bank economist and Treasury official, Malpass was appointed by then US President Donald Trump in 2019.

The United States is the World Bank’s biggest shareholder and a long-standing tradition gives the US government the right to select the head of the World Bank.

However, Nadia Daar, the head of the Washington office of Oxfam International, said the process should be opened to more candidates to improve the credibility of the institution.

“If shareholders really want to ‘evolve’ the WorldBank, Malpass’ successor must be hired based on an open and merit-based selection process,” she said on Twitter.

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Sonia Dunlop, public banks lead at the E3G think tank said the next leader “must be a visionary with deep understanding of the food, energy and development crises gripping the world, have climate change as the one of the top priorities, be profoundly committed to multilateralism and have the full backing of developed and developing countries.”

She added: “It is of course high time that the world’s development bank had a woman at the helm.”

All the bank’s 12 presidents have been American men and all but Korean-American Jim Yong Kim have been white.

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The Climate Investment Funds (CIF) will lend Colombia $70m at a low interest rate so that it can invest in its transition from dirty to clean energy.

The funds are aimed at infrastructure which helps get renewable electricity to communities and businesses including batteries to store renewable electricity, transmission lines to move it around and facilities to make green hydrogen with it.

The money comes from a $300m pot made up of one-off donations from the governments of the United Kingdom, Netherlands and Switzerland. 

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Other countries set to benefit with up to $70m each are Kenya, Mali, Fiji and Ukraine.

If rich nations give more, the next developing countries on the priority list are Brazil, India, Indonesia, Turkiye and Costa Rica.

An official told Climate Home “there is an active fundraising campaign underway to draw in more resources from donors and support additional countries”.

The Colombian government expects the $70m will mobilise $280m more from multilateral development banks and carbon finance markets.

It predicts the spending will save a total of 1.6 million tons of carbon dioxide from entering the atmosphere. That’s about 1% of the greenhouse gas Colombia produces every year.

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Colombia gets about three-quarters of its electricity from hydropower dams, a zero-carbon source. The rest is mostly from fossil fuels.

The Colombian government plans to use the money for loans and guarantees to green projects.

Red tape challenge

The government says that delays to environmental permits could threaten some projects’ success, especially after the government approved the Escazu agreement which protects environmental defenders.

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Colombian environmentalist Martin Ramirez told Climate Home that the social and environmental licenses to build transmission lines are “almost impossible to get fast”.

He added: “There is a lot of bureaucracy and red tape in Colombia, it’s getting harder and harder” and that officials can demand bribes to approve projects.

Green hydrogen facilities are often easier than transmission lines, he said, because they only cover a small area and so only one community has to be consulted.

Another risk, the government’s plan acknowledges, is political instability. Colombian presidents get only one four-year term so left-wing environmentalist president Gustavo Petro will leave office in 2026.

The Climate Investment Funds was set up in 2008 and has received $11 billion from 14 countries. It works from the same building as the World Bank in Washington DC. It recently dedicated $500m to Indonesia’s energy transition.

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Half of the money is to come from governments, the Asian Development Bank and the International Finance Corporation. The rest will come from private investment co-ordinated by the Glasgow Financial Alliance for Net Zero.

An initial amount of $15.5 billion in public and private finance will be disbursed over the next three to five years, according to the press release.

The deal will help Vietnam to peak its greenhouse gas emissions by 2030, bringing forward a previous 2035 projection, limit its peak coal capacity to 30.2 gigawatts (GW) instead of an initially planned 37 GW, and source 47% of its power from renewable energy by 2030, the statement said.

The contributors claim delivering on these targets will save around 500m tonnes of carbon dioxide by 2035. That’s about the same as the nation of Turkiye emits every year.

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“Today, Vietnam has demonstrated leadership in charting an ambitious clean energy transition that will deliver long-term energy security,” U.S. President Joe Biden said in a statement.

Ember’s Asia electricity analyst, Achmed Shahram Edianto, said: “This new $15.5 billion deal for Vietnam is expected to reroute the country’s energy transition pathway, to significantly increase the share of renewable energy and attach a higher priority to reduce coal in their future electricity system.”

The deal is backed by the G7 group of big wealthy nations plus Denmark and Norway.

Mostly loans

A minor part of the funding will be grants, while most of the public investment will be loans, a Reuters source said.

Andri Prasetiyo, from Trend Asia said: “The initial $15 billion funding needs to offer a sufficient portion of grants or at least a more soft loan portion. I am concerned that if Vietnam’s JETP arises only as a new form of loan, it could fail to support the crucial aspects of a just transition, which is strongly tied to a sense of responsibility and assistance from developed countries to developing countries.”

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Contributors have not released a breakdown of which governments are giving what amount to Vietnam. They were similarly opaque about the breakdown for Indonesia but Climate Home obtained the details for the South Africa deal.

Vietnam, among the world’s top 20 coal users, was initially slated to sign the “Just Energy Transition Partnership” with G7 nations at the global Cop27 climate summit in November, but high-level talks stalled before the meeting.

To persuade Vietnam to back the offer, Western negotiators led by the European Union and Britain have repeatedly increased the amount of funding offered to Hanoi.

Another point of contention was Vietnam’s imprisonment of anti-coal activists on tax evasion charges. The US has condemned the imprisonment of Khanh and fellow activists Mai Phan Loi, Bach Hung Duong and Dang Dinh Bach.

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The deal is the third of this type reached by G7 nations, as pressure mounts on them to help poorer countries cope with climate change and transition to cleaner energy.

The group signed similar deals last year with South Africa and last month with Indonesia. In all three negotiations, the share of grants versus loans was a battle line.

The G7’s deal with Indonesia promised $10 billion in public funds to shut down coal plants there and bring forward the sector’s peak emissions by seven years to 2030. South Africa was promised $8.5 billion.

Vietnam’s Environment Ministry did not immediately respond to a request for comment.

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Negotiators have provisionally agreed to hold regular “investment-focused events” as part of a process to cut emissions, known as the mitigation work programme.

The aim, according to the latest draft text, is “unlocking financing barriers and identifying investment opportunities and actionable solutions” to help investors fund emissions-cutting projects.

In a written proposal, the UK government described the events as “world cafe[s]” with a “speed networking” element between governments and investors to “enhance investment and international partnerships”.

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The events would be run by UN Climate Change with the support of “high-level champions” – a now-annual appointment by each Cop presidency to bridge the divide between formal talks and the private sector.

The champions tested out the concept in 2022, with a series of regional forums. It culminated in an event at Cop27 to showcase 50 projects looking for $90bn alongside a longer list which included 78 more. Together, they’re worth $120bn.

“We can now show that a meaningful pipeline of investible opportunities does exist across the economies that need finance most,” said Egypt’s climate champion Mahmoud Mohieldin.

A source with knowledge of the situation told Climate Home the champions whittled the lists down from 450 projects, which meant disappointing a lot of developers.

The shorter list is tilted slightly to middle-income countries. Projects that didn’t make the cut include drainage channels in Nigeria, to help cope with flooding, and a clean cooking programme in Ghana.

Rich nations, banks pledge $20bn for Indonesia’s coal-to-clean switch

Investors told Climate Home that a lack of connections was not the main obstacle to sourcing finance for emissions-cutting projects in developing countries.

Julie Levin spent four years as an investment analyst at the McConnell Foundation, before joining Environmental Defence Canada’s finance team.

She told Climate Home she was sceptical that any deals would be done as a result of these events which wouldn’t have been done anyway. “I don’t imagine it will be significantly impactful in addressing the lack of investment in the global south,” she said.

Levin said that investors had a “prejudice” against newer technologies and against lower income countries.

Money is flowing into oil and gas in Africa, she noted. Holding banks to their net zero pledges, as the UN is trying to do, would move this money into greener projects.

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Sonam Velani used to work at the World Bank and Goldman Sachs before founding her own social impact fund Streetlife. She said that these investment events would only be a “very, very small step forward” as investors like her are already bombarded with pitches on Twitter and LinkedIn.

Most venture capitalists are very public, she said, and even in countries with low levels of internet access, entrepreneurs looking for funding are able to connect.

“The gap is not in finding something, it’s making someone feel more comfortable with an investment,” she said.

Velani said multilateral development banks were able to take more risks but they have too much red tape. Governments should “lay out the red carpet not red tape” to investors, she said.

“Even though the pipeline of interesting projects is there, they will require technical and financial help to get to a position where they can attract the right kind of finance,” Nigel Topping, UK champion from last year’s Cop26 summit, acknowledged. “We need all actors in the system to roll up their sleeves to make that happen.”

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This proposal is part of the mitigation work programme. Countries agreed at Cop26 to launch this to discuss how to close the gap between collective national emissions cuts and the global temperature limit goal of 1.5C. Negotiators are supposed to finalise the details at Cop27.

While holding investment events is uncontroversial, Evans said, discussions have been “lively” on how to structure the broader process.

An alliance of developed countries, vulnerable small islands and some left-wing Latin American countries wants the forum to continue all the way to 2030 and report back to politicians and Cop meetings regularly.

Big emerging economies including China and India want discussions to only last a year or two and not to feed in to ministerial or Cop discussions.

Another divide is over how specific to get in sectoral discussions.

The Cop27 presidency has put the climate ministers of Denmark and South Africa – Dan Jørgensen and Barbara Creecy – in charge of hammering out a deal by the weekend.

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President Joe Biden promised $11.4 billion a year by 2024 to support climate action in developing countries, including an overdue $2bn to the Green Climate Fund (GCF).

But he got little through Congress in his first two years of office. A rightward swing in midterm elections, while smaller than predicted, will make it harder to appropriate funds for the climate agenda.

Following a closely fought campaign, the Republicans flipped the House with a narrow margin, enabling them to block new climate legislation. Democrats retain control of the Senate after winning contested seats in Arizona and Nevada.

Broken promise

The US has yet to deliver on a pledge to the GCF made eight years ago. In 2014, then-president Barack Obama promised the GCF $3bn but he handed over just $1bn before leaving office. His successor Donald Trump did not give any money to the fund and to date neither has Biden.

Biden said he would double US climate finance to developing countries from Obama-era levels to $11.4bn a year by 2024. With Republicans in control of the House, it is now looking unlikely he will meet that target.

Republicans generally favour a small state and don’t see climate as a priority for public spending. Wyoming Senator John Barrasso described Biden’s 2022 budget proposal as “another pipe dream of liberal activism and climate extremism. It spends too much, borrows too much, and taxes too much.”

With the Republicans in control of the House, “I don’t anticipate any sort of interest or support in international climate finance,” said Clarence Edwards, an environmental advocate with the non-profit Friends Committee on National Legislation.

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“It was a difficult road for climate finance, even with a Democratically controlled Congress,” he said. In March, US Congress approved a mere $1 billion in international climate finance for 2022, only $387 million more than the funding allocated during Trump’s presidency. 

The US should be providing $45-50bn of finance every year under a “fair share” calculation factoring in the size of its economy and historical emissions, according to the Overseas Development Institute. Campaigners described the 2022 budget as a “betrayal”.

But all hope is not lost.

Democrats have other avenues to channel climate funds. Of the $11.4bn pledge, Biden has requested that Congress appropriates half ($5.3bn). The remainder is to come through various development agencies, such as the Development Finance Corporation and the Trade and Development Authority.

While Congress still appropriates funds to these agencies, this budget is not climate-specific. The individual organisations can set their own priorities.

“The administration needs to fight for as much dedicated climate finance as possible in the appropriations bill, but also pursue other avenues, including getting agencies such as the Development Finance Corporation and Export-Import Bank to invest more in climate,” Joe Thwaites, an international climate finance advocate at the Natural Resources Defense Council (NRDC), told Climate Home News.

International signals

A Republican controlled House could signal to other big emitters that they can stall climate progress, experts told Climate Home News. 

“Laggards are going to feel little to no pressure to actually take action,” said Kate DeAngelis, international finance programme manager at Friends of the Earth Action. South Korea, for example, recently elected a Conservative government, and Japan has been pushing the expansion of LNG at home and abroad, she said.

“The elections are very interesting for Japan,” said Hanna Hakko, senior analyst at E3G. The US is Japan’s “most important ally”, therefore the Asian country strives to keep a similar ambition level, Hakko said. She added that Japan will be watching closely what kind of positions the US will take at the G7 next year, which Tokyo is hosting.

European governments may also “continue to delay or release policies with giant loopholes for gas,” said DeAngelis. The Netherlands, for example, said last week that it will continue to provide international finance for fossil fuel projects in 2023, deferring a promise made at Cop26.

Secured wins

Biden’s landmark climate bill, the Inflation Reduction Act (IRA), is expected to survive Republicans flipping the House, however.  

The biggest federal climate spending package in US history, $370bn in total, will reduce the country’s greenhouse gas emissions by 42% between 2005 and 2030, according to analysis by Princeton University’s Repeat project.

“I’m not concerned about the unwinding of any recent policy wins that have happened in the US,” said Lindsey Baxter Griffith, federal policy officer for the Clean Air Task Force (CATF).

“Policymaking is difficult and undoing it is just as difficult,” she said. “We’re likely to see a lot of oversight, but with President Biden still in the White House, he’s not going to sign off on any legislation to undo those programmes.”

“There might have been an initial desire to try to roll back parts of the IRA, but the majority of the funds [in the IRA] will go to Republican controlled states,” agreed Edwards. “Once you pass something and people start seeing the benefits of the bill, it’s hard to [repeal it],” he said, adding that Republicans spent years trying to repeal Obamacare but weren’t able to.

Common ground

Although a Republican House is likely to push back on climate finance, there’s broad consensus on other climate issues, such as nuclear, carbon markets and drought resilience, said Edwards.

Climate and clean energy is one of the legislative areas that has received the most bipartisan support over the past two years, according to a report by CATF.

“There’s actually quite a lot to build on and there’s an opportunity next year for the Senate and House to cooperate on further energy legislation and industrial decarbonisation,” said Baxter Griffith.

By passing the IRA in his first term as president, Biden has secured his climate legacy, experts said. 

“He’s done a tremendous amount,” said Edwards. “This administration has done much more than any other administrations and really laid the foundations to accelerate a low-carbon economy.”

“One of the major criticisms of Obama was that he didn’t do what he could when he had control and tried to get things done in the last hour,” said DeAngelis. “Biden learned from that. He was pushing his climate agenda, every chance he got.” 

“The last two years have been monumental… there have been some incredible policy wins,” said Griffith Baxter. “But there’s still quite a lot of work this administration has to do” on clean air, methane and public health regulations, she said.

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On one of the most contentious issues at Cop27 in Sharm el-Sheikh, EU climate chief Frans Timmermans hinted at room for compromise.

“We want to be bridge builders. We are open for this facility, but under certain conditions, and we need to discuss this,” Timmermans told reporters on Wednesday.

A group of 134 developing countries, known as the G77, and China, is calling for agreement in Sharm el-Sheikh this week to set up a loss and damage facility.

Rich countries prefer a “mosaic” of funding arrangements. The EU argues a facility is just one option to consider – and the decision should be made at next year’s summit.

Existing and new funding instruments, ranging from debt relief to a windfall tax on oil and gas profits, should form part of the solution, Brussels says. Many of these sit outside the UN Climate Change process.

Current v historic responsibility

In any case, Timmermans said the pool of contributors should be broader than the list of countries defined by UN Climate Change as “developed” in the 1990s.

“I think everybody should be brought into the system on the basis of where they are today. China is one of the biggest economies on the planet with a lot of financial strength,” said Timmermans. “Why should they not be made co-responsible for funding loss and damage?”

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Last week, the prime minister of Antigua and Barbuda appeared to agree. “We all know that India and China… are major polluters and the polluters must pay,” Gaston Browne said. “I don’t think that there’s any free pass for any country.”

The island leader later clarified that there had to be a “differentiated assessment” that took into account historic emissions.

At a press conference last week, China’s climate envoy Xie Zhenhua said Beijing made voluntary contributions through south-south cooperation and was under no obligation to do more.

Developing countries’ position hasn’t budged. Under a detailed proposal published on Tuesday, the G77 calls for a committee to work out how the facility would work for approval next year.

The EU’s shift in position puts the spotlight on the US, which has so far rejected the proposal for a new fund. “That’s just not happening,” climate envoy John Kerry said on Saturday, citing concerns about liability for compensation. In other interviews, he took a softer tone, but remained vague about where the landing ground might be.

Need for speed

One of the arguments against a facility is it would take too long to get money flowing.

Developing countries have previously said the new fund could be modelled on the UN’s flagship Green Climate Fund (GCF), which was established in 2010. It took five years for the first projects to be approved.

The EU argues existing and new financial instruments outside the UN climate process could deliver funding at the scale needed, more quickly.

On Wednesday, Timmermans announced that the EU had allocated €60 million ($62m) for “loss and damage” from its Global Gateway programme. This would support an early warning initiative, climate and disaster risk finance and insurance mechanisms.

Other ideas include a new trust under the World Bank, a funding window at the GCF, a windfall tax on oil and gas profits and reforms of the financial system.

‘Complete contradiction’: Egypt burns dirtier fuel to sell more gas to Europe

The Alliance of Small Island States (Aosis) has so far been unimpressed with wealthy countries’ alternative proposals. In a statement, the group said it was “gravely concerned” with the lack of progress on the issue.

Aosis chair and environment minister Molwyn Joseph, of Antigua and Barbuda, said some countries like the UK and New Zealand, had been “willing to engage”.

But “some developed countries are furiously trying to stall progress and even worse, attempting to undermine small island developing states,” he said.

Following ministerial consultations on Wednesday afternoon, one source close to the discussion told Climate Home that some developing countries may be ready to accept a compromise, as long as it leads to a decision on funding arrangements at Cop28 next year.

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Historically, in climate talks, Latin America has been divided into two negotiating groups: the right-leaning Ailac countries and the left-wing Alba bloc. Brazil, the region’s biggest country, negotiates on its own. In other international talks, the region sticks together. 

The Community of Latin American and Caribbean States (Celac) — which excludes Brazil — issued a joint statement at Cop27 calling for, among other things, the need for “a greater mobilization of financial resources from developed countries”, sovereign bonds and debt swaps.

The joint move at Cop27 is a sign of greater coordination among Latin American states, analysts told Climate Home News.

Latin America was the world’s most indebted region in 2021, according to a UN report.

The International Monetary Fund warned that, after the Covid-19 pandemic and Russia’s war in Ukraine, the region is poised to suffer a “third shock” from a global hike in interest rates.

The joint declaration calls for “innovative financial instruments” such as sovereign bonds, guarantee funds and debt-for-climate swaps. The last mechanism, in particular, is an idea that Colombia, Argentina and Ecuador have all publicly supported.  

A united front? 

Colombia, which shifted leftwards in recent elections, is a key voice for unity. A member of the Ailac bloc, its government made approaches to neighboring Venezuela, which is in Alba.

“I want to see a united Latin America negotiating climate decisions in a common bloc like the African continent has done,” Colombia’s vice-president, Francia Marquéz, told Climate Home during an event at Cop27.

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Chile’s chief climate negotiator, Julio Cordano, said the declaration is a “very important starting point” and added that “for the region, access to resources is essential and that clearly unites us”. 

Cordano noted that the region has found common ground in the past in specific issues, which has allowed it to play a more decisive role.  

While negotiating the Paris Agreement, for example, “we put out a number of declarations that represented the whole region” on adaptation and indigenous people, said Cordano.

With its right-wing history and a leftist president, Colombia has a “moral authority” to play a mediating role between Ailac and Alba, said Sandra Guzmán, general coordinator of the Climate Finance Group for Latin America and the Caribbean (GFLAC).

“They have an opportunity to build bridges and create alliances,” Guzmán added.

It helps that a handful of other Latin American countries swung to the left in their latest presidential elections: Mexico, Argentina, Peru and most recently Brazil.

Adrián Martínez, director of NGO La Ruta del Clima, said unity in the region could help advance negotiations on loss and damage, as developed countries have often exploited divisions within the global south.

Financial needs 

Debt in Latin America has been increasing since 2010. The Covid-19 pandemic and inflation triggered by Russia’s invasion of Ukraine accelerated the trend. Now, high interest rates and extreme weather are set to add even more pressure. 

The region closed 2020 with its highest weight of foreign debt in a decade, at around 56% of GDP, the UN regional report shows.  

Climate disasters add sporadic financial shocks. This year, for example, hurricane Fiona left more than $375 million in losses in the Dominican Republic and around $100 of agricultural losses in Puerto Rico.

Debt-for nature swaps can be a way to ease the burden, Muhamad said.

“It’s time for us to work together in political decisions but also in common work programmes,” Muhamad said during a public event hosted by the New York Times.

But the two negotiating blocs are unlikely to merge in the short term, said Chilean negotiator Cordano. “It’s complex to arrive at political agreements from one day to the other in such a complex agenda. I prefer to advance in key specific topics.”

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