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US$4 To 6 Trillion A Year Needed To Reach A Low-Carbon Global Economy – Analysis

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COP27 to set up “Loss and Damage Fund” for climate change vulnerable countries.   

The “Sharm el-Sheikh Implementation Plan” adopted on November 20 at the UN Climate Change Conference (COP27) has said that a transformation to a low-carbon global economy will need investments of at least USD $4 to $6 trillion a year. 

In a “breakthrough” move, COP27 reached an agreement to provide “loss and damage funding” to vulnerable countries. The UN ClimateChange News said that the agreement was the culmination of a decade-long hard struggle fought in the backdrop of a tough geo-political situation.

However, the New York Times reported that the Agreement only calls for a committee with representatives from 24 countries to work over the next year to figure out exactly what form the fund should take, which countries should contribute, and where the money should go. Many other details are still to be determined, it added. 

The first meeting of the “transitional committee” is expected to take place before the end of March 2023.

It is noteworthy that the developing nations had to fight to even place the “loss and damage fund” on the formal agenda.

Governmental Packages Announced

Be that as it may, there were definitive gains. COP27 resulted in countries delivering a package of decisions that reaffirmed their commitment to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels. The package strengthened action by countries to cut greenhouse gas emissions as well as boosting support for financing, technology enhancement and capacity building needed by developing countries. 

COP27 agreed on the institutional arrangements to operationalize the “Santiago Network for Loss and Damage,” to catalyze technical assistance to developing countries, especially the vulnerable ones. New pledges, totaling more than US$ 230 million, were made to the “Adaptation Fund” for concrete adaptation solutions by 2030.  

Countries launched a package of 25 new collaborative actions in five key areas: power, road transport, steel, hydrogen and agriculture. UN Secretary-General António Guterres announced a US$ 3.1 billion plan to ensure everyone on the planet is protected by early warning systems within the next five years. The G7 and the V20 (‘the Vulnerable Twenty’) launched the Global Shield against Climate Risks, with new commitments of over US$ 200 million as initial funding. 

US$ 105.6 million in new funding was announced by Denmark, Finland, Germany, Ireland, Slovenia, Sweden, Switzerland, and the Walloon Region of Belgium. The new Indonesia Just Energy Transition Partnership, announced at the G20 Summit held in parallel with COP27, will mobilize US$ 20 billion over the next three to five years to accelerate a just energy transition.

Important progress was made on forest protection with the launch of the Forest and Climate Leaders’ Partnership, which aims to unite action by governments, businesses and community leaders to halt forest loss and land degradation by 2030.

According to a UN Climate Change report, the implementation of current pledges by national governments will put the world on track for a 2.5°C warmer world by the end of the century. The UN’s Intergovernmental Panel on Climate Change indicates that greenhouse gas emissions must decline 45% by 2030 to limit global warming to 1.5°C.

Spreading the Message 

COP27 brought together more than 45,000 participants to share ideas, solutions, and build partnerships and coalitions. Indigenous peoples, local communities, cities and civil society, including youth and children, show-cased how they are addressing climate change. Young people made their voices heard through the first-of-its-kind pavilion for children and youth, as well as the first-ever youth-led Climate Forum.

In parallel with the formal negotiations, COP27 provided a platform for governments, businesses and civil society to collaborate and showcase their “real-world” climate solutions.

Failure of Developed Countries 

However, COP27 expressed concern that the goal of developed countries to jointly mobilize US$ 100 billion per year, has not been met till-date. So, multi-lateral development banks and international financial institutions were urged to mobilize climate finance. COP27 also called for a “new collective quantified goal on climate finance’ to be set up in 2024.

The United States and other wealthy countries had been blocking efforts to get adequate funding for climate change projects, as they feared that they would be held legally liable for the greenhouse gas emissions that are driving climate change. Therefore, the agreement at COP27 says that nations cannot be held legally liable for payments, the New York Times reported.

There is no guarantee that wealthy countries will deposit money into the fund. The NYT points out that a decade ago, that the US, EU and other wealthy emitters pledged to mobilize U$ 100 billion per year in climate finance by 2020 to help poorer countries shift to clean energy and adapt to future climate risks through measures like building sea walls, but they are still falling short by tens of billions of dollars annually. 

In 2021, the Biden administration sought US$ 2.5 billion from Congress for climate finance but secured just US$ 1 billion. With Republicans, who largely oppose climate aid, set to take over the House in January 2023, the prospects of Congress approving an entirely new pot of money for loss and damage appear dim, NYT adds. 

Greenhouse Emissions

The question of the emission of greenhouse gasses, in which the US tops, was not given due attention at COP27. It was only on the day before the close, that US officials said that they would accept a loss and damage fund. The US and European Union further said that the fund should be only for developing and resource-starved countries and insisted that China should not be allowed to draw from it, though, as per the UN classification, China is a “developing” country. 

China is the only developing country which emits greenhouse gasses to such an extent that it is next only to the US in this category.

World’s Hazard Belt 

Countries in the Indian Ocean Region (IOR) have a heavy stake in the success of the COP series of negotiations on climate change. The IOR is described as the “World’s Hazard Belt” because it is prone to disasters such as climatological (cyclones and droughts), geological and tectonic (earthquakes and tsunamis) and hydrological (floods and tidal surges). 

According to the IOR Association (IORA), 2018 and 2019 saw tsunamis and earthquakes in Indonesia, severe droughts in Madagascar, floods and landslides in India, seasonal cyclones in the Islands of the Indian Ocean, among many more calamities. The 2008 Super Cyclone in Myanmar and the December 2004 Indian Ocean earthquake and tsunami will never be forgotten. The loss of lives as well as the damage to property and the natural environment were humongous.  These disasters have also triggered famines, societal imbalance and other tragedies. Between 1991 and 2005, disasters impacted 3,470 million people, of whom 960,000 people lost their lives. Recent floods in Pakistan made millions homeless and the property loss was US$ 30 billion. 

These disasters could be linked to climate change. Climate change is caused by increasing sea levels and rising seawater temperatures. According to The Wire Science, between 1982 and 2019, cyclones over the Arabian Sea had increased in intensity by 20% to 40%. And sea surface temperatures that caused cyclones here had increased by 1.2 to 1.5 degrees C over the last four decades.

P. K. Balachandran

P. K. Balachandran is a senior Indian journalist working in Sri Lanka for local and international media and has been writing on South Asian issues for the past 21 years.

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