In 2023, the promise remains broken: rich nations deny their responsibility while devouring massive amounts of new gas, coal, and oil, and the proposed ‘just transition’ for energy is anything but. Current actions are too slow and filled with hypocrisy; to delay is dangerous.
In Africa and other emerging markets, proposed decarbonization pathways, including those dubbed as equitable, preclude thousands of communities from development pathways that have yielded rapid economic growth in advanced economies.
Coverage of the just energy transition often speaks of the opportunities that it presents to lower-income countries but fails to address the structural barriers to those opportunities being realized and ignores the inherent injustices by rich countries implementing climate policies that restrict developing countries’ agency and access to financial resources for projects critical to development. If current trends in climate finance flows continue, Africa faces an annual GDP shortfall of $127bn by 2030.
There are still deep inequalities associated with the just energy transition, a lack of consensus about exactly who is on the frontlines, and innumerable gaps in what is currently in place to assist lower-income, lower-emitting countries through the transition. The world’s wealthiest 5% use more energy than the poorest half of the global population combined. And more than 3 billion people in the poorest countries live in energy poverty, 80% of them in Africa and 18% in Asia. The Group of Seven (G7) subsidized fossil fuels by more than $80bn in 2021 alone, while lecturing poor countries about their dangers.
These fossil finance flows must be diverted from polluting industries to major investments in renewable energy, energy efficiency, and related infrastructure like grids and power storage considering each ecosystems’ resilience, as well as their interconnection, conservation, and sustainable use.
All lip service, no actions
Questions of justice are prominent in the global debates on climate finance. Concrete financial commitments on behalf of developed countries remain abysmal, and many climate-vulnerable countries still struggle to mobilize climate finance.
While $100 billion a year is still considered the watershed figure for climate investment, the reality is that trillions, not billions, are now required for the remainder of the Decisive Decade. In addition, the complexity of application processes to access financing, for example from multilateral climate funds, poses significant challenges. Governments must be far more systematic about how the low-carbon transition can be financed, especially in countries facing a serious cost of capital barriers and dire debt sustainability challenges — all exacerbated by the Ukraine conflict in the Global North.
Recently published IEA analysis estimates that annual clean energy investment in emerging and developing economies needs to increase by more than seven times to over $4trn by 2030 to put the world on track to reach net-zero emissions by 2050. And much of that investment needs to happen in sub-Saharan Africa, where the population, unemployment, urbanization, and energy demand are growing rapidly.
Putting equity at the center of the Global Stocktake
Both climate justice and social justice must be intertwined to address poverty, historic and present greenhouse gas emissions by the rich, colonial legacies, and perpetuated racism. Without actions promoting equity and justice, the transition will fail to earn the trust of frontline communities. Globally, around 90% of emissions are now covered by net-zero targets. While these targets are an important signal, the commitment to these targets remains questionable.
With the United Arab Emirates Climate Change Conference (COP28) approaching, wealthy and developing countries must rewrite the way international cooperation works. The conference marks the first Global Stocktake, a comprehensive assessment of progress against the goals of the Paris Agreement. It is clear the world is completely off track as far as the Paris climate goals are concerned and given historical responsibilities and the interrelationship with poverty reduction, rich countries have a crucial responsibility from the standpoint of climate justice. Acting strongly will also be in their own self-interest.
Speaking at the recent 14th Petersberg Climate Dialogue 2023, COP28 President-Designate Dr. Sultan bin Ahmed Al Jaber emphasized the need to unlock climate finance while ensuring climate justice. “We must supercharge climate finance, making it more available, more accessible, and more affordable finance to drive delivery across every climate pillar. While doing all of this, we need to ensure a just and equitable transition that leaves no one behind,” he said.
Parties must therefore realistically assess what developed countries haven’t delivered and what they urgently must do in the next few years to drive the 1.5°C transition in all developing countries. The transition will be neither sustainable nor credible if it creates or worsens social inequalities.
A watershed moment for accountability
Ahead of the 49th G7 Summit in Japan and as governments start the global countdown to COP28, rich nations must urgently set new ambitious financing targets for climate and energy. This urgency of action means financing efforts must be frontloaded with a roadmap for delivery and implementation starting now. In addition, multilateral development banks and international financial institutions need to do much more to support blended financing structures to alter the risk-return profiles for the climate transition in emerging economies.
By agreeing to be the first to endure losses in green funding vehicles and securitizations, development banks can increase the expected risk-adjusted return for private investors. Unlocking funding for project development and addressing barriers to private finance during the project feasibility and financing phases will be key to delivering on climate and development targets and ensuring the long-term sustainability of investment in the transition to a net-zero economy.
Acting decisively and fairly will deliver not only on climate but also on strong and inclusive growth and development and the drive toward the attainment of true justice and equity. It must be the growth story of the 21st century: sustainable, resilient, and inclusive. Billions of lives depend on it.
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