SHARM EL SHEIKH, Egypt: Developing and emerging countries — excluding China — need investments well beyond $2 trillion annually by 2030 if the world is to stop the global warming juggernaut and cope with its impacts, according to a UN-backed report released on Tuesday.
A trillion dollars should come from rich countries, investors and multilateral development banks, said the analysis commissioned by Britain and Egypt, hosts respectively of the 2021 UN climate summit in Glasgow and this week’s COP27 event in Sharm el-Sheikh.
The rest of the money — about $1.4 trillion — must originate domestically from private and public sources, said the report. Current investments in emerging and developing economies other than China stand at about $500 billion.
The new 100-page analysis, Finance for Climate Action, is presented as an investment blueprint for greening the global economy quickly enough to meet Paris climate treaty goals of capping the rise in global temperatures below two degrees Celsius, and at 1.5C if possible.
Warming beyond that threshold, scientists warn, could push Earth toward an unlivable hothouse state.
“Rich countries should recognise that it is in their vital self-interest — as well as a matter of justice given the severe impacts caused by their high levels of current and past emissions — to invest in climate action in emerging market and developing countries,” said one of the report’s leads, economist Nicholas Stern, who also authored a landmark report on the economics of climate change.
The report is among the first to map out the investment needed across the three broad areas covered in UN climate talks: reduction of the greenhouse gas emissions that drive warming (mitigation), adapting to future climate impacts (adaptation), and compensating poor and vulnerable nations for unavoidable damages already incurred, known as “loss and damage”.
It calls for grants and low-interest loans from the governments of developed countries to double from about $30 billion annually today to $60 billion by 2025.
“These sources of finance are critical for emerging markets and developing countries to support action on restoring land and nature, and for protecting against and responding to the loss and damage due to climate change impacts,” the authors said.
“Emerging market” countries include large economies in the global south that have seen rapid growth — coupled with rising greenhouse gas emissions — in recent decades, including India, Brazil, South Africa, Indonesia and Vietnam. Historically seen as part of this group, China was excluded from the new estimates, presumably because of its unique and hybrid status.
Its economy — the second largest in the world — is in many respects advanced, and Beijing has positioned itself as a major international investor in its own right, through its Belt and Road Initiative and the promotion of “South-South” investment across the developing world.
In the context of climate change, developing nations include the world’s poorest economies, many of them in Africa, and those most vulnerable to climate hazards, such as small island states facing existential threats from sea-level rise and ever-more powerful cyclones.
“Most of the growth in energy infrastructure and consumption projected to occur over the next decade will be in emerging market and developing countries,” said Stern.
“If they lock in dependence on fossil fuels and emissions, the world will not be able to avoid dangerous climate change, damaging and destroying billions of lives and livelihoods in both rich and poor countries.”
South Africa’s president, whose coal-dependent country is among the world’s biggest polluters, on Tuesday criticised international funders for making it difficult for poorer nations to access aid to fight climate change.
Support from multilateral organisations “is out of reach of the majority of the world’s population due to lending policies that are risk-averse and carry onerous costs as well as conditionalities,” Cyril Ramaphosa told the climate summit.
Addressing the meeting in Egypt’s Sharm el Sheikh, he said “funding institutions need to transform… the way in which they fund projects that will enable us to develop with regard to climate change”.
According to a UN-backed report released on Tuesday, developing countries and emerging economies need investments well beyond $2 trillion annually by 2030 if the world is to stop the global warming juggernaut.
South Africa, one of the world’s top 12 polluters, last week revealed that it will require about $98 billion over the next five years to transition to net zero. Last year, at the COP26 in Glasgow, Pretoria secured $8.5 billion in loans and grants from a group of rich countries towards its green transition.
“We need a clear roadmap to deliver on the Glasgow decision to double adaptation financing by 2025” Ramaphosa said in his address.
He called on rich nations to honour their commitments “because failing to honour these commitments breaks trust and confidence in the process”.
The head of state also assured the summit that South Africa, which generates about 80 per cent of its electricity through coal, was on course to retire several of its ageing coal-fired power plants in the next eight years.
The World Bank last week granted South Africa $497 million to decommission one of its largest coal-fired power plants and promote renewable energy. South Africa will require at least $500 billion dollars to achieve carbon neutrality by 2050, according to the bank. — Agencies