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Climate ministers and UN officials will descend on Washington this week in a bid to supercharge global talks on how the world should pay to combat climate change as global temperatures soar.
Officials including Germany’s climate envoy Jennifer Morgan, Denmark’s global climate policy minister Dan Jørgensen and top UN climate change official Simon Stiell arrive in Washington alongside finance ministers from around the world who are attending the annual spring meetings of the IMF and World Bank.
The World Bank has become a focal point for negotiations to find up to $9tn a year by 2030 to pay for action on climate change.
“Finance is the golden thread through all climate action,” said Rachel Kyte, professor in practice of climate policy at Oxford university. “And at the heart of the need to rebuild trust between developing economies and advanced economies.”
The world’s poorest countries — many of them struggling with unsustainable debt levels — are frequently on the front lines of rising sea levels and heat but face high-borrowing costs that leave them unable to cope with extreme weather events fuelled by global warming.
Other countries, notably in Africa and Latin America, argue that exploiting their oil and gas wealth is critical to their economic development and view halting climate change as chiefly the responsibility of wealthier nations that have historically contributed the most to global emissions.
As part of the UN’s annual COP conference, countries this year face the challenge of agreeing a new climate finance target, known as the new collective quantified goal, aimed at helping poor countries make their economies greener and deal with the effects of climate change.
Speaking in London last week, Stiell said the spring meetings should play a crucial role in driving action on climate finance ahead of COP29 in Baku, Azerbaijan, this year.
“There’s no shortage of theories here. What needs to happen is the channelling of all of that [theory] to concrete outcomes in Baku and the discussions that take place at the IMF and the World Bank,” he said.
Officials at the World Bank point to progress made by US-appointed president Ajay Banga, who has been in the post for less than a year following the resignation of Trump-appointed David Malpass, who was widely criticised for his record on climate.
The bank has moved to lower its equity-to-loan ratio from 20 per cent to 19 per cent — allowing it to take on more risk and freeing up about $4bn a year — and introduced new financial tools to generate more lending capacity.
It has also set up a so-called liveable planet fund to be financed by governments and philanthropies, and pledged to boost its share of total annual climate finance to 45 per cent by 2025, up from its present goal of 35 per cent.
But Banga on Thursday told reporters that despite boosting lending, “no amount of money from just multilateral banks” could cover all of the anticipated costs of adapting to climate change and slowing global warming.
“That’s just not the size of these balance sheets,” said Banga. “The reality is government money and multilateral bank money alone will not get to those trillions of dollars . . . that’s why the private sector is really important.”
Kyte said that while there “was movement” within the multilateral lender, “most observers” think the changes are not “deep enough and fast enough”.
Broader negotiations on the finance goals that ministers will hold on the sidelines of the World Bank and IMF meetings are already tense after rich countries repeatedly failed to meet the previous $100bn annual target set more than a decade ago.
Jørgensen said his view was the new target needed to take in public, private and concessional money.
This finance goal — alongside broader climate finance discussions — will be crucial to ensuring emerging economies can take ambitious action on climate change, especially as countries set out their next round of climate plans, known as nationally defined contributions, in the months ahead.
Also set to take place next week is the first meeting of a task force chaired by the governments of Kenya, Barbados and France that will look into how more money can be raised for climate causes through the international tax system.
Initial taxes under consideration for further study include an air passenger levy, wealth tax, maritime fuel levy and global tax on fossil fuel producers.
Source: Economy - ft.com
