COP28: global warming, fossil fuel, and climate finance

COP28 should have provided developing countries more relief

The recently released report by World Meteorological Organization (WMO) titled ‘Provisional state of the global climate 2023’ indicated the fast-unfolding climate change crisis, whereby the last decade’s average annual temperatures were the highest in the recorded history of temperatures. It pointed out in this regard ‘The global mean near-surface temperature in 2023 (to October) was around 1.40 ± 0.12 °C above the 1850–1900 average. Based on the data to October, it is virtually certain that 2023 will be the warmest year in the 174-year observational record, surpassing the previous joint warmest years, 2016 at 1.29 ± 0.12 °C above the 1850–1900 average and 2020 at 1.27±0.13 °C. The past nine years, 2015–2023, will be the nine warmest years on record. … The ten-year average 2014–2023 (to October) global temperature is 1.19±0.12°C above the 1850–1900 average, the warmest 10-year period on record.’

Moreover, with regard to the gap between where countries should be, and where they are in terms of reducing fossil fuels in a timeframe that allows keeping global average annual temperatures below 1.5°C, the United Nations Environment Programme (UNEP) led report titled ‘Production Gap Report 2023: phasing down or phasing up’ highlighted lack of needed progress in this regard. The Report pointed out ‘Since it was first quantified in 2019, the global production gap has remained largely unchanged. Despite encouraging signs of an emerging clean energy transition, the world’s governments still plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C. The production gap is the difference between governments’ planned fossil fuel production and global production levels consistent with limiting global warming to 1.5°C or 2°C. … Many major fossil-fuel-producing governments are still planning near-term increases in coal production and long-term increases in oil and gas production. In total, government plans and projections would lead to an increase in global production until 2030 for coal, and until at least 2050 for oil and gas, creating increasingly large production gaps over time.’

The needed level of urgency to phase out fossil fuels requires moving towards a green economy, which in turn requires a greater level of climate finance, especially for the cash-strapped developing countries, which otherwise have little carbon footprint. Hence, the developed countries, which have been the major contributors to the climate change crisis, need to take a lead in this regard.

Having said that, the needed level of multilateralism has neither been seen in the case of provision of climate finance, nor has developed countries, and multilateral institutions have come up with a debt policy that allows developing countries to have much needed greater fiscal space; while the emphasis of the International Monetary Fund (IMF) on austerity policies has also increased interest payments a lot.

The needed level of multilateralism has neither been seen in the case of provision of climate finance, nor has developed countries, and multilateral institutions have come up with a debt policy that allows developing countries to have much needed greater fiscal space; while the emphasis of the International Monetary Fund (IMF) on austerity policies has also increased interest payments a lot.

A recent article ‘New push for debt relief to help developing world fund climate action’ published in The Guardian highlighted the negative impact of interest payments on climate change related spending as ‘The fight against the climate emergency is being hampered by a debt crisis that involves the world’s poorest countries paying more than 12 times as much to their creditors as they are spending on measures to tackle the impact of global heating, a campaign group has warned. As the Cop28 meeting opened in the United Arab Emirates, Development Finance International (DFI) said a new round of comprehensive and deep debt cancellation was needed to free up much-needed investment in climate emergency adaptation. A study of spending in 42 countries by DFI found debt service payments represented 32.7% of the budget in 2023 on average, while responding to the climate crisis stood at 2.5%.’

Having said that, one of the major outcomes from the ongoing 28th edition of the ‘Conference of the Parties’ (COP) meetings in Dubai, United Arab Emirates (UAE) has been the adoption of the ‘loss and damage’ fund. A November 30, ‘Nature’ published an article ‘First cash pledged for countries devastated by climate change: COP28 starts with historic decision’ pointed out in this regard ‘A fund that will provide essential finance to countries most impacted by climate change attracted more than $400 million in pledges after it was announced on 30 November at the start of the 28th United Nations Climate Change Conference (COP28) in Dubai. The draft resolution on a ‘loss and damage’ fund marks a historic moment for the world’s strategy on climate change. It is the culmination of a 30-year effort by low- and middle-income countries to be compensated by high-income countries for the harm caused by the effects of climate change. … Of 197 countries represented at COP28, the UAE and Germany have pledged $100 million each to the fund; other European Union member states have together promised $125 million, and the United Kingdom pledged around $50 million. The United States pledged $17.5 million and Japan $10 million. The fund will be administered from the World Bank in Washington DC until a more permanent home can be found.’

Although a good initiative, the amount of money needed is much more, as pointed out in the same article ‘Countries calling for the fund, especially those highly vulnerable to climate change, are expecting it to eventually reach at least $100 billion per year. Tom Mitchell, executive director of the International Institute for Environment and Development, an environmental-research think tank in London, says the total amounts so far “are really, really very modest”. Some of the least developed countries see the US commitment as “a slap in the face”, he adds.’

Dr Omer Javed
Dr Omer Javed
The writer holds PhD in Economics degree from the University of Barcelona, and previously worked at International Monetary Fund.Prior to this, he did MSc. in Economics from the University of York (United Kingdom), and worked at the Ministry of Economic Affairs & Statistics (Pakistan), among other places. He is author of Springer published book (2016) ‘The economic impact of International Monetary Fund programmes: institutional quality, macroeconomic stabilization and economic growth’.He tweets @omerjaved7

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