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OPINION: Rich nations must turn on the climate finance tap for a green, resilient future

by Alok Sharma | AlokSharma_RDG | UK Government
Friday, 22 April 2022 13:09 GMT

Boys walk past electricity pylons and the cooling towers of the defunct Orlando Power Station in Soweto, South Africa, June 28, 2018. REUTERS/Siphiwe Sibeko

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Climate-resilient investment equals growth, new jobs, clean air and a competitive advantage - and far more is needed to help the vulnerable obtain these benefits

British member of parliament Alok Sharma is president of the COP26 U.N. climate summit, which was hosted by the UK government in Glasgow in November 2021.

It was Svitlana Krakovska, Ukraine’s leading climate scientist, who explained it best: “This is a fossil fuel war.” 

As the world’s scientists attempted to finalise the latest report on reducing greenhouse gas emissions from the Intergovernmental Panel on Climate Change, released earlier this month, Svitlana worked on until Russian bombs overhead forced her to flee.

Only five months ago, at COP26, the UK brought almost 200 countries together to agree the Glasgow Climate Pact - the foundation to a greener, prosperous, net zero future for all.

Since then, the challenges facing the world have deepened. Russia’s illegal and brutal invasion of Ukraine has, among so many horrific impacts, escalated a global energy crisis.

But it has also shone a brighter light on exactly where our energy comes from, and as a result, has injected renewed urgency into reducing countries’ fossil fuel dependency. The UK’s recent Energy Security Strategy is an example of how we are trying to do this to guarantee a more independent and secure energy system. 

At the same time, the latest climate science, universally agreed by global experts, underscores the urgency with which we must act. 

Meanwhile, the fragile position of the world’s most vulnerable countries on the frontline of climate change gets ever worse, with every fraction of a degree’s rise in global temperatures. 

It is now clearer than ever that accelerating action toward a net zero emissions world is the best choice for an energy-secure future while avoiding the worst impacts of climate change.  

It is “now or never” if we are to keep 1.5 degrees within reach and adapt to widespread, substantial and potentially irreversible risks from climate change.  

MORE AND BETTER FINANCE 

I am in Washington for the World Bank and International Monetary Fund Spring Meetings, to continue to underline the message that finance remains the critical enabler for climate action to help deliver an economic, as well as an environmental, dividend.

We need to turn the commitments made in the Glasgow Climate Pact into action, demonstrating that promises made are promises kept. Developed countries must show that the pledges contained in their delivery plan for mobilising climate finance of $100bn a year for poor and vulnerable nations are being deployed on the ground and that the promise of doubling adaptation finance for developing countries by 2025 is on track to be met. 

Climate-resilient investment equals growth, new green jobs, clean air and a competitive advantage. In Glasgow, we saw commitments to mobilise finance from public and private actors all around the world, and a vision for turning the billions in finance into the trillions needed to power a global low-carbon, resilient transition. 

At COP26, we announced a Just Energy Transition Partnership for South Africa - with an initial $8.5 billion to help the country switch from coal to clean energy without leaving communities behind. And we are aiming to deliver further such country partnerships, with the aim of using the full international financial ecosystem of public and private funds  

Yet delivering the finance we need isn’t just about the amount of money out the door. At this week’s World Bank and IMF Spring meetings I will be making the point that we must see better coordination between providers and recipients of climate finance. We must strengthen these partnerships to ensure that finance is accessible and effectively flowing to national plans. 

This reality faces ongoing delays from a lack of coherence, unnecessary bureaucracy and time-consuming negotiations. Rather than competing for business, governments, multilateral development banks and the private sector need to work together to deliver climate action, and fast.

EXPOSED TO SHOCKS

Climate-vulnerable countries - which are already in fiscal stress exacerbated by the dual crises of climate change and COVID-19 now compounded by escalating fuel and food costs - simply don’t have time to wait. 

Eligibility for climate finance has been an ongoing challenge for these countries. Many small island developing states face a cliff edge when graduating from eligibility for development aid. While their economies might thrive in the short-term, they are highly exposed to climate and economic shocks.  

Finally, we must address those persistent barriers to accessing existing finance, and promote more efficient systems that get money to those who need it faster, in alignment with their own plans and priorities.

Movement on the IMF’s historic $650bn allocation of Special Drawing Rights (SDRs) - international reserve assets - to its members will help boost global liquidity and provide fiscal space.

Yesterday, the UK also announced that we will channel $2.5 billion of SDRs to the IMF’s Resilience and Sustainability Trust to provide affordable long-term financing to low- and middle-income countries to address climate impacts and energy security.  

Investing in a climate-resilient future, one that works for and protects everyone, has never been more important.