28th Session of Conference on Parties on Climate Change at DUBAI

 World 'Badly Offtrack' to Achieve Paris Climate Goals

COP28UAE

As negotiators focus identifying necessary measures and commitments to put the world back on track to limiting temperature rise to 1.5degree C, a group of experts led by eminent economists Vera Songwe and Lord Nicholas Stern have suggested a financial system to make it possible.

The primary reason why the world is "badly offtrack" to achieve the Paris goals is the insufficient investment in key areas, particularly the emerging markets and developing countries outside China, according to a new report by the Independent High-Level Expert Group (IHLEG) on Climate Finance.

Following their 2022 report on the scale of investment required to meet the Paris Agreement goals, the expert group chaired by Songwe and Stern was tasked by the COP26 (UK) and COP27 (Egypt) and the UN Climate Change High-Level Champions was asked to develop a climate fi nance system that would be "fit for purpose”.

The first report released at COP27 in Sharm El Sheikh concluded that by 2030 an annual in vestment of about $2.4 trillion would be required by emerging markets and developing coun tries outside China.

The new report, A Climate Finance Framework: Decisive Action to Deliver on the Paris Agreement', launched on Monday focus es on the actions required to put in place a reformed holistic framework for cli mate finance that can accelerate and implement the necessary climate action.

Much of the current investment is "misdirected". Investment in fossil fuel production and power generation still continues to out strip investment in renewable energy. The report finds that emerging markets and developing countries other than China are being left behind. More than 90% of the Increase in investments in solar PVand electric vehicles since 2021 has been in developed economies and China. Low and low-middle income countries only accounted for 7% of clean energy spending in 2022 At the same time, adaptation costs and needs are rising. It is estimated that adaptation costs and needs are around 10 to18 times current international flows of public finance. Yet international public finance commitments for adaptation fell by 15% in 2021.

The report suggests that the first task is to act to unlock investment at scale by tackling impediments and buttressing institutional structures that can create an investable pipeline of projects. This requires co-creation of invest ment opportunities and tackling obstacles with the combined involvement of countries, the private sector and development finance Institutions. It also requires tackling debt constraints and the lack of fiscal space that limits the ability of many countries to invest.

It identifies four sources of finance domestic public resources, private sector, multilateral development banks, and concessional. The deployment of different combinations of finance from these sources will be necessary for investment and activities in different countries.