As countries prepare for COP28 summit scheduled for the end of the year in Dubai, the world has the opportunity to map a transition pathway that addresses over 14 years of unmet promises. This is particularly true when it comes to climate finance.
The deficit of trust is colossal. It demands tangible, ambitious, predictable action.
This won’t be easy.
Each year the scale and complexity of annual Conference of the Parties (COP), organised under the umbrella of the United Nations Framework Convention on Climate Change, increases. At the same time so does the intensity and complexity of the climate challenge. With a history of almost three decades, the scope of actors and multilateral processes has proliferated, as parties move towards an “all of society” response.
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A COP is by no means the only multilateral process the world has. But it’s one of the most important. For its success, it relies on a delicate and at times seemingly invisible web of global relations, based on good faith, and held steadfast by the processes and procedures of the legal system where all states party, not just the country hosting the conference, play an important role.
Whether – or how – this is achieved will require sensitive and deft political negotiation. This is true in both the lead-up to the conference, and during it. This will be the only way to ensure that the COP process retains its legitimacy and produces an outcome that is not the lowest common denominator serving the interests of the fossil fuel industry, but rather one that advances the highest level of ambition and participation across all countries and major emitters.
The fact that after 27 COPs the world is still not demonstrating tangible climate action is contributing to growing frustration. In turn this is diminishing the perception of progress that’s been made. And amplifying the focus on the lack of adequate climate finance.
For the Global South, each new COP is being transformed into an opportunity to assert agency and denounce the pilling-up of empty promises.
Whether or how we achieve this will require sensitive and deft political negotiation – both in the lead-up to, and at, the COP28.
We must tread carefully to avoid poisoning one of the most longstanding and time-honoured wells we have.
When stakeholders question whether COPs are nothing more than a talk-shop, doubt their legitimacy, or denounce their transparency, we can rightfully learn from these criticisms and make the system more robust.
But the way in which we express views must be respectful of governing processes and sensitive to the fragile web of relations the system depends. Attempts to undermine the multilateral system through selective criticism – as we have seen recently around the UAE’s forthcoming Presidency – simply becomes a distraction from paving the way for a global solution to climate change.
Instead of negotiating with only self interest in mind we need to identify the common ground for global public goods, recognise pragmatically who is responsible for what, while supporting the UAE Presidency achieve meaningful outcomes.
This year, the imperative to achieve an ambitious, equitable and effective response could not be higher. Finance is likely to take centre stage again at the negotiations, or at least it should.
There are expectations that, for the first time, the Green Fund’s yearly $100 billion target will be reached. And that a Loss and Damage Fund will be set up, prioritising adaptation.
Many African countries are in the invidious position of funding adaptation and post disaster response costs in the billions from their own national budgets, while managing rising levels of national debt, without promised climate finance. Raising additional investments to provide real-economy solutions remains central.
The Paris Agreement squarely places the obligation on developed countries to provide finance. Nevertheless, achieving this quantum will require reform across the entire global financial architecture, from the way we deal with sovereign risk or public debt through to prudential and due dilligence rules, foreign
currency and capital markets.
Work is already underway across multiple global forums on the methods and means to achieve this. The IMF and the World Bank reforms are on the agenda. The macroeconomic orthodoxy of the past decades is being challenged, even in wealthy economies.
It is also why a lot of attention will be devoted to the outcome of a number of key meetings:
- the Paris Summit for a New Global Financing Pact which is expected to design a reforms road map capable of mobilising G20 action;
- the Africa Climate Action Summit. This will provide an opportunity for the continent to coordinate its negotiating positions on climate finance;
- the annual meetings of the World Bank and IMF which will be taking place in Marrakesh in October. These meetings can hep clarify whether solutions for Africa’s liquidity squeeze and public debt stress will be acted upon; and
- the G20 Summit that can act on most of the reforms being considered, creating the space for a successful COP28.
Developing countries need to coordinate their positions for these various high-level gatherings. This is what happened through the political momentum achieved by the G77 + China around loss and damage finance last year.
Options on the table
Increased South-South cooperation within these finance forums remains paramount.
African focus should also be on scaling the quantum of funding for the transition and for adaptation and resilience, and the role that state owned entities and the private sector can play.
How countries elect to achieve this is open to discussion. But many options have already been put on the table for COP28. These include include Just Transition Plans and associated finance packages, carbon pricing, and, more controversially, targets and fossil fuel phase outs.
By their nature transitions are politically fraught. While the private sector and state owned companies may not benefit in the short term, they have the opportunity to lead the way, steal the march on regulation, and mitigate their inevitable long term climate transition risks.
National oil companies can play a significant role given that they are tied with sovereign interests – including wealth funds – and they can act in ways that can accelerate the pace of transitions.
The incoming UAE COP28 Presidency is in a good position to harness such prospects.