Gian Autenrieth, Co-Lead at D-REC argues that funding to help secure net zero and climate adaptation in emerging countries has too long been a slow, sclerotic process typified by a reliance on multilateral funding.
The opening day of COP27 has been marked by emerging economies repeating their calls for financial assistance to enhance adaptation to climate change, or reparation for historic climate damage by mature economies, as existing financing commitments fail to yield results.
In a little over a week’s time, we should know whether this summit in Sharm-El-Sheik will have been a success, or whether, a little like Glasgow a year ago, vested interests and political division will have frustrated meaningful progress.
Whatever the immediate outcomes, there seems small hope that the top-down approach of COP summits can actually deliver the impactful changes we need in order to stem global warming.
Frustratingly, all too often it seems that the status quo in climate funding is a waiting game, and an approach that frequently fails to understand how to make meaningful impacts on the ground. And as we know from COP26, the absence of one or two pivotal players places the entire enterprise at risk.
And when it comes to implementing a ‘just transition’ this approach seems to risk more than ever abject failure as countries dispute perspectives on ‘responsibility’ for historic climate change and political deadlock ensues. This in turn further hampers the already slow moving mechanism of multi-lateral climate funding, leading to further stagnation in the race to halve global GHG emissions by 2030.
It’s time then, to do things differently. Rather than constantly striving for increases in funding, the reasons above alone should guide us towards thinking differently in our support of developing countries adapting to the effects of climate change, and to help them decarbonise their own economies. We should think big in ambition but small in the detail. And we should start at a global corporate level.
Multi-national firms have the budgets to effect real change, and, increasingly, are responding to the concerns of shareholders and consumers as to their role in climate and environmental impacts and social justice, through ESG programmes.
But to secure investment from global companies, there has to be an alignment on needs – recognising where corporates have reputational interest in making commitments that actually count, alongside projects that will make most impact.
This is not a new idea – we’ve seen some strong progress here with the likes of the RE100, where 380 multi-nationals such as Apple, Pepsi and Goldman Sachs have joined the initiative, pledging to procure 100% clean energy to run their operations, which includes their Scope 2 emissions in emerging economies.
Secondly, with the vulnerability of ESG to ‘greenwashing’ from the less scrupulous businesses, corporate renewable energy engagement in developing economies needs to be transparent, verifiable, and robust. Technology has an important role to play here. We are now in an age of new ledger technologies that significantly enhance the traceability of clean energy procurement in emerging economies. This means corporates can act with more certainty in their way to source and support renewable energy in these markets.
Thirdly, we need to recognise that we can move more quickly by starting small. Utility scale projects in developing countries are frequently hamstrung through permitting and financing. If looking to construct a multi-MW wind or solar project, millions of dollars of project finance need to be sourced from multiple parties, with a multi-lateral organisation, such as the World Bank, anchoring the project. This is before we start to consider the additional infrastructure constraints in construction, operation, transmission or distribution.
But in stepping down in scale, we can be more ambitious. Smaller scale distributed renewable technologies are more effective at making impactful change in emissions reduction by displacing diesel generators in the more isolated communities of the developing world, and, may be deployed more quickly than the drawn-out development cycles of large-scale multi-MW renewable energy projects.
Only in thinking through these issues can we start to disrupt the traditional methods of climate finance that seem to become bogged down in political rhetoric and tortuously slow decision making.
Ultimately, the private sector has the flexibility to act fast and the responsibility to do so. The power play of governments and the forces within them have hampered and slowed progress long enough.