By Simon Jessop, Valerie Volcovici and Katy Daigle
DUBAI (Reuters) – Governments, development banks and companies announced on Friday initiatives to mobilise billions in climate cash at the COP28 summit where the UAE has made increasing financing central to its leadership of the U.N. talks.
So far the world has barely begun to deliver the vast amounts of money needed to help the world pay for the transition away from fossil fuels and deal with the impact of climate change.
Developing countries will need an estimated $2.4 trillion in annual climate finance by 2030, the Climate Policy Initiative non-profit organisation said. To try to end years of deadlock on the financing issue, COP28 summit host the United Arab Emirates said it would invest $30 billion in a new climate investment venture.
Named ALTÉRRA, it will aim to mobilise $250 billion in investment by the end of the decade, in what COP28 President Sultan Ahmed Al-Jaber described as a “defining moment” for climate finance. Calling it “the world’s largest private investment vehicle for climate change action,” Jaber said it included $5 billion to be allocated to poorer countries. BANK ROLL The World Bank stepped up with a promise to increase the amount it spends annually on climate-related projects to 45% of its financing over 2024 to 2025, up from 35% now, as part of a policy overhaul to better respond to climate change. U.N. Secretary General Antonio Guterres also backed the broader effort to reform the world’s multilateral development bank system to “leverage far more private finance at reasonable costs.” Average annual climate finance hit almost $1.3 trillion in 2021-22, but only around $30 billion – just 2% – went to developing countries, a November report by the Climate Policy Initiative said.
Another report released Friday by the Independent High-Level Expert Group on Climate Finance also said investment was too little and too much of that “is still misdirected”.
Emerging market and developing countries were being “left behind on clean energy,” it said. To help channel support to emerging market financial firms, the World Bank and other multilateral lenders including the International Monetary Fund launched the Global Capacity Building Coalition on Friday.
Also to try to ensure climate funding is not wasted on spurious projects, the World Bank on Friday announced a plan to expand the growth of “high-integrity global carbon markets,” helping five countries in 2024 to develop robust offset credits that they can sell into the market.
PLEDGE’S FROM WORLD’S WEALTHIEST
To help support smallholder farmers in Africa and South Africa who face severe consequences from global warming, the Gates Foundation, the charitable foundation of Microsoft founder Bill Gates, and the UAE together committed $200 million.
In a first for blended finance, bringing together public and private lenders, leading climate-focused donors including the Bezos Earth Fund joined forces to launch the Allied Climate Partners investing platform. The aim is to generate $11 billion in investments in developing countries.
The transition to electric vehicles also drew impetus as Tata Motors said it would work with affiliated banks under the Climate Finance Leadership Initiative India (CFLI India) to boost sales.
Part of broader coalition of Indian and international companies, CFLI plans to mobilise more than $6.5 billion into sectors including e-mobility, green hydrogen, and renewables.
FINANCING A SHIPPING TRANSITION?
Decarbonising shipping and how to finance it also came into focus at Friday’s talks.
Some of the world’s biggest container shipping lines set out commitments on how to decarbonise shipping, after a global deal reached in July was criticised for lacking substance.
Countries through the U.N.’s International Maritime Organization (IMO) to aim for net-zero shipping emissions by around 2050, but they failed to reach consensus on issues such as a carbon levy.
In a declaration on Friday, shipping lines CMA CGM, Hapag Lloyd, Maersk and MSC, and backed by France, Denmark and South Korea called for a global marine fuel emissions intensity standard. They also sought a pricing mechanism to reduce the price gap between fossil fuels and alternative fuels for shipping.
The companies also pledged to aim for one or more of the highest targets in the IMO deal en route to net zero – including a 30% emissions reduction by 2030 and an 80% decrease by 2040 – and called for a firm date to end the construction of vessels based on fossil fuel.
“By collaborating with others, we each take a new step in our energy transition, while ensuring a collective level playing field and access to greener fuels for the industry,” CMA CGM’s Chairman and CEO Rodolphe Saade said.
Shipping transports around 90% of world trade and accounts for nearly 3% of global carbon dioxide emissions.
For daily comprehensive coverage on COP28 in your inbox, sign up here for the Reuters Sustainable Switch newsletter.
(Reporting by Simon Jessop, Valerie Volcovici and Katy Daigle. Additional reporting by Tommy Wilkes in London and Guy Trompiz in Paris; editing by Barbara Lewis)
