It is finally here. I am writing this blog from the climate summit in Paris, COP21. Long the focus of NGOs, business, think tanks and Governments, COP21 has had an unforgettable and very long running build up. The Intergovernmental Panel on Climate Change (IPCC) told us the science. World leaders at Ban Ki Moon’s climate Summit in September 2014 demonstrated the extent of their political will (and its limits). A new vision for the global economy was laid out in the New Climate Economy report. Faith leaders spoke out. We have the scientific, political, economic and moral imperative to act on climate change. Check mate. All that is needed is COP21 to take the king. An agreement is within sight. Or it would be if the United Nation Framework Convention on Climate Change (UNFCCCC) was not as unwieldy. The impacts of a changing climate are already being felt, and will only become more wide ranging and complex. But the UN process is bogged down and relatively dysfunctional. Complex political wrangling around mitigation, adaptation, legality and finance dominate proceedings. These are certainly important, but COP21 must not lose momentum and miss the opportunity to distil the build-up into something truly meaningful. The talks opened with world leaders setting the scene. President Obama spoke of the USA’s commitment to tackling climate change, Prime Minister Cameron asked how we would explain failure in Paris to our grandchildren and the Premier Xi described it as being just the start of action. COP21 must, as a bare minimum, deliver the long-term end goal. Its gift to the world must be a clear, unequivocal signal that in Paris in 2015 the world agreed to get to zero greenhouse gas emissions by, ideally, mid-century.
Financing the Future
There are numerous divisive fissures running through the COP process. None more so than the provision of finance. Climate finance refers to funds channelled from developed countries – the historical contributors to global emissions – to developing countries to assist with climate change mitigation and adaptation projects and programmes. In 2010, developed countries committed to mobilising US$100 billion a year from public and private sources by 2020. Calculations on finance delivered to date are hazy. The assumed future channel for additional finance is the Green Climate Fund, which has received contributions of US$10 billion to date (though just under US$6 billion is in the bank).
More money is required to transform economies. The new climate economy report found that the investment needed for a low-carbon transition could be in the trillions of dollars. How this support will be delivered is unclear, however, it will not solely be from the COP process. There is neither the finance available nor the political will.
Beyond the boundaries of the climate talks, additional financial flows continue to develop, investments are happening, and infrastructure is being build. China has led the way in setting up the new Asian Infrastructure Investment Bank (AIIB) and has authorised capital of US$100 billion. As well as this, it has pledged US$3 billion for developing countries to fight climate change via the South-South Cooperation Fund. In addition, alongside both of these is China’s new $40 billion Silk Road Infrastructure Fund, which has already approved its first project, a hydropower dam in Pakistan. These, alongside numerous traditional finance infrastructure internationally, will ultimately fund and build the infrastructure and economies of the future.
These investments will not wait for a perfect COP text or decision. Already emerging economies are making substantial progress at home. Driven by domestic priorities economies are slowly transforming. National commitments – or INDCs – already submitted by countries ahead of COP21 are testimony to how thinking has moved on. The priority is that future development and investments are in line with the science of climate change. Long-term investments must be based on a trajectory towards a zero emissions world.
A disconnect remains
This is not yet the case. For all the grand speeches about the need for action a disconnect remains. This is evident from Xi Jinping, who, after delivering his address to the COP21 plenary on the 30th November, went on to Zimbabwe where agreements were finalised on providing $1 billion for an extension of the Hwange coal power station.
Zimbabwe’s energy needs must be addressed, but in a sustainable way that factors in the long term. Not doing so risks stranded assets. This is the realisation that climate change could render some investments void and lead to a rapid write-down or devaluation. The Kariba Dam in neighbouring Zambia is one possible candidate. A recent Chinese investment increased the generating capacity of Zambia’s Kariba north bank hydropower plant. Larger turbines require more water to keep them turning. At a time of diminishing rainfall in the region, exacerbated by the El Niño effect, the net result is result for Zambia is daily 12 hour power cuts. In a county where over 90% of its energy needs are met by hydropower the impact on the economy has been crippling. How would this investment have differed if the full effects of a changing climate had been incorporated?
By deciding the zero emission end point COP21 can demonstrate to the world – including all new and existing financial institutions – that there is a collective direction of travel and common vision. Clarity of the goal is paramount. It must resonate with the public, investors, policy makers and leaders. Crucially, it must set the high water mark for which all investments, no matter the fund or institution, are measured. Challenges remain and countries’ paths will differ. This emphasises the need for the Paris agreement to be flexible and able to respond to a changing world, the latest science, and the needs of the most vulnerable. A long term goal would cement the direction of travel at the global level. The deal is not yet done.