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31. The Global Stocktake at COP28: Ensuring a Successful Outcome

Author:
Masooma Rahmaty and Gabriela Bonina
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
International Peace Institute (IPI)
Abstract:
COP28 marks a pivotal point in the global response to the climate crisis, where countries will have the first opportunity to review and take stock of the Paris Agreement through the Global Stocktake (GST). This presents an opportunity to accelerate climate action and close the gaps needed to keep global warming below 1.5°C. To ensure a successful political outcome from the GST, the parties at COP28 could focus on the following: Keep 1.5°C alive through commitments in nationally determined contributions: Governments, especially major emitters and future major emitters, need to commit to ambitious measures to reduce greenhouse-gas emissions. The GST outcome should provide specific guidance and actionable suggestions to countries as they prepare to submit their new or updated NDCs in 2025. Phase out fossil-fuel production: Parties should agree to call for a sustained and widespread phase-out of fossil-fuel production, including the elimination of subsidies for domestic and foreign fossil-fuel extraction. The goal should be to achieve net-zero carbon emissions as close as possible to 2040 (for developed countries) and 2050 (for emerging economies). An ambitious GST outcome would also include individual and collective commitments to triple global capacity for renewable energy by 2030. Price emissions: Parties should go beyond making pledges and develop mechanisms and frameworks that incentivize action. Carbon pricing is one such mechanism. A global carbon-pricing floor should differentiate between developed and developing countries, and the price should be set based on the markets rather than on a distinction between high and low emitters. Implementing a global carbon-pricing strategy could foster cooperation between developed and developing countries to safeguard the planet’s climate. Improve the quality and quantity of climate finance: Getting countries out of debt, especially those vulnerable to climate impacts, should be a priority. Donor countries can also explore innovative strategies for utilizing the International Monetary Fund’s special drawing rights to provide grants instead of putting countries more in debt. Bridgetown 2.0 highlights a path toward reforming the global financial system to better serve developing countries through currency exchange guarantees, disaster clauses for debt deals, and reforms to multilateral development banks to increase lending. Capitalize the Loss and Damage Fund: Now that countries have agreed to establish the Loss and Damage Fund, they should make pledges and pursue innovative finance, including taxes and levies on shipping, air travel, financial transactions, and fossil fuel extraction.
Topic:
Climate Change, Climate Finance, Fossil Fuels, Carbon Emissions, Paris Agreement, and Conference of the Parties (COP)
Political Geography:
Global Focus

32. Global incentive mechanism to protect standing forests

Author:
Igarapé Institute
Publication Date:
12-2023
Content Type:
Special Report
Institution:
Igarapé Institute
Abstract:
The planet’s future hinges on safeguarding the remaining tropical forests. These forests, crucial for reducing global temperature by at least 1°C, are home for two-thirds of global biodiversity and absorb 29% of the world’s annual CO2 emissions. In this Global Futures Bulletin, we present a global incentive mechanism designed to enhance, not just replace, carbon markets, and to more effectively compensate those committed to conserving forest. The core concept involves a simple and intuitive set of new incentives, enticing individuals, organizations, or nations to cease deforestation in return for yearly payments per hectare of preserved forest. Funding would come from multiple sources, including combined funding mechanisms from philanthropies, bilateral and multilateral funds, and institutional investors. This mechanism aims to cover the opportunity cost of the immediate land-use benefits from forest degradation, such as livestock farming and monoculture agriculture. Nations that possess these vital ecosystems should be at the forefront of this movement. Brazil, with 59% of its territory covered by forests and set to host COP30 in 2025, is poised to be a key player in developing a global financial framework that secures a sustainable future for the planet and its people.
Topic:
Climate Change, Climate Finance, Carbon Emissions, Forest, Biodiversity, and Conference of the Parties (COP)
Political Geography:
Global Focus

33. MENA and the Global Energy Conundrum

Author:
Rabah Arezki and Adnan Mazarei
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The Middle East and North Africa region (MENA) is addicted to fossil fuels, but so too is the rest of the world economy. Solutions to the energy transition have thus to be found in a coordinated global shift in both the supply and demand for fossil fuels and clean(er) energy, where multilateral institutions can play an important role. These institutions could help bolster international technology transfers to MENA, as well as scale up investment and trade in clean energy to facilitate the global energy transition. Given the potential in MENA for solar power, the region could remain a global hub, this time for clean energy.
Topic:
Climate Finance, Economy, Fossil Fuels, Energy, and Green Transition
Political Geography:
Middle East and North Africa

34. Reforming the World Bank to Play a Critical Role in Addressing Climate Change

Author:
Pedro Albarran, Patricia Bliss-Guest, and Laura Tuck
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The current World Bank model focuses on reducing poverty and promoting equitable growth, while considering environmental and social sustainability. Programming of resources is country-driven, and resources are allocated to programs and investments according to priorities of client government authorities. Despite the appeal of this approach and its many benefits, it has left numerous global public goods (GPGs), particularly those related to climate change, underfinanced, undermanaged, and unachieved. The resulting limited levels of investment and programs have significant global cost and, potentially, extreme ramifications. While there has been considerable reflection on the question of mandate, as well as on options for improving financial engineering of the multilateral development banks (MDBs) to increase resources to better address GPGs, there has been little attention given to reforms and changes in the internal business model that would be required at an MDB like the World Bank if it were to implement a new global mission on climate change. This paper examines the changes in the internal business model that would allow the World Bank (or other MDBs) to better address climate change—and, with some adjustments, potentially, other GPGs.
Topic:
World Bank, Climate Finance, Multilateral Development Banks (MDBs), and Sustainable Development
Political Geography:
Global Focus

35. The JETPs of South Africa and Indonesia: A Blueprint for the Move Away from Coal?

Author:
Annika Seiler, Hannah Brown, and Samuel Matthews
Publication Date:
07-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The Just Energy Transition Partnerships (JETPs) are a novel approach to intensifying ongoing efforts toward carbon neutrality, combining country-led strategies to decarbonize the energy sector and addressing development priorities resulting from the ensuing structural transformation with focused, long-term, and plurilateral partnerships. The launches of the $8.5 billion JETP for South Africa in 2021 and the $20.0 billion JETP for Indonesia in 2022 provide momentum for this effort. However, the legacies of coal-based power and modest renewable energy deployment in both countries present key challenges in the areas of political economy, policy alignment, finance, and supply chain development. This paper consolidates available information about these two JETPs and analyzes the approaches taken by South Africa and Indonesia, with the aim of providing a thought framework for these JETPs. It seeks to identify risks and gaps that could obstruct these JETPs’ advancement and to assess whether these JETPs can serve as blueprints for other countries looking to accelerate their move away from coal. Further, this paper highlights complementary action that could enhance the effectiveness of these JETPs and guide the development of similar partnerships in the future. The paper finds that while the JETPs for South Africa and Indonesia appear to deliver a blueprint for moving away from coal in their respective contexts, barriers, risks, and gaps call into question whether the targets can be delivered at the planned pace and scale.
Topic:
Climate Change, Climate Finance, Renewable Energy, Energy, and Green Transition
Political Geography:
Africa, Indonesia, South Africa, and Southeast Asia

36. Forest-Based Carbon Markets: Pitfalls and Opportunities

Author:
Julián Cárdenas and Juan Jose Guzman Ayala
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
Forest-based carbon markets could become an important source of income for countries in Africa, Latin America and Asia-Pacific. Estimates indicate that under a high carbon prices scenario, the value of the forest-based carbon credit market could increase from US$1.3 billion in 2021 to US$25 billion per year by 2030. Apart from the climate and monetary benefits, forest based carbon markets also have pitfalls that must be avoided. Without the right institutions in place, at the national and local level, forest projects can generate negative externalities, such as population displacement, increases in food prices, and biodiversity degradation. The value chain in carbon credits involves a number of high value-added upstream and downstream activities that tend to take place outside the countries where the projects are located. Industrial policies are required for host countries to receive a higher share of the revenue stream, including in areas such as structuring, monitoring, verification, and surveillance. Countries need to promote actions in labor training, research and development, and access to long-term capital. The paper proposes the creation National Carbon Federations as institutions to resolve several market failures, while preventing conflict, ensuring adequate savings of the additional income, and strengthen democratic governance. These organizations can also provide key public goods, so that local communities benefit from the development of carbon credits from tropical forests.
Topic:
Climate Change, Environment, Climate Finance, Forests, and Carbon Markets
Political Geography:
Latin America

37. Warming or Cooling on World Bank Climate Finance: What Drives Country Demand?

Author:
Clemence Landers, Karen Mathiasen, and Samuel Matthews
Publication Date:
12-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The climate agenda has been a dominant feature of World Bank reform efforts, with President Banga aiming to both mobilize new resources and increase the proportion of total funding for climate-related projects. The stakes are high: greenhouse gas (GHG) emissions in many borrowing countries are elevated and rising, dimming prospects for meeting the 2030 Paris Agreement target to limit warming to a 1.5 degrees Celsius increase. To date, stakeholders have focused on how to mobilize new funding for climate mitigation reflecting an emphasis on the supply side (e.g., financing) of the agenda. But there has been little analysis on the demand side (or project pipeline). The assumption is that more money will generate more demand. But this does not necessarily follow. In this paper, we discuss major factors that will influence demand for climate mitigation projects, especially from the largest emitters of greenhouse gases (e.g., China, India, Brazil, Indonesia, Mexico). Our assessment is that factors like World Bank borrowing costs and access to alternative sources of finance will likely limit demand absent financial incentives, which could prove costly and difficult to resource at the scale needed to have meaningful impact. We also see a risk that these incentives could be used inefficiently absent a rigorous analysis to identify where they could have the most impact and a robust framework for assessing results.
Topic:
World Bank, Climate Finance, and Sustainable Development
Political Geography:
Global Focus

38. A Potential Path for Alleviating Currency Risk in Emerging Market Green Bonds

Author:
Gautam Jain
Publication Date:
09-2023
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
A large gap exists between the financing needed for the energy transition and what is being invested. Green bonds are flourishing as one of the main sources to close this financing gap, with over $2.5 trillion issued globally thus far. However, emerging market and developing economies (EMDEs) haven’t fully capitalized on the growth of this asset class: the share of EMDE (excluding China) green bonds denominated in local currencies within the total green bond universe remains minuscule. While some EMDE issuers can sell a bond denominated in dollars and hedge by swapping the dollar exposure into the local currency of the underlying projects, the cost of doing so is usually prohibitive. This report, part of the Financing the Energy Transition initiative at the Center on Global Energy Policy at Columbia University SIPA, adds to ongoing discussions of how to encourage a greater flow of green financing from international investors to emerging economies. Toward that end, it explores a blended finance structure wherein an intermediary takes on the local currency risk of an EMDE green bond, effectively converting it to a dollar bond that settles internationally, to potentially stimulate more issuances and expand the pool of international investors with access to these bonds.
Topic:
Climate Finance, Currency, Bonds, and Energy Transition
Political Geography:
Global Focus

39. Unaccountable Accounting: The World Bank’s unreliable climate finance reporting

Author:
Jason Farr, James Morrissey, and Christian Donaldson
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
Despite being the largest multilateral provider of climate finance, the World Bank supplies very little evidence to support its claims about the amount of climate finance it provides. Oxfam has attempted to recreate the Bank’s reported climate finance figures using public information for projects in the Bank’s FY2020. Oxfam found that the Bank’s current climate finance reporting processes are such that its claimed levels of climate finance cannot be independently verified and could be off by as much as $7bn, or 40%. Without better disclosure practices, the World Bank is asking us to take much on faith. Climate finance funding is too important for us to do that. The World Bank must be more transparent in its reporting so that it can be held to account.
Topic:
Climate Change, Environment, International Cooperation, World Bank, Climate Finance, and Banking
Political Geography:
Global Focus

40. Climate finance in Asia: Assessing the state of climate finance in one of the world’s most climate vulnerable regions

Author:
Christopher Roy
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
Asia is particularly vulnerable to climate hazards including extreme temperatures, flooding, droughts, cyclones, and sea level rise. The most vulnerable communities need financial support to help adapt to the climate crisis – they cannot do so alone. Developed countries have promised $100 bn in climate finance to developing countries every year until 2025. This promise has not been met. Asian countries have outlined the support they require and delivering on these needs is integral to bringing climate justice to those most vulnerable to – yet least responsible for – the climate crisis. We find that the climate finance provided to Asia is woefully inadequate to support the necessary adaptation actions and vulnerable communities are suffering as a result.
Topic:
Climate Change, Environment, Finance, and Climate Finance
Political Geography:
Asia