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71. Achieving the full potential of sustainable finance: The role of national, European and international initiatives

Author:
Eva De Francesco
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
When signing the 2016 Paris Agreement, a legally binding international treaty on climate change, world leaders agreed to pursue the ambitious goals of achieving climate neutrality and mitigating the effects of climate change. Almost every country around the globe recognised that business-as-usual is not an option if we are to save the planet and human existence. As a result of this realisation and commitment, different green measures are being taken globally, regionally, locally; at all levels of societies; and in the public and private sectors. Redirecting capital flows toward a green economy is an important part of measures to take, so it is no surprise that there is a growing interest in using environmental, social and corporate governance (ESG) factors as guidance points for both public and private investors. However, there is still much to be done to ensure not just sufficient investment volumes but also that investments labelled as ‘sustainable’ do, in fact, contribute to climate action objectives. In order to realise ESG markets’ full potential in supporting the global transition towards a climate-neutral economy, further effort is especially needed in the following three areas: Policymakers at all levels must urgently address greenwashing and the lack of transparent and comparable ESG data. In the context of sustainability reporting, double materiality approaches are better suited to address the urgency of climate change. Policymakers at all levels must ensure the interoperability and alignment of the rapidly evolving sustainability reporting initiatives.
Topic:
Climate Change, Finance, Sustainability, and Green Transition
Political Geography:
Europe

72. Let Them Eat Carbon

Author:
Vijaya Ramachandran and Arthur Baker
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
The push for the World Bank and others to link their investments to addressing climate concerns stems from a fear that, unless developing countries take action to decarbonize now, their economic growth will lead to vast emissions that will derail all global efforts to limit climate change. This approach, which treats low- and middle-income countries as a monolith, is unhelpful to the conversation about climate change. To understand better where emissions are concentrated and how to address them, we projected carbon dioxide emissions to 2035—the point at which observers believe they will level off in most countries due to technological advances and accumulating wealth—under some simple assumptions. Emissions from the world’s poorest 64 countries, those which get IDA loans, will remain very low for decades to come, even if their economies grow rapidly and without action to reduce emissions. Pressuring low- and lower-middle-income countries to replace plans for gas power with solar or wind energy will have limited climate benefits compared to replacing coal generation in richer countries. It is just more efficient—and just—to focus on climate mitigation where emissions are high, and on poverty reduction where poverty is high. And given that there is no sign of an increase in aid spending, especially in the poorest countries, rich countries must not cannibalize development aid or reinvent the development finance architecture
Topic:
Climate Change, Environment, World Bank, Finance, Banking, and Green Transition
Political Geography:
Global Focus

73. Greening the US Sovereign Bond Guarantee Program: A Proposal to Boost Climate-Directed Sovereign Finance in Developing Countries

Author:
Scott Morris, Rowan Rockafellow, and Alan Cameron
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Sovereign bond guarantees (SBGs) are an effective but underutilized instrument available to the US government in support of developing country partners. By protecting bond purchasers in the event of a foreign issuer country’s default, SBGs substantially reduce borrowing costs for developing country governments. In this CGD policy paper, we estimate the costs and benefits of historical US sovereign bond guarantees in order to model the use of SBGs for climate finance purposes. We demonstrate that the US government-provided SBG has the effect of conferring the US government’s cost of borrowing on the partner government. On that basis, it represents substantial savings for these countries. Based on this analysis, we propose a $20 billion “Green” SBG program aimed at financing climate change mitigation efforts in 28 emerging market economies. We estimate that the US government could support $20 billion in bond issuances through a subsidy outlay of $2 billion, resulting in a 22 percent reduction in borrowing cost of the target countries, which represents $4 billion in budgetary saving for their governments. We propose that the subsidy appropriations in support of the guarantees be retained and recycled within the Green SBG program, which would substantially improve the financial leverage of the program over time. We also suggest that the program could be used for climate adaptation purposes by targeting a different group of developing countries
Topic:
Climate Change, Development, Finance, Sustainability, and Green Transition
Political Geography:
North America and United States of America

74. Energy Politics in the MENA Region: From Hydrocarbons to Renewables?

Author:
Valeria Talbot
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
After Russia's invasion of Ukraine and its weaponisation of natural gas supplies, energy security has become a top political priority for Europe. Given the Middle East and North Africa (MENA) region's abundant oil and gas resources, the European countries inevitably turned to the region to make up for the shortfall. This Report analyses the impact of Europe's "scramble for alternatives" on key MENA exporters of fossil fuels. Specific attention is attached to their prospects as short-term suppliers of fossil fuels while they set the stage for their green transition. How is the current energy crisis affecting the role of MENA hydrocarbons producers as Europe's energy suppliers? Which impact on energy relations among MENA countries? Which new prospects for their green transition?
Topic:
Security, Energy Policy, Renewable Energy, Hydrocarbons, and Green Transition
Political Geography:
Middle East and North Africa

75. Expanding the Peaceful Uses of Nuclear Technology and Climate Change Adaptation: Opportunities and Challenges

Author:
Julius Caesar Trajano
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
While ongoing debates on the critical role of nuclear power plants in achieving the goals established in the 2015 Paris Agreement remain unsettled, the peaceful applications of nuclear technology in climate change adaptation have been expanding in recent years. The peaceful uses of nuclear technology cannot be excluded from innovative approaches to addressing the world’s most pressing and complex challenge─ climate change. This NTS Insight examines how nuclear technology can be deployed to strengthen climate adaptation measures and presents case studies from several Southeast Asian countries that have nuclear research and scientific programmes. Nuclear technology is being utilised in adopting climate-smart agriculture, modernising water management, enhancing greenhouse gas emissions analysis, and combatting plastic pollution. This Insight offers agendas for action by Southeast Asian countries to address key challenges to expanding the role of nuclear technology in addressing climate change.
Topic:
Climate Change, Science and Technology, Nuclear Power, and Green Transition
Political Geography:
Asia

76. Small Modular Reactors in the Philippines’ Journey Toward Nuclear Energy

Author:
Julius Caesar Trajano
Publication Date:
12-2022
Content Type:
Commentary and Analysis
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
The Philippines is seeking nuclear energy partnerships with various countries and allies as it aims to address the twin challenges of achieving energy security and reducing carbon emissions. How can advanced small modular nuclear reactors help the Philippines in its transition to clean energy?
Topic:
Security, Energy Policy, Nuclear Power, Nuclear Energy, and Green Transition
Political Geography:
Asia and Philippines

77. COP27: Will Egypt Bring New Life to Climate Conferences?

Author:
Thibaud Voïta
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The COP26, held at the end of 2021 in Glasgow, was emphatically heralded as “the last best hope for the world to get its act together”. Many elements are pointing to a particularly difficult COP27, among which the unfinished work of the Glasgow COP, the worsening of the climate crisis, the tensions in the hydrocarbon markets, and the risks of economic recession. This COP in Sharm-El-Sheik is nevertheless the first hosted outside the European continent since 2016 and the first under the aegis of a rapidly changing UN Climate Change. It takes place on the African continent and, like the COP28 chaired by the United Arab Emirates, is held in a country that wants to be a hub for all types of energies. Therefore, the role of gas in the energy transition has become a central topic. Finally, African countries are pushing for a greater contribution from rich countries to the fight against climate change, especially regarding the financial adaptation, and the acceleration of implementation efforts (rather than announcements of new initiatives).
Topic:
Climate Change, European Union, Gas, Renewable Energy, Energy, and Green Transition
Political Geography:
North Africa and Egypt

78. Corruption risks loom large over financing of green infrastructure

Author:
Creon Butler, Sean Hagan, and Dominic Martin
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Governments and public international organizations are making a concerted effort to provide large amounts of money to reduce emissions of greenhouse gases (climate mitigation) or adapt to the effects of climate change (climate adaptation). But there is a significant risk that the infrastructure projects where much of this climate financing will need to be targeted will be undermined by corruption—from bribery and kickbacks to fraud and embezzlement. The threat is increased by the scale of the climate financing being provided and the speed with which the required projects need to be completed. This Policy Brief identifies key corruption risks that threaten climate infrastructure financing and the best practices that can alleviate these risks.
Topic:
Climate Change, Corruption, Infrastructure, Risk, Carbon Emissions, and Green Transition
Political Geography:
Global Focus

79. Green energy depends on critical minerals. Who controls the supply chains?

Author:
Luc Leruth, Adnan Mazarei, Pierre Régibeau, and Luc Renneboog
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
In light of the transition away from fossil fuel–based energy, this paper highlights the importance of understanding who controls vital parts of the global supply chains of critical minerals and rare earth elements (REEs). Analysis of direct ownership does not reveal the real sources of control over the decisions of the company. To identify those sources, the authors use an index that measures the degree to which important shareholders can affect voting decisions. This analysis is not straightforward, because companies along the supply chain are not necessarily incorporated in the countries in which mining and production activities take place, and shareholders can exert influence through multiple layers of subsidiaries. The analysis reveals that China’s control over the global value chains involving critical minerals and REEs extends beyond what is commonly assumed. It also sheds light on environmental, social, and governance issues in the countries in which mining and/or production take place. The paper advocates increasing transparency regarding the sources of control to better assess and manage economic and geopolitical risks; enhancing recycling, to reduce dependency on foreign supply; avoiding protectionist and trade-reducing reactions; and encouraging research and development in order to speed up the adoption of technologies of substitution.
Topic:
Economics, Geopolitics, Supply Chains, Minerals, Energy, and Green Transition
Political Geography:
Global Focus

80. Just Transition for Bangladesh

Author:
Mizan R. Khan, Afsara Binte Mirza, and Saleemul Huq
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
International Centre for Climate Change and Development (ICCCAD)
Abstract:
In recent years, the just transition to a low carbon economy, supporting climate resilient development has become an issue of global concern for all the right reasons. The response measures to address climate change through switching to a cleaner energy mix and enhancing the adaptive capacity of society – businesses, workplaces and communities will entail significant disruptions particularly, to the lives and livelihoods of the working poor and the marginalised communities across the world. For the most vulnerable countries like Bangladesh, achieving a just transition is important. In countries like Bangladesh, which are not big users of fossil fuels, just transition as a response to climate change impacts relates more to strengthening the resilience and adaptive capacity of communities and rehabilitating the displaced people, ensuring their livelihoods and income opportunities. With this perspective, this policy brief reviews how workers and other vulnerable people are coping with the twin crises of climate change and COVID-19, and looks at the roles the Government of Bangladesh and the trade unions can play to strengthen the just transition measures.
Topic:
Climate Change, Development, Justice, Carbon Emissions, and Green Transition
Political Geography:
Bangladesh and South Asia