Stockholm (NordSIP) – World leaders gathered in Paris last week in another attempt to address climate finance and the persistent disparity between promises made by developed nations and the actual funding available on the ground in the Global South. The Summit for a New Global Financing Pact was jointly convened by Mia Mottley, Prime Minister of Barbados and Emmanual Macron, President of the French Republic. The 300 delegates included Heads of State, leaders of supranational bodies, non-governmental organisations (NGOs) and representatives from the private sector partners and philanthropy.
The Bridgetown Agenda
Mottley’s involvement stems from her campaign for a Marshall plan-type of approach to the climate crisis that would use International Monetary Fund (IMF) financing mechanisms as a catalyst to bring in the trillions of private sector dollars that are needed to make significant change. Known as the Bridgetown Agenda, Barbados’ proposals also advocate granting favourable financing terms to vulnerable nations and funding loss and damage with a 2% levy on fossil fuel exports. Among the tangible successes of the summit was the $100 billion-worth of IMF Special Drawing Rights (SDRs) pledged by France, Japan, the UK, and the US, pending congressional approval for the latter. This funding is unrelated to the annual $100 billion promised to developing nations at COP26 and the so-called loss and damage fund. Neither of these initiatives have reached the expected funding levels to date.
New funding sources under discussion
President Macron sought to use the occasion to propose new global taxes on shipping and aviation that could provide part of the agreed climate financing. However, there were no firm commitments on Macron’s proposal, although the shipping tax will be on the agenda as the International Maritime Organisation (IMO) begins two weeks of talks in London today, June 26th, 2023. Up to $60 billion a year could be raised from a carbon tax on shipping, according to World Bank estimations. The levy would also provide an incentive for shipping companies to implement emissions reduction measures. Shipping accounts for 3% of global greenhouse gas (GHG) emissions and is the only sector to employ the heavy fuel oil (HFO) that is considered too dirty for use on land.
The IMO discussions will also be boosted by the publication on 26 June of new research by Dutch consultancy CE Delft. This demonstrates that GHG emissions from shipping could be reduced by 28-47% by 2030 relative to a 2008 baseline, using various existing technical and operational measures. Moreover, despite a small increase in shipping costs, CE Delft predicts that the proposed measures would have little overall effect on global trade.
Developing nations remain frustrated
Despite the SDR pledge and the potential new sources of funding from transportation levies, there was criticism that the summit had yielded little in terms of concrete measures. The World Bank, represented by its new president Ajay Banga, committed to pausing debt repayments for countries experiencing the worst effects of climate change. However, critics pointed out that this would only apply to new loans, whereas many of the affected countries are struggling to maintain their existing debts. Nevertheless, Banga is signalling his intention to redirect the activities of the World Bank towards climate change mitigation and other global crises affecting the quality of life in developing nations. His appointment has been welcomed by environmental campaigners, with his Trump-appointed predecessor David Malpass having overseen fossil fuel-friendly policies amidst doubts about his climate change beliefs.
Last week’s Paris summit was presented as a key step along the road towards the Sustainable Development Goals, building on COP27 and the Kunming-Montreal Biodiversity Framework and working towards the upcoming Africa Climate Summit in Kenya, G20 meeting in India, SDG Summit and IMF/World Bank meetings in New York, and COP28 in the UAE. Climate-affected nations in the Global South will be hoping for greater commitments towards concrete, immediate action on the part of wealthy nations as these events progress.
