Developing Countries Need Debt Relief to Act on Climate Change

While developed economies have pledged to increase climate financing sharply by 2030, developing-economy policymakers are struggling to cover the costs of action. With medium-term strategies being used to address a short-term threat, progress on the green transition will be undermined, with potentially catastrophic implications.

WASHINGTON, DC/PARIS – If developing economies found it hard to manage their debts in 2023, they are likely to face even more formidable challenges this year. Though most possess relatively small debt stocks and are not considered insolvent, many are in dire need of liquidity. As long as this remains true, they will struggle not only to manage their debts, but also to invest in the green transition.

Developing economies have faced a series of external shocks in recent years, including the COVID-19 pandemic, war-related disruptions of food and energy supply chains, and an uptick in global inflation. Moreover, their access to capital markets has been curtailed, preventing them from rolling over maturing loans, as they would do in normal times. As a result, countries have been forced to channel a large share of their tax and export revenues to service their debt, avoiding default at the cost of priorities like infrastructure investment, social-welfare programs, and climate action.

The outlook for these countries is likely to worsen in the next few years. According to estimates by the Finance for Development Lab (FDL), large debt payments are coming due in 2024 and 2026 for at least 20 low- and lower-middle-income countries. As countries hit this “debt wall,” their already fragile fiscal positions will deteriorate further. This does not bode well for climate action.

Climate change is not some distant menace; its effects are already being felt worldwide, especially in climate-vulnerable developing economies. But international summits on the topic last year sent a disappointing message: while developed economies pledged to increase climate financing by 2030, developing-economy policymakers are struggling against severe fiscal constraints. With medium-term strategies being used to address a short-term threat, developing and emerging economies have been expressing frustration, including at the Summit for a New Global Financing Pact that was held in Paris last June.

Multilateral development banks can provide an essential lifeline, but their capacity would have to be strengthened – and quickly. According to World Bank data, the new concessional loans the world’s poorest countries received from MDBs in 2022 were smaller than these countries’ debt-service payments, a large share of which went to private and bilateral creditors. Increasing capital flight from the developing world – driven not least by monetary tightening in advanced economies – will intensify the needs of illiquid lower-income countries.

But it is not only a matter of financial capacity. MDBs have so far been inconsistent, at best, when it comes to supporting countries struggling to repay their debts. For example, both Kenya and Ethiopia have been under pressure to repay their private and Chinese creditors, which are now collecting more in debt-service payments than they are providing in new loans. But only Kenya received enough support from the International Monetary Fund, the World Bank, and others to refinance its debt that is maturing this year.

By contrast, assistance to Ethiopia has declined in recent years. As a result, Ethiopia recently defaulted on its external debt, even though it amounts to just 25% of GDP. While the Kenya approach is not the solution – providing similar levels of support to all illiquid countries would require a tripling of MDB flows – this is clearly unacceptable.

A better approach would focus on closing the gap between short-term debt concerns and long-term investment needs, by unlocking net-positive inflows for countries facing liquidity constraints. As the FDL has proposed, an agreement among debtors, creditors, and MDBs to permit countries to reschedule debts coming due – delaying maturities by 5-10 years – would create fiscal space for climate-friendly investments, financed by MDBs.

For this liquidity bridge to work, MDBs would have to accelerate progress on implementing existing reform plans and increase funding substantially, while the IMF helps manage debt-rollover risks. Importantly, private and bilateral creditors would have to agree to the rescheduling. That is why, compared to the Debt Service Suspension Initiative that the G20 introduced in 2020, the proposal includes stronger incentives for private-sector creditors to participate, in addition to longer time horizons.

There are good reasons to believe that creditors can be convinced to join the program voluntarily. It is, after all, in their best interest to remain invested in solvent countries with strong growth prospects; no one benefits from debt crises like those that have ensnared Zambia and Sri Lanka. In any case, creditors would continue receiving interest payments, and as global interest rates fall and economic-growth prospects improve in the coming years, debtors may well be able to return to capital markets and resume repayment of the principal.

Shaping a workable blueprint along these lines is a task for upcoming international gatherings, such as the G20 summit in Brazil later this year. Logistical and financial coordination will be needed to ensure sufficient liquidity. Coordination among the IMF, the World Bank, and regional development banks will also be essential to ensure that participating debtor countries pursue investments that genuinely support green growth.

If nothing is done to help countries facing liquidity crises, the world will risk a wave of destabilizing debt defaults, and progress on the green transition will be severely undermined, with catastrophic implications for the entire world. Because promising solutions like the liquidity bridge can prevent such outcomes, they deserve broad global support.




UN climate chief calls for $2.4tn inclimate finance

The world needs to mobilise at least $2.4tn to keep global climate change goalswithin reach, the United Nations climate chief said in a speech yesterday.
Simon Stiell, executive secretary of the UN Framework Convention on ClimateChange (UNFCCC), addressed a group of students at the Azerbaijan DiplomaticAcademy in Baku, host of the COP29 climate summit in November, laying out thesteps that need to be taken this year to turn the commitments made at last year’ssummit in Dubai into reality.
This was Stiell’s first major speech since the UN gathering in Dubai, where nearly200 countries agreed to begin a transition away from fossil fuels to avert the worstimpacts of climate change.
“It’s clear that to achieve this transition, we need money, and lots of it – $2.4tn, ifnot more”, excluding China, Stiell said in prepared remarks, citing a reportreleased in December from the High-Level Expert Group on Climate Finance.
“Whether on slashing emissions or building climate resilience, it’s alreadyblazingly obvious that finance is the make-or-break factor in the world’s climatefight – in quantity, quality, and innovation,” he said. “In fact, without far morefinance, 2023’s climate wins will quickly fizzle away into more empty promises.”
Climate finance will be the main focus of the Azerbaijan-hosted talks, wheregovernments will be tasked with setting a new target post-2025 for raising moneyto support developing country efforts to cut emissions and adapt to the worseningimpacts of climate change.
Setting a new financial goal will be challenging given that countries only met lastyear a goal set in 2009 to mobilise $100bn a year in climate finance by 2020.
“It’s already blazingly obvious that finance is the make-or-break factor in theworld’s climate fight,” he said, adding that without more finance, the winsachieved at the COP28 Dubai summit will fizzle out.
Stiell said that the year should be spent ensuring that the global financial systemand multilateral banks can meet the task of ramping up climate finance, and urgedbanks to triple the amount of climate grants and concessional finance by 2030and triple the rate of private capital they mobilise.
More broadly, he cautioned against taking “victory laps” after the UAE agreement,saying that the political agreement reached in Dubai enables countries to hidebehind “loopholes”.

“The action we take in the next two years will shape how much climate-drivendestruction we can avoid over the next two decades, and far beyond,” he said.
The world is currently far off track in delivering on its cornerstone climate deal,agreed in Paris in 2015.
Under the Paris Agreement, world leaders pledged to keep the rise in Earth’saverage temperature to “well below” 2.0° Celsius above the pre-industrial leveland preferably the much safer threshold of 1.5C.
The 2020s are critical for keeping that 1.5C target in view, with UN climate expertsestimating that planet-heating greenhouse gas emissions need to be slashed bysome 43% by 2030.
There is progress, with a surge in clean energy technologies like solar, wind andbatteries, as well as electric vehicles.
However, emissions continue to rise.
A key challenge that is likely to take centre stage at this year’s climate talks inBaku, as well as meetings of the World Bank and International Monetary Fund(IMF), is how to support emerging economies manage and pay for their transitionto clean energy.
Many of these nations are currently mired in debt and facing a raft of challenges,from inflation to growing climate impacts.
Meanwhile global warming continues, with 2023 confirmed as the hottest everrecorded and experts warning 2024 could be even hotter.
The Earth is now about 1.2C warmer than it was in the 1800s.
This is already having an accelerating impact on people and ecosystems acrossthe planet, from heatwaves and droughts, to devastating floods and storms.
A damning appraisal of countries’ decarbonisation efforts so far, released lastyear, showed the world heading for catastrophic planetary heating.
Stiell conceded it would take an “Olympian effort” to get the world on track.
One key task for countries will be to outline a new round of national climatetargets for 2035 ahead of a pivotal COP30 meeting, due to be held in Brazil in2025.
These pledges should be strengthened to align with the 1.5C goal, cover thewhole economy and all greenhouse gases, Stiell said.
“The action we take in the next two years will shape how much climate-drivendestruction we can avoid over the next two decades, and far beyond,” he added.




Climate change march: From Paris to Glasgow

The latest IPCC report shows that we are dangerously close to 1.5C already. Every fraction of a degree matters

The COP26 climate conference will be a clarifying moment, poised between global co-operation and competition. As one of the key French officials tasked with delivering a deal at COP21 in Paris in 2015, I can attest to the weight of expectations placed upon this year’s hosts, Italy and the United Kingdom.
The summit in Glasgow this November is by far the most fraught meeting of governments since Paris. Paradoxically, greater global integration continues alongside emerging fault lines, including the injustices of the Covid-19 pandemic and a growing desire for inward, nationalistic policies.
While global trade is on track to increase by 8% this year, after falling by 5.3% in 2020, the rollout of medical supplies along global supply chains has exposed deep sources of antagonism and rivalry. The issue of vaccine solidarity – compounded by wealthy countries earmarking trillions for their own economic recoveries – has seriously strained multilateral ties. COP26 is approaching under a cloud of tension.
This year’s conference will test the spirit of co-operation that emerged in Paris, where – after several abortive efforts – 196 governments adopted the historic Paris accord and made “net zero” a geopolitical reality. The agreement has since provided the organising principle for all climate action – one that nation states, regions, cities, businesses, investors, civil society, and individuals all had a voice in, and can all act upon. This was people-powered multilateralism at its best.
Six years later, we ought to be seeing a positive domino effect of bold pledges from states. Instead, we are watching a nervous game of poker. As with vaccines, wealthier countries are not sharing their wealth and technology.
Tellingly, the international community still has not met the Paris agreement’s target of $100bn per year for supporting climate investments in developing countries. This figure is a threshold, not an end goal: it is essential that we clear this hurdle for all parties at COP26 to know that wealthy countries mean business and are sincere in their solidarity.
Equally concerning is the absence of specifics for how G20 countries intend to meet abstract net-zero targets. Many remain fully locked into fossil fuels. Since these economies account for almost 80% of worldwide emissions, they must start including more concrete, comprehensive decarbonisation planning as part of their Nationally Determined Contributions (NDCs) under the Paris agreement.
The European Commission’s new Fit for 55 plan shows how this can be done in a detailed, sector-specific way. Unfortunately, the European Union is the exception. Everyone else is still playing poker, even as the room fills up with water.
Just this year, climate-driven disasters have struck Brazil, Canada, Madagascar, China, Germany, Russia, the United States, and many others. There is no need to recall every cataclysmic weather event, because it is already sufficient to say that the problem has broken beyond our readiness.
As climate modelling improves, the path to remaining within 1.5C of warming is narrowing before our eyes. In early August, the latest report from the Intergovernmental Panel on Climate Change (IPCC) showed that we are dangerously close to 1.5C already. Every fraction of a degree matters. The differences between a 1.5C world and a 2C world would be dramatic.
When we were negotiating the Paris agreement, the preceding G20 gathering was similarly fraught – some might say disastrous. Many felt the COP21 was doomed to fail as a result. But after weeks of intense work and dialogue, the Paris summit managed to exceed most expectations, mine included.
How can the UK and Italy steer the talks toward another successful outcome? If the parallels with 2015 offer any indication, the key for this final “sprint” is to emphasise that no-one, and no single country, can tackle the climate crisis alone. Because every single party to the United Nations Framework Convention on Climate Change has an equal say, any single signatory can cause negotiations to stumble. Good faith dialogue, concrete plans, and serious means to finance them are the only way forward.
There are some recent positive developments to build on. Earlier this year, South Korea and Japan – respectively the world’s second- and third-largest coal financiers after China – both pledged to end their public coal investments abroad.
But there are also clear areas where governments have more work to do. According to the International Energy Agency, staying on track for net-zero emissions by 2050 requires that no new coal, oil, or gas projects be started after 2021. That means all of the world’s largest emitters must immediately end coal investments abroad and clarify how they will phase out their own use of coal.
Only a sincere spirit of multilateralism can solve the imbalance at the heart of the climate crisis, the impacts of which are profoundly unfair. Countries that are hardly responsible for the problem’s escalation are the ones facing the most severe, often existential risks. Why would small island states negotiate themselves into submersion?
The Paris agreement was only possible because of its commitment to multilateralism, and this remains the best guide to ensuring its relevance. It is telling that soon after a G20 climate meeting delivered few tangible positives this year, the world’s Least Developed Countries issued a statement calling on their wealthier counterparts to “take responsibility.”
Sovereign, competitive impulses will always strain the space for cooperation. But within that space, there are ample opportunities to achieve positive-sum outcomes – in technological innovation and adoption, for example. These instincts are rooted in the national interest, and thus should be responsive to the fearsome, increasing prospect of overshooting 1.5C.
In this spirit, some concrete steps to defuse tensions at COP26 would include a dedicated item for meaningful discussions on “loss and damage,” while this summer’s ferocious weather events still loom large in everyone’s memory. The conference also must press the issue of financing for climate adaptation efforts as part of the broader drive to meet the minimum $100bn per year target. Finally, G20 countries that have not delivered their NDCs must do so as soon as possible, demonstrating that their policies are sufficient to keep the world on a 1.5C pathway.
G20 countries anxious to promote their role as climate leaders must listen carefully to the warnings from others, particularly those on the front lines. If we see momentum on these fronts between now and November, the UK and Italy could herald COP26 as a success, keeping the 1.5C goal in our sights. — Project Syndicate
l Laurence Tubiana, a former French ambassador to the United Nations Framework Convention on Climate Change, is CEO of the European Climate Foundation and a professor at Sciences Po, Paris.




Qatar suggests three-pointagenda for equitable, secureand sustainable energytransition

Qatar has suggested three point-agenda, which includes greater investment in energy efficiency and low carbon innovation and coordinated policies and incentives, for equitable, secure and sustainable energy transition, which not only protects earth but also propels economic growth.
This suggestion was made by HE Saad bin Sherida al-Kaabi, Minister of State for Energy Affairs, at the ministerial session of the 17th Gulf Petrochemicals and Chemicals Association (GPCA) forum in the presence of Abdulaziz bin Salman al-Saud, Minister of Energy, Saudi Arabia; and Salim bin Nasser bin Said al-Aufi, Minister of Energy and Minerals, Oman.
Hamad Rashid al-Mohannadi, former general manager, Qatar Petrochemicals Company (QAPCO), was chosen for the fifth GPCA legacy award in recognition of extraordinary contributions to foster and strengthen the chemical industry.
The forum featured an exhibition that showcased new projects, industry journey, youth pavilion, sustainability district, cultural majlis and publications.
Highlighting that secure, equitable sustainable energy transition will not only help protect the planet but also provide economic growth; al-Kaabi said “to achieve this goal, we need to remain focused on three important areas that are essential in energy transitioning.”
The first and foremost, according to him, was the greater investment in energy efficiency and low carbon innovation.
This includes renewable energy integration, carbon capture and sequestration, low carbon solutions for reduced greenhouse gas emissions, and the carbon intensity in the chemical manufacturing, he said.
Other areas include optimising resources use, waste reduction, waste management and developing circular economies through improving recycling and the reuse of materials.
“We need coordinated policies and incentives to support the petrochemical industry’s success,” al-Kaabi said.
Terming the third enabler as awareness; he said it was not fair to put the onus on energy producers alone as there was a need for the real story to be told within workforce, across societies and among consumers about the critical role chemical industries plays in bettering lives worldwide.
In Qatar, the growth and evolution of petrochemical industry has been on a steady path of success, al-Kaabi said, adding the country is building the world’s largest blue ammonia plant with annual 1.2mn tonnes capacity.
“This plant will be most sustainable facility of its kind. As part of this project, we are implementing CCS technologies to capture and sequester 1.2mn tonnes of carbon dioxide. Furthermore, the electricity for this project comes from a solar power plant currently under construction,” he said.
He reminded that QatarEnergy in partnership with Chevron Phillips recently announced the start of the construction of two ethane crackers with a capacity of more than 2mn tonnes per annum each, one in Qatar and one in the US. The expected start is before the end of 2026, he added.
The Saudi oil minister said the demand for petrochemicals is expected to grow by more than 50% by 20240 with demand for basic chemicals such as ethylene and propylene slated to expand more than 60%, quoting market report and analysts.
The sector is also advancing through innovative technologies to maximise the yield of crude oil, he added.




Cheap imports threaten US solar panel production boom

US companies have announced plans to build dozens of solar panel factories across the country since last year when President Joe Biden’s signature climate law unleashed billions of dollars of subsidies, raising hopes a clean energy boom can provide tens of thousands of good paying jobs.
But global solar panel prices have collapsed due to a wave of new Asian production capacity in recent months, leading many in the US solar industry to worry many of these proposed factories may be uneconomical. As many as half may soon be delayed or canceled, a figure not previously reported, according to Reuters interviews with industry analysts, solar companies, and trade groups.
Changing market forces have already derailed solar manufacturing operations in Europe. In recent days, the US race for a clean energy transition has already been hit by huge writedowns and project cancellations the offshore wind industry.
“The more prices decline in the global market, the more difficult it is to build US local manufacturing,” said Edurne Zoco, executive director for clean energy technology at S&P Global Commodity Insights. “If the cost gap between imported modules and locally manufactured modules is too big … many of these announcements might not happen.”
Solar shipments into the US more than doubled through August to $10bn from about $4bn a year earlier, according to the US International Trade Commission.
The domestic industry’s souring outlook could hurt Biden’s climate agenda and hinder reelection efforts for a president who has hailed solar project plans as proof his clean energy policies can create millions of good-paying jobs.
US solar manufacturers and trade groups have said they need more government help at the federal and state levels or those jobs may not materialise, and the US will keep relying on panels made with mainly Chinese components. US officials have repeatedly warned that over-reliance on Chinese clean energy technology could pose a security risk similar to Europe’s historical dependence on Russian natural gas.
A White House spokesperson did not respond to questions about recent market challenges facing domestic solar manufacturers, but said Biden’s policies had generated a huge wave of investment and were revitalising American manufacturing.
Companies have announced over three dozen solar factories since passage of the Inflation Reduction Act in August 2022 that collectively promised to create 17,000 jobs and bring in nearly $10bn in investment, according to projects tracked by the clean energy business advocacy group E2.
Of eight solar company representatives, trade groups and researchers who spoke to Reuters, all eight agreed the market has worsened. Energy research firm Wood Mackenzie shared its new forecast that just 52% of the 112 gigawatts of solar module capacity companies planned will be online by the target date of 2026, a projection it has not previously made public.
Mike Carr, executive director of the Solar Energy Manufacturers for America trade group, said factories could be delayed, extending US dependence on China.
“A misunderstanding of the policy opportunity here could really undermine a signature initiative of this administration, which is to restore manufacturing competitiveness to the United States, and particularly in such a key industry,” Carr said.
Globally, the solar industry has already absorbed a 26% drop in panel prices this year to about 19 cents per watt, according to S&P Global Commodity Insights. US prices have been more resilient, but SEMA and analysts say spot prices are declining for those without long-term contracts.
The increase in solar imports stems partly from a
temporary waiver of tariffs on Malaysia, Thailand, Cambodia and Vietnam, which expires in June, 2024. Imports are also up sharply from India, Mexico and other nations unaffected by that move.
The IRA provides a decade of tax incentives worth 30% of a project’s cost. But industry consultant Brian Lynch said that could be outweighed by the glut of cheap panels and worries about rising costs for labor, raw materials and financing.
“It’s almost like Dr Jekyll and Mr. Hyde. The incentives to site and open up a US factory are phenomenal,” Lynch said. “But if pricing is going to continue to go down, if the continued gamesmanship on the trade is going to continue, they can’t justify it.”
The US Commerce Department said imported panels and cells remained important to the clean energy transition.
“Commerce is committed to holding foreign producers accountable to playing by the same rules as US producers,” a Commerce spokesperson said.
The IRA also contains a 10% bonus credit for panel manufacturers using American-made components. This perk is critical for domestic panels that may command a 40% price premium to imported alternatives, according to Wood Mackenzie.
But so few components are produced domestically that much of the industry cannot secure that bonus. So far, solar module factory announcements have been more than double those for solar cells, the crucial components that transform sunlight into energy.
The industry needs more government help, including “the right tax and trade policies that build on the IRA and similar state laws that create the space for emerging US solar manufacturers to compete on a global scale,” said Danny O’Brien, president of corporate affairs at Hanwha Qcells, which is making one of the largest investments in the domestic solar supply chain.
Meyer Burger, which plans to build a factory in Colorado, said the government needs to help domestic manufacturers deal with “underpriced products that are coming from Asia”.
The Solar Energy Industries Association (SEIA), a large solar trade group that has long opposed tariffs, is also advocating for more support for manufacturers, warning it does not expect that every proposed factory will be built.
Convalt Energy plans next year to open 2 gigawatts of module capacity in New York and Maine followed by a facility for components in 2025. CEO Hari Achuthan said module production lines are already about four months behind schedule because the company’s financiers are waiting for the Treasury Department to issue crucial rules on how to secure the IRA tax credits.
“Our country has done a phenomenal job seeing through the IRA bill. But now it’s going to come down to the details of the IRA and how we execute it and the support that we need to get from the Commerce Department and anybody else with regard to tariffs on imports,” he said. — Reuters




Regional Energy Expert Roudi Baroudi Earns Award from Washington Think Tank

Transatlantic Leadership Network Recognizes Author for Contributions to Peaceful Development in Eastern Mediterranean

WASHINGTON, DC November 9, 2023: Doha-based Lebanese author Roudi Baroudi was one of two people presented with the 2023 Transatlantic Leadership Award at a ceremony in Washington this week.

Although circumstances relating to the conflict in the Gaza Strip prevented Baroudi from attending the event, both he and Joshua Volz – the Deputy Assistant Secretary for Europe, Eurasia, Africa, and the Middle East and the Office of International Affairs at the US Department of Energy – were recognized by the Transatlantic Leadership Network (TLN). Each was cited at a gala dinner on Monday for his “valuable contribution in building a peaceful and prosperous Eastern Mediterranean” as part of the TLN’s 2nd Annual Conference on Freedom of the Media.

“I was deeply honored to be named a recipient of this prestigious award, and I will always be grateful for the many ways in which the TLN has supported my work for several years now,” Baroudi said. “I also look forward to working together in the future so that one day, our descendants can know the benefits of peace and coexistence. It is precisely in difficult and trying times that cooler heads must be able and willing to look at the reasons for current bloodshed and recrimination, then envision pathways to a better future.”

Baroudi, who serves as CEO of independent consultancy Energy and Environment Holding in Doha, is a long-time champion of dialogue, cooperation, and practical solutions to both the global climate crisis and recurrent tensions in the East Med. A regular speaker at regional energy and policy conferences, Baroudi’s insights are also avidly sought by local and international media, as well as governments, major energy companies, and investors.

Having advised both public and private sector actors on a wide variety of energy issues, Baroudi is widely credited with bringing unique perspective to all manner of policy discussions.  He is the author of several books, including “Maritime Disputes in the Eastern Mediterranean: The Way Forward” (2021), and “Climate and Energy in the Mediterranean: What the Blue Economy Means for a Greener Future” (2022). Together with Notre-Dame University – Louaize, Baroudi has also published a study of the US-brokered October 2022 Maritime Boundary Agreement between Lebanon and Israel, and is currently preparing another volume on Lebanon’s prospects for similar deals with Cyprus and Syria.

The TLN describes itself as “a nonpartisan, independent, international network of practitioners, private sector leaders and policy analysts dedicated to strengthening and reorienting transatlantic relations to the rapidly changing dynamics of a globalizing world.”

Monday’s ceremony was attended by a broad cross-section of high-profile figures, including senior officials from the Departments of Energy and State, numerous members of Washington’s extensive diplomatic corps, and representatives of both international organizations and various media outlets.

 




ABU DHABI – Faced with mounting pressure over planet-heating pollution, Gulf Arab energy giants are turning to humble tech start-ups as they search for ways to remove emissions while keeping oil flowing.

Oil producers have for years touted capturing carbon before it goes into the atmosphere as a potential global warming solution, against criticism from climate experts who say it risks distracting from the urgent goal of slashing fossil fuel pollution.

With little investment and few projects in operation around the world so far, the technology is currently nowhere near the scale needed to make a difference to global emissions.

Now, major players from Saudi Aramco to the United Arab Emirates’ state oil and gas firm Abu Dhabi National Oil Company (Adnoc) say that is about to change, as the UAE hosts climate negotiations this year with a message of cutting emissions rather than fossil fuels.

“For the industry and for countries as well to achieve net zero by 2050, I don’t see us achieving this without embracing carbon capture,” Mr Musabbeh Al Kaabi, Adnoc’s executive director of low-carbon solutions, told Agence France-Presse.

“I would love to see more wind and solar energy, but to be practical and transparent, it’s not going to solve the problem.”

Carbon capture was a hot topic at a recent climate tech conference in Abu Dhabi, UAE’s capital.

Start-ups displayed their advances in carbon capture and storage (CCS), which removes carbon dioxide (CO2) as it is pumped from power plants and heavy industry.

There were also companies presenting their plans for direct air capture, a newer technology that extracts CO2 directly from the atmosphere.

The United Nation’s Intergovernmental Panel on Climate Change (IPCC) says the existing fossil fuel infrastructure – without the use of carbon capture – will push the world beyond the Paris deal’s safer global warming limit of 1.5 deg C above pre-industrial levels.

Industrial smokestacks

The debate between whether to primarily target fossil fuels or emissions is shaping as a key battleground at the COP28 climate talks, which will be held in UAE financial hub Dubai.

Citing the IPCC, the COP28 president-designate, Sultan Ahmed Al Jaber – Adnoc’s chief executive and his country’s climate envoy – last week said it was time to “get serious about carbon capture”.

But environmentalists are sceptical about the central role that big energy companies are seeking in climate solutions, saying they have a vested interest in maintaining fossil fuel sales.

Greenpeace Mena (Middle East and North Africa) programme director Julien Jreissati labelled it a “distraction”.

Adnoc’s Mr Kaabi, however, argued that the oil giant’s engineering capabilities and deep pockets make them best placed to propel climate tech.

“The world has two options: We could leave it to the small players or have the big players accelerating this decarbonisation,” Mr Kaabi said.

In 2016, Adnoc launched the region’s first commercial-scale CCS project, Al Reyadah, which has the capacity to capture 800,000 tonnes of CO2 per year.

Globally, there are only around 35 commercial facilities using carbon capture utilisation and storage globally, according to the International Energy Agency, which says even those planned until 2030 would capture only a fraction of the emissions needed.

‘We need to move quicker’

The entrepreneurs at the UAE conference included Omani company 44.01, a winner of Britain’s Earthshot Prize for its technology that permanently removes CO2 from the air by mineralising it in peridotite rock.

“Climate change is an urgent challenge and for us to be able to tackle that challenge we need to move quicker,” said 44.01 CEO Talal Hasan.

“The oil and gas partnerships help us move quickly,” he told AFP.

Mr Hasan’s 44.01 has partnered Adnoc to develop a carbon capture and mineralisation site in Fujairah, one of the UAE’s seven emirates – the first such project by an energy company in the Middle East.

“In one tonne of peridotite, you could probably mineralise 500 to 600 kilograms of CO2… this means that with the rocks just in this region, you could potentially mineralise trillions of tons,” he said.

For Mr Hasan, energy companies are good partners because “we use a lot of the same equipment, infrastructure, people and resources”.

“That will help us accelerate scaling,” he said, arguing that the speed of execution is “very important”.

State-owned Saudi Aramco, one of the world’s richest companies, has invested in Carbon Clean, a British-based company that has developed compact technology that captures carbon from industrial smokestacks.

The company, which has 49 sites around the world, will deploy its latest technology in the UAE this year – its first project in the Middle East.

When asked about the logic of working with big oil, Carbon Clean CEO Aniruddha Sharma said: “If I were a fireman and there was a fire – a big fire and a small fire – where would I go first? Obviously, the big fire.” AFP




The Climate Elephants in the Room

As tempting as it is to rely on multilateralism to solve a shared global problem like climate change, the world simply does not have the time for such an approach. A far more pragmatic and effective strategy is to focus on the biggest polluters that contribute disproportionately to total greenhouse-gas emissions.

NEW HAVEN – Now that the falsehoods and obfuscation of climate denialism have finally been silenced, addressing climate change has become the world’s top priority. But time is running out, and the International Monetary Fund warns that any further delays on implementing policies to mitigate global warming will only add to the economic cost of the transition to a low-emissions economy. Worse, we still lack a concrete, pragmatic strategy for tackling the problem. Although economists have made a robust case for why carbon taxes are the best solution, this option has proven politically infeasible, at least in those countries that account for some of the highest emissions (namely, the United States).

Commentators have also stressed that climate change is a shared problem involving important cross-border externalities that must be addressed through a multilateral approach to global coordination. But, as with carbon taxes, this argument has fallen on deaf ears. And, given the current geopolitical climate and the increasing fragmentation of the global economy, there is little hope that the message will get through anytime soon.

Having committed to assisting developing economies as they confront climate change, the World Bank finds itself limited by the country-based model underlying its financing operations. It is earnestly weighing its options and considering how it could coordinate climate-related financing across borders. But while such efforts are well meaning and consistent with the spirit of multilateralism, they inevitably will delay concrete action. World Bank financing would have to be completely restructured, and coordinating action across multiple countries that have limited financial resources and often conflicting interests seems an impossible task. For example, while some developing economies are rich in fossil fuels, others are starved for energy sources.

Given these limitations, pragmatism dictates focusing on the biggest polluters. Global carbon dioxide emissions are concentrated among only a handful of countries and regions. China, the US, the European Union, Japan, and Russia collectively account for 63% of the total, and none of these top polluters is a low-income country anymore. China, the poorest of the group, represents around 30% of all emissions, making it by far the world’s largest current polluter in absolute terms. But its government is taking steps to accelerate the transition to green energy – a winning strategy, given the country’s abundance of rare earth metals.

India, the third-largest emitter, currently accounts for approximately 7% of global CO2 emissions, and its size and growth trajectory imply that it could easily surpass China as the leading polluter, barring stronger climate policies. In fact, when it comes to helping developing countries decarbonize, considerable progress could be made simply by targeting India alone. The big advantage of this strategy is that it would avoid the paralysis associated with attempts to adopt a multilateral approach in an increasingly fragmented world.

This does not mean that we should eschew projects aimed at climate mitigation or adaptation in other countries. But we would not need to wait until everyone is on board before doing anything. Those insisting on a multilateral approach should learn from the experience of the ultimate multilateral institution: the World Trade Organization. Its requirement that every single provision in every multilateral agreement gain unanimous support has left it increasingly paralyzed, prompting demands for institutional reform.

Of course, India is not low-hanging fruit. It is rich in coal and has little incentive (beyond the health of its citizens) to hasten the transition to green energy. In focusing on India, we would need to employ the carrot, not the stick.

Since the stick generally takes the form of pressure to implement carbon taxation, it is a non-starter. A tax would be ineffective, because it would incite massive domestic opposition (as has been the case in the US). It would also be morally objectionable, because it is unfair to ask a lower-middle-income country to bear the burden of reducing CO2 emissions when rich countries (like the US) have failed to do the same. Moreover, even if China and India are now two of the world’s biggest polluters, they bear little responsibility for the past, cumulative emissions that led to the current climate crisis.

That leaves the carrot, which would come in the form of tax incentives or subsidies to support green energy. When paired with other policies, these can ease firms into adapting to higher environmental standards (such as those associated with a ). But such policies are expensive, which means that tackling climate change will require richer countries to help finance them. Whether or not India becomes the new China, it is still in our power to ensure that it does not become the new outsize polluter.

https://www.project-syndicate.org/commentary/climate-change-prioritize-top-emitters-over-multilateralism-by-pinelopi-koujianou-goldberg-2023-05




Climate change continues to causeuncertainties for commodity prices

It can alter rainfall patterns, increase temperatures, and cause extremClimate played a major role in commodity prices last year and looks like doing so again in 2023.
Scorching heatwaves in the northern hemisphere hit production of wheat in the US and Europe in 2022, and climate change means that catastrophic weather events are becoming more frequent.
These include La Niña, which is stretching into an unprecedented third consecutive year and will be detrimental to maize and soybean production in the first half of 2023, in addition to other crops like sugar and coffee, according to Economist Intelligence Unit (EIU).
Wheat, which was heavily affected by war-related supply disruptions in 2022, faces significant climate risks. In the US large swathes of the southern plains remain under drought conditions, and crops are in unusually poor condition heading into winter dormancy. Extremely dry, occasionally frosty weather in Argentina is causing damage across major producing provinces there, but Russia and Australia are on course for a second consecutive year of bumper crops, which, for the moment, is alleviating concerns about production in the western hemisphere.
Weather will loom large in energy markets as well, EIU noted. Europe’s heatwave drove up demand last summer, causing gas and electricity prices to spike, especially as winds dropped to levels insufficient to generate enough power to meet Europe’s electricity needs while drought affected hydropower generation in many countries.
These dry conditions, together with rising water temperatures, also hit nuclear power generation.
In addition, the severity of Europe’s current energy crunch depends largely on how cold temperatures fall over the winter, not just in 2022/23 but in 2023/24 as well.
“The colder the winter, the more countries will have to draw down stockpiles built up over 2022. Below-normal temperatures will not only raise the spectre of energy rationing, but also put upward pressure on prices over the summer as Europe scrambles to refill reserves—this time without Russian supplies,” EIU said.
Obviously, climate change can have significant impacts on commodity prices by affecting their production, transportation, and demand for various goods.
Climate change can impact commodity prices by affecting crop yields, energy prices, water availability, and transportation costs.
It can alter rainfall patterns, increase temperatures, and cause extreme weather events like droughts and floods, which can reduce crop yields.
This can lead to lower supply and higher prices for commodities like wheat, corn, soybeans, and other agricultural products.
Climate change can also impact energy prices by affecting the production and transportation of oil, natural gas, and other energy resources.
For example, extreme weather events can disrupt oil and gas production and transportation infrastructure, leading to supply disruptions and higher prices.
Changes in rainfall patterns and increased water scarcity due to climate change can impact the availability of water for agricultural production and energy generation. This can result in higher prices for water-intensive commodities like meat, dairy, and processed foods.
Climate change can also affect transportation costs, particularly for goods that rely on sea or river transportation.
Rising sea levels and changes in ocean currents can disrupt shipping routes and increase shipping costs, which can lead to higher prices for imported goods.e weather events like droughts and floods, which can reduce crop yields




No net zero without nature

By Nigel Topping And Mahmoud Mohieldin/ London

Businesses, investors, and governments that are serious about fulfilling net-zero emissions pledges before 2050 should be rushing to protect, conserve, and regenerate the natural resources and ecosystems that support our economic growth, food security, health, and climate. Yet there appear to be worryingly few trailblazers out there.
Worse, we are quickly running out of time. The science makes clear that to avoid the most catastrophic effects of climate change and to build resilience against the effects that are already inevitable, we must end biodiversity loss before 2030. That means establishing lasting conservation for at least 30% of land and sea areas within eight years, and then charting a course toward living in harmony with nature by 2050.
Though the challenge is massive, ignoring it makes no sense from a business perspective. A World Economic Forum white paper estimates that nature-positive policies “could generate an estimated $10tn in new annual business value and create 395mn jobs by 2030.” Among other things, such policies would use precision-agriculture technologies to improve crop yields – diversifying diets with more fruit and vegetables in the process – and boost agroforestry and peatland restoration.
A nature-positive approach can also be more cost-effective. For example, the Dasgupta Review (the Final Report of the United Kingdom’s Independent Review on the Economics of Biodiversity) finds that green infrastructure like salt marshes and mangroves are 2-5 times cheaper than grey infrastructure such as breakwaters.
Nonetheless, private-sector action is lagging, including in economic sectors where the health of value chains is closely tied to that of nature. That is one key finding from an analysis just released by the UN Climate Change High-Level Champions, Global Canopy, Rainforest Alliance, and others.
Out of 148 major companies assessed, only nine – or 6% – are making strong progress to end deforestation. Among them are the Brazilian paper and pulp producer Suzano and five of the largest consumer goods companies: Nestlé, PepsiCo, Unilever, Mars, and Colgate-Palmolive.
Unilever, for example, is committed to a deforestation-free supply chain by 2023, and thus is focusing on palm oil, paper and board, tea, soy, and cocoa, as these contribute to more than 65% of its impact on land. Nestlé has now made over 97% of its primary meat, palm oil, pulp and paper, soy, and sugar supply chains deforestation-free. And PepsiCo aims to implement regenerative farming across the equivalent of its agricultural footprint by 2030, and to end deforestation and development on peat.
These are positive steps, but they represent exceptions, rather than any new normal. Moreover, the financial sector has also been slow to turn nature-positive. Since the COP26 climate-change conference in Glasgow last year, only 35 financial firms have committed to tackle agricultural commodity-driven deforestation by 2025. The hope now is that more firms will join the deforestation commitment by COP27 this November. Under the umbrella of the Glasgow Financial Alliance for Net Zero, 500 financial firms (representing $135tn in assets) have committed to halving their portfolios’ emissions by 2030 and reaching net zero by 2050. And now, the Alliance has issued new net-zero guidance that includes recommended policies for addressing deforestation.
Nature functions as a kind of global capital, and protecting it should be a no-brainer for businesses, investors, and governments. The World Economic Forum finds that “$44tn of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services.” But this profound source of value is increasingly at risk, as demonstrated by the current food crisis, which is driven not just by the war in Ukraine but also by climate-related disasters such as drought and India’s extreme heatwave, locust swarms in East Africa, and floods in China.
Businesses increasingly have the tools to start addressing these kinds of problems. Recently, the Science Based Targets initiative released a methodology for targeting emissions related to food, land, and agriculture. Capital for Climate’s Nature-Based Solutions Investment platform helps financiers identify opportunities to invest in nature with competitive returns. And the Business for Nature coalition is exploring additional moves the private sector can make.
Governments have also taken steps in the right direction. At COP26, countries accounting for over 90% of the world’s forests endorsed a leaders’ declaration to halt forest loss and land degradation by 2030. And a dozen countries pledged to provide $12bn in public finance for forests by 2025, and to do more to leverage private finance for the same purpose. They can now start meeting those commitments ahead of COP27 in Sharm El-Sheikh, by enacting the necessary policies, establishing the right incentives, and delivering on their financial promises.
Meanwhile, the UN-backed Race to Zero and Race to Resilience campaigns will continue working in parallel, helping businesses, investors, cities, and regions put conservation of nature at the heart of their work to decarbonise and build resilience. The five strong corporate performers on deforestation are in the Race to Zero, and the campaign’s recently strengthened criteria will pressure other members to do more to use biodiversity sustainably and align their activities and financing with climate-resilient development.
The world is watching to see if the latest promises of climate action are robust and credible. By investing in nature now, governments and companies can show that they are offering more than words. – Project Syndicate

• Nigel Topping is the United Kingdom’s High-Level Climate Champion for COP26 in Glasgow. Mahmoud Mohieldin is Egypt’s High-Level Climate Champion for COP27 in Sharm El-Sheikh.