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Finance: Everything back on the table
Yesterday, developing countries told the co-chairs of the talks on a new climate finance goal to put all the options they wanted back into a nine-page text that had been slimmed down as a basis for negotiations. They went away last night and did so – and at 8.30 this morning they released a new text, which is 34 pages long.
Fernanda Carvalho, WWF’s climate and energy policy lead, described the ballooning length as “frustrating” because “after three years of preliminary talks, we had hoped to see a more streamlined text at this point”. She noted that the “swollen draft text puts everything back on the table – both good and bad options”.
The basic options on the structure of the New Collective Quantified Goal (NCQG) remain the same in both texts. The first option is a goal for a certain dollar amount, consisting of finance provided by governments and private finance mobilised by their money.
The second is a provision and mobilisation goal, plus a wider investment goal that includes private and domestic finance. As this goal is “multi-layered”, it has been compared to an onion – and it’s what developed countries want.
There are several different proposals for the size of the government finance goal: $100bn+, $1tn+, $1.1tn, $1.3tn+ or $2tn. Developed countries want less and developing countries want more, with the G77 and China umbrella group jointly pushing for $1.3tn+.
On who pays, both texts include the same options – either just developed countries or various criteria to identify a larger set of contributors based on countries’ wealth and emissions. The African Group’s lead negotiator Ali Mohamed said today that attempts to widen the contributor base beyond developed countries were “why we had to reject the earlier draft”.
Newly arrived in the text are specific proposals for minimum amounts that should go to Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The latest text has options for $220bn for LDCs and $39bn for SIDS in grant-equivalent terms each year.
It also introduces options specifying that climate finance should transition away from fossil fuels or “emissions intensive investments”. That might seem obvious but it’s not, for example, to the Asian Infrastructure Investment Bank – which last year counted its investment in a gas-fired power plant in Bangladesh as climate finance.
Both the new and old texts have – outside brackets, suggesting it’s uncontroversial – commitments to phasing out “inefficient fossil fuel subsidies that do not address energy poverty or just transitions”. But the new text adds a target date of 2025 alongside the previous text’s options of 2035 and “as soon as possible”.
MDBs’ big climate-cash goal
Multilateral development banks (MDBs) say they are “walking the talk” on climate finance as pressure piles on them to channel more of their cash into developing countries’ efforts to shift to clean energy and adapt to climate change.
Their overall climate finance provision is estimated to reach $170 billion a year by 2030 – up 30% from a “record high” of $125 billion in 2023, the group of ten MDBs, including the World Bank, said in a joint statement on Tuesday.
Drilling down into the numbers, over 70% of the money ($120 billion) is expected to go to low and middle-income countries, with more than a third of that earmarked for adaptation.
Rob Moore, associate director for public banks and development at think-tank E3G, told journalists on Wednesday that this number is “significant” as it “provides a basis” for the New Collective Quantified Goal (NCQG) to go significantly beyond the existing figure of $100 billion a year.
MDBs have been under the spotlight over the last few years as several country leaders and campaigners have called for wide-ranging reforms that would enable the financial institutions to pour more money into climate action. The World Bank – the largest among them – updated its mission to focus more on climate and made a series of technical tweaks to free up more capital for projects across the world.
Nadia Calviño, president of the European Investment Bank, said in a statement on Tuesday that “the family of multilateral development banks is walking the talk” with its new climate finance commitment. But experts think MDBs could and should go further.
Economists Vera Songwe and Nicholas Stern wrote in an influential report last year that development banks need to triple their lending to $390 billion by 2030 with a substantial chunk of the extra dollars funding climate projects.
In their statement on Tuesday, MDBs warned that their ability to do more largely depends on the commitment of their shareholders from both developed and developing countries. The group of banks urged them to show “greater ambition”, adding that “additional capital” could “unlock more MDB financing”.
Campaigners have also raised concerns over where the MDB’s climate cash actually ends up and on what terms it is provided.
In a report published this week, NGO Recourse said that the lenders’ definition of climate finance is “far from as extensive and stringent as required”, allowing for “troubling and high emitting projects”, like fossil gas, waste-to-energy incineration and airport expansion projects, to count as climate finance. It also highlighted that the majority of funding comes as loans, which contributes to “worsening the debt crisis in many countries”, the NGO said.
The MDBs added on Tuesday that they aimed to mobilise an additional $130 billion a year from the private sector by 2030. The development lenders have repeatedly stressed their role as multipliers of climate finance, using relatively modest amounts of public money to unlock much higher private capital.
But a Climate Home investigation earlier this year found private-sector climate projects enabled with the World Bank’s backing included the renovation of luxury hotels in Senegal, while a vulnerable fishing community next door struggled against rising seas with almost no support.
Meanwhile, some leaders are continuing their search for “innovative” ways to fill up the climate coffers. Barbados’ Prime Minister Mia Mottley used her speech on Tuesday to point out that putting levies on shipping companies, airlines, and bonds and stocks, as well as taxing fossil fuel extraction, could raise hundreds of billions of dollars.
Fourteen countries – including France, Spain, Kenya, Senegal and Colombia – plus the European Commission and the African Union are trying to make those ideas more concrete through a “Coalition for Solidarity Levies”. It announced five new developing-country members in Baku on Tuesday and said it will target carbon-intensive industries.
In brief…
Fossil fuel emissions still rising: Carbon dioxide (CO2) emissions from fossil fuels worldwide are expected to grow 0.8% in 2024, belying predictions of a peak, according to the Global Carbon Project. That’s higher than the average growth rate of 0.6% per year over the past decade and follows a rise of 1.4% in 2023. Global fossil CO2 emissions are now 8% higher than in 2015, when the Paris Agreement was negotiated. Emissions from coal use are set to increase 0.2% in 2024, hitting another record high, due to growth in India and China.
Youth take on NDCs: Youth-led organisations are calling for a “Universal NDC Youth Clause” to be included in countries’ updated national climate plans, urging governments to involve young people more actively in climate strategies. The proposed clause has three pillars: recognising young people as essential drivers of climate action, collaborating with youth in developing the NDCs, and educating young people on the impacts of climate change. At the launch, the organisations noted that “several governments” are expected to announce commitments to the clause in the coming days.
The post COP29 Bulletin Day 3: New finance text and development banks’ 2030 offer appeared first on Climate Home News.
COP29 Bulletin Day 3: Finance text balloons and Brazil presents new NDC
Climate Change
Fight Over Venezuelan Oil Highlights Shadowy International Legal System
Trump said the socialist government “stole” from American oil companies. Those firms have been seeking billions in compensation through a controversial arbitration system.
The true reasons for the Trump administration’s military intervention in Venezuela might be unknown, but there is little doubt that oil and money lie at the center of any resolution.
Fight Over Venezuelan Oil Highlights Shadowy International Legal System
Climate Change
Coal Communities Accuse Congress of Breaking Its Promise to Clean Up Abandoned Mine Lands
The House passed a bill last week that would “repurpose” $500 million meant for cleaning up environmental and safety hazards caused by decades of coal mining.
When the Infrastructure Investment and Jobs Act was signed into law in 2021, authorizing more than $11 billion in new funding to reclaim lands and waterways damaged by abandoned coal mines, the people who lead this work on the ground were ecstatic.
Coal Communities Accuse Congress of Breaking Its Promise to Clean Up Abandoned Mine Lands
Climate Change
Q&A: “False” climate solutions help keep fossil fuel firms in business
From cross-border pipelines for green hydrogen that can also carry natural gas, to sustainable aviation fuel that threatens forests, and costly carbon capture projects that are used to recover more oil, “false solutions” to climate change have gained ground in recent years, often backed by fossil fuel firms.
A new research paper, published last month in the journal Energy Research and Social Science, shines a light on this trend, exploring such projects that have also caused environmental injustices such as air pollution or depriving communities of their source of income.
The study by the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB), in collaboration with the University of Sussex, is based on 48 cases of environmental conflicts around the world, contained in the ICTA-UAB’s Global Atlas of Environmental Justice (EJAtlas).
The selected cases range from Norway’s Trollvind offshore wind farm, built partly to decarbonise the power supply to the Troll and Oseberg oil and gas fields; to US fossil fuel firms working with the dairy industry to turn manure into biogas; and a tree plantation in the Republic of Congo proposed by TotalEnergies, where locals say they have been prevented from accessing their customary farmland.
“House of cards”: Verra used junk carbon credits to fix Shell’s offsetting scandal
The researchers argue that “false solutions” – which also include large-scale carbon offsetting projects, many of which have been discredited – help to reinforce the political and economic power of the industry that is responsible for the climate crisis, and are undermining the global energy transition.
Climate Home News spoke to co-author Freddie Daley, a research associate at the University of Sussex’s Centre for Global Political Economy, about the paper’s findings and implications for climate policy.
Q: What was your motivation in exploring these types of “false solutions” to the climate crisis?
A: It’s very much a reaction to the fossil fuel industry insisting these technologies are solutions, rather than us creating a typology of things that are not working. All of the [paper’s] authors are very keen on a habitable planet – and we’re not going to let perfection be the enemy of the good.
But this is a call [to] arms to say that governments need to be very careful about what they’re giving public subsidy to, because in a complex situation – where there’s an urgency for reducing emissions but also for creating sustainable livelihoods and for ensuring that the needs of people living in and around these projects are met – I think it’s very important to scrutinise the viability of these schemes.
The starting point was off the back of oil majors – or so-called integrated energy companies – coming out and being very bullish on sustainability and net zero, and alongside this, proffering that they were part of the solution to climate mitigation, energy transition, job creation, green growth. And we took this as a problem statement to begin our analysis: How can fossil companies be part of the solution?
Q: What did your work reveal about “false solutions” and how can it deepen understanding of them?
A: “False solutions” is a term that’s been used for many, many years by Indigenous groups and by frontline communities – so we wanted to formalise it because it’s not really been engaged with in academic literature so far. We thought it was quite a big gap that needed to be filled.
We thought how can we categorise it? How can we help redefine it? What are the characteristics of these false solutions? So we dug into the data, the EJ Atlas, across many technologies – from hydrogen through to carbon offsets and biofuels, but also renewable energy projects, because we were finding that renewable energy projects causing conflicts were either being used to fuel fossil fuel production, such as solar panels or wind turbines to run rigs, which we thought was an interesting pattern – and also utility-scale renewable energy projects which were operated by fossil fuel firms.
Out of total energy generation, fossil fuel companies’ production of renewables is a tiny, tiny fraction. Why do these projects exist, and how do they operate within the broader energy system? We wanted to look at what their function was – and going through the data and the lived experience of the communities on the frontlines of these projects, we found that they’re very much used to legitimise fossil fuel expansion or just continued operation.
Is the world’s big idea for greener air travel a flight of fancy?
And then we also looked at the governmental role within the institutions as well – so fossil fuel firms using these technologies and these false solutions as ways to garner public subsidy, particularly for carbon capture and storage (CCS) and hydrogen, to some degree.
And what we found across all these cases was they did very little to reduce emissions and generated environmental conflicts… and they ultimately delayed an energy transition, or the sort of industrial transformation that’s required to deliver deep and rapid emissions cuts.
Q: Shouldn’t fossil fuel companies be able to use all the climate solutions available to help reduce their emissions while the world is transitioning away from coal, oil and gas?
A: My response [to that argument] is to actually look at the data. When people say hydrogen and CCS are very important and they’re crucial, I don’t disagree with the idea that we might need some sort of technology to suck carbon out the atmosphere at some point in the future. But currently, the operational projects are not delivering that, and fossil fuel projects should not be expanded on the premise that future technologies can undo their emissions.
Just a few weeks ago, the Financial Times ran a very big story about how most of the oil majors have cancelled all their hydrogen projects because the scale of it’s not there yet, and they don’t think it’s going to stack up. These are companies with huge amounts of capital in an easy-to-abate sector – energy – saying we’re not going to do this. So you have to question the plan of hydrogen as a solution, if even the people that have the expertise and the capital to make it work are saying we’re not going to do this because we cannot make it work.
Likewise with carbon capture, many of the large energy projects and energy producers that have garnered vast amounts of public subsidies on the promise that they will do carbon capture are cutting those research projects down.
So at this stage in the energy transition – which some people call the “mid transition”, the difficult part – I think we need to scrutinise these technologies and look at what they do deliver on a project-by-project basis, and then on an aggregate basis.
Q: High-carbon industries say they need government subsidies to cover the high cost of researching, developing and creating markets for new technologies to help combat climate change. Is this justified?
A: I’m a big believer in the idea that the energy transition – the ideal energy transition, which is one of scaling up new industry while phasing out an old one – is going to require not only public money, but public coordination. That means states actively stewarding investment, picking winners and sequencing what is going to be a highly disruptive process.
I think public subsidy is necessary. We need to see deep and rapid decarbonisation, especially in wealthy industrialised states, but it should be used in a very targeted way to scale up technologies which have a marked impact on emissions and also uplift welfare as well – so heat pumps insulating homes in poorer communities. With these sort of things, you get your bang for your buck.
Comment: The battle over a global energy transition is on between petro-states and electro-states
You don’t get bang for your buck giving BP and Shell money to pilot a carbon capture and storage facility. It’s an extension of existing relationships between big business and government that needs to be looked at closely in the context of energy transition, because ultimately, these companies are not serious about transitioning at the requisite speed or scale to stave off climate disaster.
Look at both oil and gas companies’ ownership of renewable assets (1.42% of operational renewable projects around the world) and the renewables share of their primary generation (0.13%). They have the capital, and they have the know-how to do this. They haven’t done it. The question is, why do they need more public subsidy to continue not doing it?
This interview was shortened and edited for clarity.
The post Q&A: “False” climate solutions help keep fossil fuel firms in business appeared first on Climate Home News.
Q&A: “False” climate solutions help keep fossil fuel firms in business
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