Rachel Kyte is professor of practice in climate policy at the Blavatnik School of Government, University of Oxford.
With spring in full bloom, the world’s finance ministers, development and financial leaders, and philanthropists met for the World Bank and International Monetary Fund (IMF) Spring Meetings in Washington, DC last week.
In their midst, Brazil, the current president of the G20, insisted on a balanced focus between ending poverty and food insecurity and combating climate change. President Lula makes no secret of his desire for a new international financial architecture, designed for different challenges, in a different century with new emerging powers at the table.
2023 was the year leaders agreed the current architecture was no longer fit for purpose. 2024 needs to be the year the IMF, multilateral development banks (MDBs), and their shareholders rapidly implement reforms and begin the process for increasing capital.
In Washington, the presidents of the MDBs held their first-ever “summit” – a direct response to insistence by G20 leaders and expert groups that the system must work more effectively together as one, in addition to individual bank reforms.
Since G20 leaders last September called for a better, bolder and bigger MDB system, and the World Bank responded with its own roadmap of reform, changes are underway, especially in areas where the MDB managements have authority. Where progress is less clear is on issues requiring their shareholders to take the lead.
Last week, coalitions of countries met with private finance, think tanks, philanthropy and civil society to discuss the key problems of debt, reversals on global development goals and lagging climate action. The policy proposals on what to do are manifold, and there is a deep well of goodwill to help with the current system’s obvious failures. But all eyes must be on governments.
In one gathering of finance ministers, IMF Managing Director Kristalina Georgieva boiled down the climate change to-do list to the two things only they can do: price carbon effectively and remove harmful subsidies in the fuel, food and fisheries sectors. So how do we move from rhetoric to action?
Geopolitical pressure and debt distress
We cannot ignore the worsening context. Wars in Ukraine and Israel-Gaza, and their costs, threaten progress. Famine and conflict are taking their toll in many other countries too. Climate impacts are severe and intensifying, with crippling extreme heat stretching across India and closing school systems from the Philippines to Sudan.
Many countries are suffering from debt distress and many more are channeling all available funds to service their debt at the expense of basic services, a serious impediment to investing in their much-needed climate resilience. Even more countries are suffering a crisis of liquidity.
Whether it’s debt, debt service, or liquidity, it’s a crisis. Yet, at the Spring Meetings, the crisis response still lacked urgency.
Protesters gather outside the IMF and World Bank’s 2024 Spring Meeting in Washington D.C., on April 19, 2024. (Photo: Andrew Thomas/Sipa USA)
Debt rescheduling was called out by the World Bank chief economist as inadequate. The details of how MDBs can use reflows of Special Drawing Rights as hybrid capital continues to be debated by the very same countries that urge climate action, and who themselves face fiscal pressure on their development and climate budgets.
While shareholders, creditors and the institutional leadership played pass the parcel, the finance ministers of Small Island Developing States (SIDS) – whose cumulative debt is around $40bn, and who have no tools to dig out of their growing indebtedness and climate crisis – were despairing. As the urgency of a lack of inclusion coupled with climate stress grows, is it time not to tweak the system but to break it in places?
For example, we could write off the debt of SIDS, while we begin new resource mobilization schemes from targeted forms of taxation to moral payments. If SIDS could face their short-term and existential challenges on a sounder footing, the international system could then expedite work on the problems of the next groups of vulnerable countries to mobilise investment in their resilience at scale.
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To underline the bind countries find themselves in, during the time that MDB reform has become mainstream and Mia Mottley of Barbados and other leaders from emerging market and developing economies have called for a system reset under the banner of the Bridgetown Initiative, net flows of finance away from emerging and developing economies have grown.
If we were grading reform mid-terms, we would be looking at Bs for management making in-roads on better and bolder, but an F for shareholders stuck on the bigger. How do they get straight As by the end of the year?
IMF and World Bank at a crossroads
First, we need radical collaboration among MDBs and between MDBs and development finance institutions, national development banks and private finance on the processes needed to get loans and guarantees disbursed faster. Some MDBs have moved to cooperate on procurement, and there are many suggestions on how to make country platforms work. But radical collaboration involves much deeper streamlining, due diligence, term sheets, analysis, talent, and pooled capital.
Second, pressure must now be focused on the MDBs’ major shareholders: the G7, other OECD countries and the G20. While they work out how to mobilize more funds and endorse a US proposal for a framework for capital increases, there is room to de-fragment the many pockets of resources stuck in trust funds and facilities with too many strings attached to scale their impact.
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Thirdly, we must preserve the collaboration within the MDBs that, despite growing tension, means that the US, China, Europe and other large emerging economies are working together and can zero in on solutions to debt, growth of carbon markets, the evolution of the trade system, harmful subsidy removal, and shifting the development and climate finance systems to a world where all development is supporting adaptation and resilience.
Shareholders could start by strengthening the quality of governance and ensuring that the ambition leaders show when they meet at the G20 is echoed in the way MDB board members articulate interests. This would support management to act more boldly and thwart push-back against the reform agenda among senior officials.
In their 80th anniversary year, the IMF, the World Bank, and their owners and borrowers, are at a crossroads. The analysis of the last two years has confirmed they are necessary institutions. Yet, if they are to retain their relevance – and not face competition from new institutions and capital pools as frustration at the system’s inertia grows – reform must go deeper and faster to rise to the challenges of tomorrow, starting today.
The post Will blossom of reform bear fruit? Spring Meetings leave too much to do appeared first on Climate Home News.
Will blossom of reform bear fruit? Spring Meetings leave too much to do
Claver Gatete is Executive Secretary of the UN Economic Commission for Africa. Jason Veysey is Energy Modeling Program Director and Senior Scientist at the Stockholm Environment Institute. Lisa Sachs is Director of the Columbia Center on Sustainable Investment at Columbia University.
The case for global energy transition has rarely been clearer. The closure of the Strait of Hormuz earlier this year exposed the cost of unplanned, fossil-dependent systems, while the falling cost of renewables, the rising penetration of electric vehicles, and the growing value of demand flexibility have made the direction of travel obvious. The benefits of a clean, secure, integrated system are no longer in dispute. What remains unclear is how to build it.
Countries around the world have called for faster renewable energy deployment and alternative energy arrangements. A secure, affordable, resilient, decarbonised system requires specific investments in specific places in a specific sequence, optimised across sectors and borders. But very few governments have the analytical foundation to translate those imperatives into investment.
The two instruments that are supposed to determine investment priorities for decarbonisation – Nationally Determined Contributions (NDCs) and country platforms – cannot answer the most basic question facing any country undertaking an energy transition: what should the energy system look like?
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To close this gap, every country needs a bankable, economy-wide optimisation model for its energy system. A model is not a plan, but it can help answer the critical question of what the future energy system should look like. It shows how optimal scenarios vary as assumptions and policies are adjusted, calculates investment requirements and sequencing, and quantifies how system costs are affected by assumptions, policies, and exogenous variables like trade policy and financing terms.
Tool for efficient investment
Optimisation is a simplified way of simulating an energy system, but it can be an extremely powerful tool for moving energy planning from reactive (how do we manage the disparate actions in the energy system?) to intentional (what energy system underpins our national objectives?). A model can show how optimal scenarios vary as assumptions and policies are adjusted, and how investment requirements are quantified and sequenced.
Optimisation models can treat the energy system and the sectors it serves as an integrated whole, optimising across sectors and projects in ways that can be mutually reinforcing. If considered independently, growth in industrial demand, transport electrification, and digital infrastructure can add stress to the energy system. But an optimised plan can arrange these and other changes in an efficient, synergistic way.
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New load can be added where low-cost power is available; industrial customers can ensure the viability of investments in energy supply; electric vehicle charging policy can smooth load curves and reduce costs for all consumers.
Additionally, optimisation modeling can also change the financeability of investments. Taken alone, each project faces uncertainty about the rest of the system, which raises the cost of capital and causes projects to stall or unwind after contracts are signed. A coherent, optimised plan makes visible the coordination that private capital would otherwise have to bet on: identified offtake, sequenced and committed transmission, contracted power supply, and so on.
What COP31 and COP32 should do
The upcoming COPs in Turkey and Ethiopia can shift the center of gravity of international climate cooperation from fragmented commitments to planning. Three moves are urgently needed.
First, optimised, economy-wide, long-term energy system planning must be the foundation on which any meaningful NDC, country platform, or finance commitment rests. NDCs are typically drafted by environment or single-line ministries, with limited cross-sectoral input from ministries of energy, finance, and planning. They contain targets, derived from sectoral strategies or national commitments, not from an analytically grounded picture of what the energy system should look like and what investments would make it work. Country platforms are generally a portfolio of investments assembled from existing project pipelines, rather than derived from a system-level analysis of what an optimised, decarbonised energy system would require.
Second, recognise regions as a key planning unit. Modern integrated energy systems are inherently regional. Renewable endowments are unevenly distributed; balancing variable supply across borders lowers aggregate cost, reduces redundant backup capacity, and unlocks economies of scale no individual nation can achieve. Many energy investments in Southeast Asia, East Africa, Southern Africa and Central Asia may only be financeable in a regional context. Assessing domestic infrastructure without regional optimisation perpetuates the perception that decarbonisation is more expensive than it is.
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Third, finance the planning capacity. A coordinated commitment by multilateral development banks, bilateral donors, and philanthropic partners to help every region and its constituent countries develop and maintain their own modelling capability, with open-source tools and regional analytical hubs, would close the most consequential gap in the current architecture. The cost is small relative to current spending on country platforms, failed project preparation, and misallocated infrastructure investment.
This includes supporting regional institutions such as the ASEAN Centre for Energy, the African Energy Commission, regional power pools, and the Latin American and Caribbean Energy Organization to determine what optimised regional systems require. Country-by-country pledging, repeated at every COP, will not deliver what meaningfully integrated systems can.
The 2026 energy crisis made the cost of unplanned, fossil-dependent systems newly visible. That window of clarity will close. The international community should seize the moment to build the planning foundation that has been missing for thirty years, rather than commissioning another round of NDCs or pledges, striving for outcomes neither was designed to deliver.
The post Every country needs a model to help optimise its energy transition appeared first on Climate Home News.
Every country needs a model to help optimise its energy transition
The world is currently experiencing what is expected to become the strongest El Niño on record – dubbed a “super El Niño” by many.
El Niño is the warm phase of a recurring climate pattern in the tropical Pacific that releases heat from the ocean into the atmosphere.
This temporarily raises global temperatures and reshapes rainfall and extreme weather around the world – impacting the lives of billions of people.
The current El Niño event began in June and is expected to last into 2027.
El Niño is part of a wider climate pattern called the El Niño-Southern Oscillation (ENSO) cycle.
The ENSO cycle also has a cool phase, known as La Niña, as well as a “neutral” phase. El Niño and La Niña events typically last between nine and 12 months, but can go on longer.
Below, Carbon Brief explains how the ENSO cycle works, its impacts on extreme weather and global temperatures and why this El Niño event is projected to be the most intense since records began.
The post Explainer: How the ‘super El Niño’ will reshape the world’s weather appeared first on Carbon Brief.
https://interactive.carbonbrief.org/el-nino-explainer/index.html
The second-largest reservoir in the US reached a record-low water height on Saturday – just days after the country’s largest reservoir broke its own record.
Both Lake Mead and Lake Powell are located on the Colorado River.
They provide water for populations across seven US states in the south-western US, with around 40 million people getting some or all of their municipal water from the Colorado River.
The river also provides water for around 5.5m acres (22,258 square kilometres) of farmland across Colorado, Arizona, California and the other states in the river basin.
Experts tell Carbon Brief that climate change, population growth and over-consumption are all contributing to the current record-low levels of the reservoirs.
Record lows
At full capacity, Lakes Mead and Powell can hold a combined 68 cubic kilometres of water – enough to supply all household consumption in the contiguous US for nearly 1.5 years. However, the water level in both reservoirs has been declining for decades.
The chart below shows the water level of Lake Mead, in metres above mean sea level. The reservoir, which began to fill in 1935 following the construction of the Hoover Dam, has a “full pool” maximum capacity of 347.60 metres. The water level in Lake Mead reached a record low of 317.11 metres on 7 August.
The following chart shows the water level of Lake Powell, in metres above mean sea level. Lake Powell’s full-pool level is 1,127.76 metres.
While the reservoir reached its maximum capacity several times in the 1980s, it has not done so since. On 15 August, the water level in Lake Powell was recorded at a new record-low of 1,072.87 metres.
Both reservoirs have continued to decline in the days since breaking their respective records. The downward trend will largely continue in both lakes until next spring, when the snowpack in the mountains of the Upper Colorado River Basin begins to melt, says Dr Jack Schmidt, a senior research scientist at Utah State University’s Center for Colorado River Studies. He tells Carbon Brief:
“The big dilemma of the moment is that we’re only in the middle of August, and we have no assurance of what the coming winter will be. The only thing we can be sure of is that we will be depleting overall total basin reservoir storage from now until, roughly, early April.”
Compounding factors
The record lows across the two reservoirs are the result of several compounding factors, experts tell Carbon Brief.
Since the turn of the 20th century, the amount of water flowing along the Upper Colorado River has declined by about 20%. Research suggests that half of this decline can be attributed to human-induced climate change.
Most of the river’s streamflow comes from the snowpack of the Upper Colorado River Basin, which stretches across five western US states but is primarily located in Colorado and Utah.
This region has been gripped by a historic “megadrought” for more than a quarter of a century. Nearly half of the megadrought’s intensity over 2000-18 is attributable to climate change, according to a 2020 study.
At the same time, the increasing population in the US south-west has put added pressure on the Colorado River’s water supply. The number of people obtaining some or all of their water from the Colorado system has grown by 15 million (around 60%) since 1992.
Schmidt tells Carbon Brief:
“There’s an ultimate cause of the present water crisis, and there’s a proximate cause. The ultimate cause is a warming climate, a warming planet and a pretty clear correlation between warming conditions and decreased runoff in the Colorado River Basin.
“The proximate cause is that in this messy democratic republic of ours, big policy decisions that match the variability of the climate occur painfully slowly – with intense political negotiations – and only incrementally.”
On 31 July, the US Bureau of Reclamation, which manages water resources in the western US, released an environmental impact statement on its proposed post-2026 strategy for managing Lakes Powell and Mead. The strategy itself has not been released yet.
Schmidt notes that the statement does appear to give the Bureau flexibility to “respond to crisis” by reducing the delivery of water to several states. However, he adds:
“They acknowledge it won’t work if we just stay critically dry, and of course every climate model for the 21st century, especially with a continually warming planet, says that that’s exactly what’s going to happen.”
The post Analysis: The two largest reservoirs in the US have hit record-low levels appeared first on Carbon Brief.
Analysis: The two largest reservoirs in the US have hit record-low levels
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