Making a transition away from fossil fuels and towards low-carbon energy is the only way to keep our planet safe and habitable for future generations. That transition has thankfully begun, but it has a vast distance to go. And the kinds of changes that are needed cost money. Development of new technology has always required investment. This applies to the generation of renewable energy, and to the myriad lifestyle changes that follow from the shift away from coal, oil and gas. Electric cars and other transport are one example. Packaging to replace plastic (which is derived from oil) is another. Resources are also required to protect societies from the harms caused by the global heating that has already happened, and to help them adjust to altered conditions.
A new report presented at the Cop27 UN climate summit says that about $2tn (£1.75tn) a year will be needed by 2030 if developing countries are to make the necessary changes. One of the authors, Nicholas Stern, pointed to a crucial role for the World Bank as well as western governments in redirecting finance and reducing the cost of capital for investors (banks typically charge higher interest on investments in poor countries, due to perceived risks).
The pledge made in 2009 of $100bn worth of climate finance annually from rich countries to poorer ones has been broken. But developing countries have succeeded in getting loss and damage on to the formal Cop agenda for the first time. So far, five European countries have agreed to contribute to a fund to help vulnerable countries manage global heating’s destructive effects. These commitments are welcome, but insufficient.
The first three days of the conference have seen blistering words from leaders of vulnerable countries, who know that Cop27 is their best chance to be heard. But the circumstances are anything but auspicious, with the follow-up work on emissions promised in Glasgow last year mostly not delivered. Further progress on loss and damage, and other mechanisms to support a green transition in the countries that can least afford it, would be the best outcome from the negotiations. Until now, funding has been skewed away from adaptation and towards emissions cuts – which means that the poorest countries (with lowest emissions) have received the least.
Carbon emissions, and the dangerously warming planet they have led to, are the byproduct of the way that the rich world developed. Since industrialisation, we have burned our way to wealth. Thankfully, we now know that there are alternatives to this destructive pattern. Renewable energy, along with social change aimed at limiting some forms of consumption, is at the heart of this prospectus.
Channelling finance towards the countries that need it, if they are to pioneer this greener version of development, could not be more urgent, as the recent floods in Pakistan have tragically demonstrated. This is a moral imperative, since the people and places most imperilled by the climate emergency are those that did least to cause it. But it is in all our interests, in our interconnected world, to limit global heating as far as we can. We have wasted decades due to the obstructive behaviour of vested interests (chiefly fossil fuel industries and states), but also ideologues convinced that markets, unguided by states, would choose the right course.
Governments know that this was wrong. But still the countries and institutions with the most resources, and the greatest share of responsibility for the international money system, hesitate. If Cop27 can shift their priorities and rouse them to reject the broken model that got us here, it will have been a success. What the world needs more than anything is a far more ambitious set of climate finance arrangements.