Climate change

Economics of Climate Change: “The Biggest Reallocation of Capital Since the Industrial Revolution”

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Breaking: the first try of the final COP agreement was released this morning and will be debated by countries in plenary. The project sets up a battle between countries over how quickly they should meet certain emissions targets. Leslie Hook has the details here.

“BoJo” – to use Boris Johnson’s media nickname – is he the right man to save the day? His political colleagues might cry ‘no’, given the recent Westminster dramas over sleaze. But today, the British Prime Minister will dodge the rain and the protesters (again) in an attempt to revive the stalled negotiations in crucial areas such as aid to developing countries, the planned phase-out of engines combustion for the automotive sector and, above all, national emissions commitments. reductions.

This morning, COP negotiators released a draft agreement for the latter, calling for more ambitious targets and more frequent review of them. But it immediately sparked more fighting (and accusations from greenwashing activists). financial groups to use their $ 130 billion in assets for decarbonization. A recent column I wrote on green auditing, for example, sparked a flurry of letters, with some saying real reform is underway – and others dismissing it as greenwashing. Meanwhile, the risk of litigation is increasing – as we write below, alongside efforts to unlock blended finance. Take note. – Gillian tett

Day 9 in brief

  • Despite all government commitments to reduce carbon emissions at COP26, the Earth’s temperature is expected to reach 2.4 ° C by 2100, according to the Climate Action Tracker. “Even with the new commitments, global emissions in 2030 will still be twice as high as required for 1.5 ° C,” said Niklas Höhne, of the NewClimate Institute, a partner organization of CAT.

  • “We’re not just back, we’re different and we’re fairer, and we’re more open, I think, to questioning previous assumptions about what’s politically possible,” said Alexandria Ocasio-Cortez, s ‘expressing yesterday at the COP as Democrats sought to reassure attendees. that the United States can fund billions of dollars for climate projects.

  • The UK government has committed £ 210million to Rolls-Royce to develop small modular reactors. Nuclear technology is “key to boosting energy security as we reduce Britain’s dependence on volatile fossil fuels,” the government said.

Subject of discussion

Amid the growing antagonism between China and the West, there is a weak presence of the Chinese government on the ground at COP26. But the Chinese-led Asian Infrastructure Investment Bank has tried to make its presence felt in Glasgow through prominent Britons Danny Alexander and Nicholas Stern, both of whom now work with the institution.

Alexander and Stern – who previously worked as UK cabinet minister and senior UN climate adviser, respectively – tried to get the message across that AIIB and other multilateral institutions can help countries developing in the fight against climate change, and initiate more blended finance with private sector capital flows.

As Moral Money reported a few weeks ago, the AIIB has pledged to deploy $ 50 billion for climate-related aid by 2030 and has pledged that climate finance will be at least half of its funding approvals by 2025. Some developing countries say this approach is less than ideal. Earlier this week, former Maldivian President Mohamed Nasheed criticized the emphasis multilateral lenders have on project finance, saying it would be better to help governments through direct budget support and let national governments choose how to spend the funds.

But Alexander argued that the project-based approach was crucial in attracting private sector capital: the help of institutions such as the AIIB offers a powerful way to ‘attract’ private sector investment into companies. climate-related projects, he said.

“This is the biggest reallocation of capital since the industrial revolution,” added Stern, a highly influential scholar on the economics of climate change. “You do it by investing in the right things – and a lot of those investments have really good returns. “

The focus on debt financing by multilateral lenders and other financial institutions has raised alarm bells among some climate activists, who have warned that this approach will force developing countries into more and more debt. , as they struggle to cope with a crisis caused mainly by rich countries. Unsurprisingly, poor countries prefer subsidies.

Stern said these concerns should not be overstated, however, and that large-scale debt financing, with the participation of the private sector, has allowed for a greater impact than could be achieved through donations alone. “It is viable if interest rates are low enough and, in particular, if the risk is carried appropriately, by ensuring that income flows to projects are strong. It’s not a debt conspiracy – it’s a good, solid investment, ”he said.

The big question now is how many blended finance projects will come to fruition – and how will multilateral lenders guarantee the high standards promised by Stern and Alexander? (Simon Mundy)

Quote of the day

British Gas and Ben & Jerry’s are among companies that have partnered with environmental groups to call on social media companies to stop spreading fake climate change news online.

In an open letter to Facebook, Google, Twitter, Pinterest and others, the organizations said many large tech companies had no policies to tackle climate change misinformation.

The group applauded Google, which in October banned advertisements contradicting “well-established” scientific evidence for climate change. Google’s action should send a “strong signal” to its peers that they too must do more.

“COP26 is the perfect time to build momentum for decision-makers to recognize the threat of climate disinformation and, through global cooperation, to oppose it,” the organization said.

Beyond Glasgow: The World View

Volkswagen has refused to sign a global deal to eliminate emissions from new cars by 2040, citing China’s lack of commitment to phase out coal power © REUTERS

As thousands gather in Glasgow, climate activist Clara Mayer and Greenpeace have taken legal action in Germany against carmaker Volkswagen for failing to reduce CO2 emissions.

In a lawsuit filed yesterday in a regional court in Braunschweig, Germany, plaintiffs called on Volkswagen to end production of internal combustion engine cars by 2030 and cut carbon emissions by 65% compared to 2018 levels.

Greenpeace and Mayer said the German group’s current commitments, which include carbon neutrality by 2050, are just talk.

Volkswagen has spent 35 billion euros on electric vehicles and has launched several battery-powered models in recent months in hopes of becoming a competitor to Tesla. But at COP26, the world’s second-largest automaker refused to sign a global deal to phase out emissions from new cars by 2040, citing China’s lack of commitment to phase out coal-fired power.

The increase in climate disputes in recent months is adding pressure on companies already facing campaigns by activists to clean up emissions. Notably, Dutch courts earlier this year ordered Shell to step up emissions reductions.

It will be months before a verdict is delivered in the Volkswagen case, but we are keeping a close eye on this space. (Kristen Talman)

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