The Center for Climate and Energy Solutions (C2ES) is leading a project aimed at achieving an ambitious and environmentally effective outcome from the Global Stocktake (GST) at COP28.
The project:
Leverages COP28 to drive needed real-world action
Assists countries to implement existing climate commitments
Facilitates the raising the ambition of their next round of commitments
Strengthens and energizes international cooperation.
Ahead of the spring UN climate conference in Bonn, C2ES published a technical paper drawing on: the GST technical dialogue process, a broad spectrum of opportunities to address the challenges of climate change, as well as a wealth of work on pathways and agendas for 2030 and 2050 climate action. To effectively achieve its mandate, the GST should, in its outcomes, focus on those opportunities that will have the best chance of resulting in a high positive impact. Applying key criteria, this paper identifies a range of suggested signals and opportunities to respond to them that have the potential for accelerating climate action and support.
Hosted by C2ES, EDF, and Transforma, in coordination with the main authors of the paper, please join us to discuss how the GST can help deliver a meaningful and effective response to the challenges of climate change across mitigation, adaptation and loss & damage (L&D), and means of implementation.
Panelists:
Kaveh Guilanpour, Vice President of International Strategies, C2ES
Alejandra Lopez, Head of Climate Diplomacy, Transforma
Lorena González, Senior Research Fellow, Climate and Sustainability Programme, ODI
David Levaï, Associate Researcher, IDDRI
Sandra Guzmán, Coordinator, Climate Finance Group of Latin America and the Caribbean (GFLAC)
Juan Pablo Hoffmaister, Associate Vice President, Global Climate Cooperation, EDF
Malango Mughogho, Managing Director, ZeniZeni Sustainable Finance
Malango spoke at this event about, among other things, the importance of reminding ourselves of some key facts, including "the principles of equity and common but differentiated responsibility and respective capacities that's enshrined in both the framework convention and the Paris Agreement."
A transcript of Malango's contribution to the discussion is below the video.
Follow this link to view the video on YouTube.
Kaveh Guilanpour
So last but definitely not least, I'd like to go to Johannesburg and give the floor to Malanga Mughogho. Malango, you've heard lots of things and I know you want to talk about things like MDBs and also finance for adaptation and loss and damage and priorities for Africa. A couple of speakers also mentioned JET-Ps as a possible area to learn lessons from; I don't know whether, given your location, you might want to speak to that as well, but you have the floor.
Malango Mughogho
Thanks very much. Yes, I'm based in South Africa and yes, I will touch very briefly on the JET-Ps. But, similar to everyone else, thank you so much for inviting me to this, a really important conversation and excellent report. And I also struggle to identify prioritised solutions, they've been evidently so carefully thought through, so they are all relevant.
But in deciding on what to talk about today I thought it was useful in my mind to remind ourselves of a couple of key facts, one of which Lorena has already touched on, which is the principles of equity and common but differentiated responsibility and respective capacities that's enshrined in both the Framework Convention and the Paris Agreement. Sitting again on the African continent, particularly respective capabilities and the issue of adaptation has come up.
For example, the University of Notre Dame produces an adaptation index and, interestingly, in terms of vulnerability to climate change across the 185 countries in that index, middle income, low income, high income - it doesn't matter, there's vulnerability there. But when it comes to responsiveness and ability to address climate change, it's predominantly low income and lower-middle income countries that are in the lower part of the index, so they have very low capability to be able to respond. So, the global stocktake really has to continue to reflect those two principles.
And also, a link to adaptation as well, hopefully the stocktake will also bring out the flows of financing from within countries as well, towards both mitigation, particularly adaptation. Because again, speaking with a so-called African hat on, research from 2017 by the UN Economic Commission for Africa found that on average African countries are spending between two to nine percent of their GDP on adaptation, so this is existing expenditure on adaptation, and that makes up about 20 percent of what they need in total, and importantly it's much larger than the amount that they're receiving in international finance flows. So the numbers do not add up, and obviously the fact that money is being spent on adaptation indicates just how important it is to these countries.
And then in terms of informing the solutions that I wanted to look at and think are really important in terms of the outcomes from COP28 and the GST is some private finance and the financial sector, as has already been mentioned. And, of course, with big proposals such as the Bridgetown Agenda and out of the recent summit in France, reforms to the whole Global Financial Architecture are top of mind, and I think it's important to build on that momentum.
But importantly now, coming to, for example, the JET-Ps, which are very important in terms of country platforms to try to create a more programmatic approach to addressing mitigation in the energy sector. In South Africa, the JET-P’s estimated cost, just over the next five years, I think it's about 98 billion dollars or so. And of that, they expect 60 percent of it to come from the private sector, so that's more than 50 percent; it's a huge number. So the private sector - this is not just about financial institutions, of course, it's also companies - needs to be placed front and centre within a global stocktake which, as has already been mentioned, typically does not address non-state entities like companies. I think that's really important that this stocktake tries to do that, especially, as I say, countries have identified the need for the private sector to be involved.
So in terms of the actual solution, the critical areas I think have been mentioned already, but particularly just doing what we said we would do in relation, for example, to the to the 100 billion dollars per annum that should have been committed by 2020. Just making sure that the financing that has been promised is put in place, and in particular around grant and confessionary financing, going back to the numbers around adaptation. That sort of financing you need, grants and deeply concessionary finance, to address adaptation in many situations.
A well-known economist, whose name I won’t mention, that said we can't finance our way out of climate change; that's exacerbating some of the existing challenges related to debt sustainability, partly caused by climate change, but by many other things such as we know; exogenous shocks such as fuel prices etcetera from wars, and of course the pandemic.
Grant and concessionary finance must be a central aspect of the response, and the GST needs to find a common way of tracking that finance. I know that there's OECD DAC processes, but other countries are outside of that process and there are flows between so-called South to South flows as well. The GST needs to encapsulate and capture all of that, just so that there's this clear understanding of where potential grant and concessionary finance can come from, and importantly where it's actually going. Is it going to where it can do the most good, as it were?
And then, coming to the private sector, particularly the private financial sector - and I should say here that this is the solution that I have a strong bias toward, because of the work myself and others on this call did last year around looking at net-zero commitments of non-state entities. The word “trust” has already been mentioned, and trust in relation to the private sector is critical, and I think the GST is a great opportunity to begin to build that trust by clearly identifying private sector players, particularly from the financial sector, that are addressing climate change seriously and putting their money where their mouth is, as it were.
Going back again to the example of South Africa's JET-P, which requires 60 percent of financing from the private sector, and it's not just money in terms of what's needed. It's also a comprehensive plan to address, in particular, the just transition elements, and the same could be said of adaptation. Any, they've been called, “social aspects” of our transition to a low carbon resilience economy and society; these social aspects, yes, sometimes funding helps, but it's also the intent. Any planning must put that front and centre and integrate it into what's needed. And it's not something that comes naturally to the to the private sector, I don't think. It's often said, “Oh, this is the government's role,” but on that basis there needs to be some stronger linkages between what the government sees is needed on the so-called social side, and what the private sector can then deliver. There needs to be much stronger interaction between the two, and I do think that the stocktake is a really important opportunity to be able to do that.
And finally, just in terms of financing again is, in general, outside of climate actually the bond financing is a critical part of most sovereign borrowing in general, has been historically. In 2021 the World Bank statistics show that for low- and middle-income countries, borrowing in the bond market was more than double what it was from multilaterals. So while there's been a significant focus on what's happening in the multilateral space, and that's important and must continue, what's happening in the bond space and the bond market space, where it's largely private investors providing that financing, also needs to be linked. And I say it's a natural process in the sense this is not just related to climate, this is related to sovereign borrowing in general and, surprisingly, also in low-income countries.
So I think there are lots of opportunities to make those links between what's happening in the private sector, for both companies and financial institutions, and governments, and making sure that adaptation is addressed through grants and concessional finance. But there shouldn't be a question of that in terms of the financing that’s needed, and I also agree with the comment made about the new funding mechanisms or new funds; they are important.
For example, the Loss and Damage Fund last year is a fantastic development, but there is a risk that with the plethora of funding it reduces… Each fund needs its own secretariat skill sets involved and to be capacitated to deliver what it was set up to do. And the more that there are, it feels that they're less able to do that, so I strongly believe that we should focus on capacitating the existing mechanisms, both from a funding perspective and from a skills perspective, so that we can actually deliver on what has been promised, and, more importantly, what's needed.