14.11.2022 Author: Viktor Mikhin

Egypt: a milestone in climate change policy

From November 6-18, the United Nations Climate Change Conference (COP27) will take place in Sharm El Sheikh, Egypt, launching a series of negotiations and discussions aimed at saving the planet and all life on it from the catastrophic effects of climate change. Against the backdrop of a turbulent global environment caused by the West’s armed conflict in Ukraine and other escalating geopolitical crises, as well as a deteriorating economic situation holding back economic growth, driving up prices and pushing developing countries further into debt, the summit must find ways to combat the climate crisis. The Paris Agreement of 2015, which is a legally binding international treaty on climate change, should be a “guiding light” for this. It was adopted by 196 Parties at the Conference in Paris on December 12, 2015 and entered into force on November 4, 2016.

“Comprehensive” refers not only to the various strands of climate change action and financing to reduce greenhouse gas emissions, adapt to their impacts and address the loss and damage that climate change has caused to biodiversity, natural resources and the general well-being of society. This also relates to the need to rebel against deliberate attempts to reduce sustainability by reducing carbon emissions, because as damaging as they are, they are not the only emissions that harm the climate. An integrated approach also requires action on climate change as part of the Sustainable Development Goals (SDGs), to be achieved without delay by 2030, as promised by world leaders at a special UN summit in September 2015.

Unfortunately, the world is now in a worse position than it was seven years ago when these commitments to action on climate change and development were made. According to the latest report by the UN Intergovernmental Panel on Climate Change (IPCC), the world continues to fall alarmingly far short of its emissions reduction targets. Instead of reducing emissions by 45% by 2030, emissions will increase by around 14%.

In terms of poverty eradication, not only has the international community failed to reduce the number of people suffering from poverty; their number has risen to 719 million by the end of 2020. Furthermore, this figure did not take into account the rising prices of food and energy since the start of the armed conflict unleashed by the US and NATO in Ukraine, the residual economic and social consequences of the Covid-19 pandemic, which have pushed even more people into poverty.

But the world cannot just blame war or Covid-19 for the failure of public policy, the poor performance of development institutions and the waste of resources at their disposal. As the UN Secretary-General warned before the pandemic, the world is still not on target for this and other SDG targets.

In October, in preparation for the Sharm El Sheikh summit, three dialogues were organized with prominent experts in finance, development and the climate economy on climate action priorities. Based on the analysis of these dialogues, the following main conclusions were drawn:

- The notion of a contradiction between development and climate action is contradicted by both scientific evidence and practical experience. Stéphane Hallegatte, Senior Climate Change Advisor at the World Bank, presented evidence that the failure to take poverty and development needs into account in the design and implementation of climate change policies is damaging to both climate and development. He cited a study of five African countries which showed that those who fell below the poverty line were affected by soaring food prices, loss of income from agriculture, natural disasters such as floods, drought, health crises. On the contrary, an integrated approach to development is one that increases investment in education, health, agricultural productivity and infrastructure development to support production, greater access to financial services, private sector development and more effective social protection systems. Hallegatte said investing in infrastructure that is more resilient to climate shocks would increase its cost by an average of three per cent; however, it would benefit the economy and society by $4 for every $1 spent on resilience.

 – Successful action on climate change requires the integration of finance and science as well as changes in behavior to achieve the priorities of the SDGs and above all the eradication of extreme poverty. This conclusion was confirmed by studies of practical experience in developing countries by French-American economist Esther Duflo, who was awarded the Nobel Prize in Economics for her applied work on poverty. While the world’s richest 10% of the world’s people living in industrialized countries account for 50% of global emissions, the world’s poorest people live in the hottest regions, making them more vulnerable to climate shocks that permanently damage their livelihoods and health, she said. Accordingly, any equitable transition to an economic regime that was better for climate and development required more investment and effective use of research and development using science and technology in agriculture, irrigation and forest conservation. Duflo gave examples of projects in India and Africa that have achieved tangible results in these areas and stressed the need for adequate funding combined with changes in the behavior of all stakeholders.

- The actual annual financing required by developing countries for climate change mitigation and adaptation is at least 10 times the $100 billion annual pledge made by industrialized countries at the Copenhagen climate conference in 2009. Prominent Indian economist Montek Ahluwalia explained that estimates of the amount of money needed per year to finance the fight against climate change vary widely in reports from international agencies, ranging from $2.8 trillion to $4.5 trillion, representing 3-4% of global GDP.

With the exception of industrialized countries and China, which is presumably able to meet its financial needs without external financial assistance, the paper found that developing countries would need $1.3 trillion per year to invest in energy and related sectors. This is 13 times the Copenhagen pledge of $100 billion. However, even a significant proportion of this amount has never reached developing countries. The authors and other economists, such as Amar Bhattacharya, suggest that half the amount could be financed domestically and the other half should come from foreign public and private sources. But allocating only half of the $1.3 billion, five times the promised $100 billion, requires the international financial institutions to play an unprecedentedly large role in direct financing and supporting private funding. The latter involves costly guarantees to allay private sector fears of economic risk and political instability.

The above-mentioned issues will certainly be raised in Sharm El Sheikh during its extensive agenda, which Egypt, as COP27 President, has designed to be practical, comprehensive and inclusive. The Egyptian Presidency has pledged to ensure that the COP27 summit meets its commitments. The Presidency also worked closely with the five UN economic regions, climate change pioneers, specialist advisory and financial institutions to prepare lists of projects worthy of investment and financing. In this process, a set of objective criteria was applied, such as their compatibility with the priorities of the target societies and their local sustainability.

In the coming days, people from all over the world will turn their eyes to Sharm El Sheikh, eager to see if the spirit of international cooperation can prevail over the excess of political crises, tensions and divisions, and lack of trust in the world today. The task of saving the planet outweighs the disputes and conflicts caused by the lust for temporary geopolitical gains and the manipulation of loopholes in the international order inherited from the aftermath of World War II, actively encouraged by the West led by the US. The time has come to give way to fairer and more effective mechanisms that will pave the way for a new global order that truly guarantees a multipolar world, ensures prosperity and benefits all people in this rapidly changing environment.

Viktor Mikhin, corresponding member of RANS, exclusively for the online magazine “New Eastern Outlook.

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