GLASGOW — Some of the world’s biggest financial institutions on Wednesday vowed to mobilize trillions of dollars to help shift the global economy toward cleaner energy as negotiators at the United Nations climate summit struggled with the question of how to pay for the enormous costs of climate change.
This coalition of banks and investors representing $130 trillion in assets is represented at the global climate summit. said it would commitTo achieve net-zero emissions from its investments by 2050. It was essentially a commitment to make climate change a key focus of major financial decisions over the next decade.
“We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account,” said Mark Carney, the former head of the Bank of England who is leading the coalition, along with the billionaire and former New York mayor Michael Bloomberg.
Environmentalists were skeptical about the pledge, noting that details were vague and many banks still invest hundreds to billions of dollars each year in fossil fuels.
“Either they stop financing fossil expansion, or their net-zero commitments are green wash,” said Jason Opeña Disterhoft, senior climate and energy campaigner at Rainforest Action Network, an environmental group.
Money has always been a big deal. sticking pointTensions over climate change have flared again at the United Nations-sponsored Glasgow summit.
A decade ago, the world’s wealthiest countries pledged $100 billion per year in climate aid by 2020 to help poorer countries transition to cleaner energy and protect themselves against the growing dangers from heat waves, floods, droughts and wildfires as the planet warms.
These promises have not been kept so far. By one estimateWealthy countries still fall short by tens to billions of dollars each year. Critics have saidEven this money has not been well targeted. A large portion of aid received to date has been in the form of loans, which are often difficult to repay by developing countries. Only a small amount of funding has been used to adapt to climate change.
At the summit, which continues until Nov. 12, developing countries and smaller nations that emit only a tiny fraction of the world’s greenhouse gases pleaded with wealthy countries to do more.
“Our countries are the least liable for the damage to the world’s environment, but we pay the highest price,” said Gaston Browne, the prime minister of Barbuda and Antigua, which has struggled to rebuild after a Category 5 hurricane hit the country in 2017.
Mr. Browne noted that even as the world’s richest countries have failed to meet their promises on climate finance, major economies have spent roughly $3.3 trillion since 2015 subsidizing fossil fuel production and consumption, according to one recent study.
“We can all agree that this is regressive,” Mr. Browne said. “I plead that we do not squander this crucial opportunity.”
Last month, diplomats representing Canada and Germany arrived in Berlin. announced a planRich nations must reach their goal of $100 billion per annum in climate aid by 2023.
But as the dangers of global warming continue to mount — particularly since nations have not yet committed to slash their emissions deeply enough to keep global warming at a relatively safe level — those financial needs are growing as well.
“That $100 billion is trivial in light of what’s actually needed,” said Saleemul Huq, the director of the International Center for Climate Change and Development in Bangladesh. “But the credibility of wealthy nations is on the line. If they can’t even deliver what they promised, why should we believe anything else they have to say?”
Janet Yellen, Treasury Secretary, stated that the United States would support a funding mechanism that aims at directing $500 million annually to develop countries away from coal-based power and towards wind, solar and other low and zero-carbon energy sources.
However, she pointed out that the real cost to climate change would likely be in the trillions of Dollars.
“I agree we all must do more, and the United States is stepping up,” Ms. Yellen said. But, she added, “the gap between what governments have and what the world needs is large, and the private sector needs to play a bigger role.”
A group of international development banks and foundations also announced a $10.5 million fund to assist emerging economies in their transition from fossil fuels towards renewable energy.
The group, which is now called the Global Energy Alliance, hopes to attract more donors in the weeks ahead. It has at the moment raised $1.5 million from the Rockefeller Foundation as well as the Ikea Foundation. Bezos Earth FundAlong with $9 billion, development banksThese include the International Finance Corporation and African Development Bank. According to the alliance, it seeks to raise $100 billion in private and public capital to expand access clean energy for a billion people in developing nations.
Raj Shah, president of the Rockefeller Foundation which helped to create the alliance, stated that the money is needed in order to jump-start clean technology technologies that would not otherwise attract private investments.
“Accelerating climate transitions in developing countries will not happen if an immediate 20 percent return on every investment is necessary,” Mr. Shah said. The money will go to initiatives such as the development of mini-electric grids in some parts of. rural IndiaThe project involved helping Indonesia close down its oldest, most polluting coal-fired power stations and developing a hydropower plant in Sierra Leone.
But the day’s biggest announcement came from the coalition of investors controlling $130 trillion in financial assets that pledged to use that capitalTo achieve net-zero emissions targets for their investments by 2050. The United Nations Glasgow Financial Alliance for Net Zero is a group of 450 banks and asset managers from 45 countries.
While voluntary, the agreement shows a commitment by a broad range of financial institutions — banks, insurers, pension funds, asset managers, export credit agencies, stock exchanges, credit rating agencies, index providers and audit firms — to use their money to push businesses to slash emissions.
Negotiators and environmentalists from developing countries expressed concern that money was not available to assist countries in adapting to rising sea levels and other increasingly severe disasters.
Projects like building sea walls, planting mangroves, improving drainage and other ways of preparing for climate change disasters are not always attractive to investors because they don’t turn profits, experts said. This means that the majority of climate finance is still geared toward investments in wind, solar, and other means of mitigating emissions.
At the same time, vulnerable countries at Glasgow are arguing for a separate funding mechanism to help deal with disasters that they can’t adapt to, often referred to as “loss and damage.” But that proposal faces opposition from wealthier countries, which fear it could open the door to future compensation claims.
Despite all the fighting some observers believe that the climate finance movement is a step up than the negotiations of a decade earlier.
“There’s the critique that some of this is a bit wishy-washy and some it’s a bit greenwashy and vague, and yes,” said Rachel Kyte, dean of the Fletcher School at Tufts University and a climate adviser for the United Nations secretary general. “But six years ago, did anyone think we would have $130 trillion in some kind of club moving in the same direction? No.”
“We’re not there yet,” she added, noting that the world is still not providing nearly enough finance to address the vast challenges of climate change. “But things are starting to move in the right direction.”
Reporting was provided by Somini Sengupta? Liz Alderman Jenny Gross