The United Nations’ climate summit (COP27) was meant to be a critical event this year for furthering the agenda of the most vulnerable countries that continue to be impacted by the adverse effects of climate change.
There were high expectations with an urgent need for the delivery of new trillion-dollar commitments based on lessons learnt following COP26. As the Prime Minister of Barbados Mia Mottley spoke, the temperature of the room in Egypt increased, as she delivered her case for innovative change in the global financial system to assist in resolving the burden of debt countries face as they recover from climate-related disasters.
Finance has been growing in its role in addressing matters related to climate change.
Environmental finance can be seen as a tool that reinforces and transforms how we do business and investment whilst strengthening resilience. Sustainable finance, inclusive of climate finance, has become a driving force for inspiring action and proposed change.
Sustainable finance is being integrated into the financial system itself – transforming how companies view assets, investments, and liabilities towards serving people, the planet, and profit at varying degrees. Climate finance is made accessible to governments and implementing agencies through global funds built from donations from developed nations. Sustainable finance encourages investment in clean energy, decarbonisation, energy efficiency and green technology which is changing the value of the assets companies possess.
According to the Climate Policy Initiative’s Global Landscape of Climate Finance: A Decade of Data 2011-2020 report, global climate finance virtually doubled in value in the last decade (USD 4.8 trillion), but we would need an additional USD 4.3 trillion annually until 2030 to avoid the worst climate change has to offer. The global financial system can work to facilitate this, but it will take a concerted effort from the international community to address existing barriers.
Climate change is not only affecting global temperatures. Fundamentally, modern society requires energy in two forms – fuel and nutritious food. Raw materials can be shipped across the world to be made into your favorite snacks before it gets to your table. Each time these goods move from one place to another there is a fuel cost. Climate change can work to disrupt this chain, but financial levers can also be used to discourage carbon-intensive practices. In both cases, this can create increased costs of doing business. Consumers may feel climate change where they feel it most –their wallets.
However, this state of transition will also encourage high-quality products of good value that are sustainable in origin to be developed for purchase. Competition can drive costs down or enable innovative home-grown products to grow at the community level. Businesses can use their more sustainable products as justification for additional investment thus increasing their value. There is certainly a balancing act that may be taken for granted at the point of sale – but we must work to find ways to minimize discomfort during the transition.
In recent times, Trinidad and Tobago, a small island developing state with over a century of experience in hydrocarbons, has been re-examining its energy portfolio with plans to move into renewables and hydrogen energy. Over the past decade, according to the Climate Policy Initiative’s Global Landscape of Climate Finance: A Decade of Data 2011-2020 report, the cost of solar photovoltaics has dropped by 80% alongside a 45% decrease in the cost of onshore and offshore wind energy.
Renewable energy has become more investor friendly and desirable facilitating the decarbonisation of the energy industry. The National Gas Company of Trinidad and Tobago Ltd (NGC), a state-owned energy company, provides natural gas for electricity generation. In its sustainability report, Pivoting to a Sustainable Future, NGC outlines its involvement in renewable energy ventures, waste-to-energy capture from landfills and support for feasibility studies to enable marine vessels to access low-sulfur fuels.
Meanwhile, in Belize, agriculture can be identified as one of the highly vulnerable sectors to climate change. According to the Climate Policy Initiative’s Global Landscape of Climate Finance: A Decade of Data 2011-2020, most of the finance allocated for adaptation was distributed through public actors like multilateral institutions. Recently, the World Bank awarded Belize with $25 million dollars to establish the Climate Resilient and Sustainable Agriculture project – meant to touch the lives of 7000 farmers with 3700 farmers receiving grants to incorporate climate-smart sustainability practices in food production. Combating food insecurity will create resilience in wider communities throughout Belize.
Prime Minister Mottley began her fiery speech with the words, “We have the collective capacity to transform.” Empowering adaptation is not impossible – but it will require more than just financial commitments from developed countries. According to a recent report published by the United Nations, Accessing Climate Finance: Challenges and Opportunities for Small Island Developing States, there is a need for a shift in thinking towards producing long-term adaptation capacity, a need for more data and more access to financial resources. It may be that in the future, we will seek to move away from sustainable methods to regenerative approaches where they can be best implemented.
At the conclusion of COP27, a pathway to expanded financial access has been codified into a new commitment – the creation of a loss and damage fund for the most vulnerable countries. The loss and damage fund will continue to draw attention as financial flows are established for it. As we decarbonise, we must prioritize what places us in the strongest position to negotiate our cause. SIDs will need to build the necessary capacity to accommodate new financial flows as well as continue to lobby as we grapple with the complexity of ensuring we stay within a 1.5-degree world – there is simply no alternative for our context.
This story was published with the support of Climate Tracker and The Cropper Foundation’s Caribbean Citizen Climate Journalism Fellowship