Activist countries

Opinion: How money could soon flow from countries like Canada to the developing world to help fight climate change

Canadian Prime Minister Justin Trudeau delivers a statement to the press at Elmau Castle in southern Germany at the end of the G7 summit on June 28, 2022. (Photo by John MACDOUGALL / AFP) (Photo by JOHN MACDOUGALL/AFP via Getty Images)JOHN MACDOUGALL/AFP/Getty Images

When G7 leaders wrapped up their summit last week, they gave an indication of how they will try to step up their governments’ disappointing efforts to help developing countries tackle climate change.

This came in their closing statement’s commitment to pursue Just Energy Transition Partnerships, or JETP – an emerging mechanism that has so far received little attention, in this part of the world at least, but which could transform the way dollars circulate in wealthier countries such as Canada.

The idea is that, rather than simply pooling the money into large funds which are then widely dispersed, donor countries partner directly with specific recipient countries to support their greenhouse gas emission reduction strategies. .

The first such deal was announced at last November’s COP26 climate summit, with an agreement that the United States, Britain, France, Germany and the European Union would allocate 8.5 billions of dollars to South Africa to accelerate its transition away from coal.

Now, according to the G7 statement, similar deals are being sought with India, Indonesia, Senegal and Vietnam – even before money from South Africa has started flowing. (Although Canada is not part of this first JETP, it is expected to contribute to the wave to come.)

It is, in fact, a response to the failure of more formal efforts – in particular the failure of developed economies to honor a long-standing collective commitment through the United Nations of $100 billion in funding international climate change, although this total is well below what is generally considered necessary.

And it has the potential to mend or deepen increasingly shattered trust in places that risk disproportionately suffering the consequences of climate change and are under pressure to reduce their own emissions, despite having accumulated far fewer emissions than richer countries.

“It’s a reflection of declining multilateralism,” says Zainab Usman, director of the Africa program at the Carnegie Endowment for International Peace in Washington. “Smaller initiatives with fewer actors, more focused and precise, seem to offer more promise for real action.”

Ms Usman and other experts on this type of financing generally hail the emergence of JETPs – not just because of their potential to speed things up, compared to more clumsy processes through the UN and others. global organizations.

They also appreciate that the country approach can allow for investments more directly tailored to the needs of beneficiaries. The process with South Africa involved negotiations around targets before it was announced, and the government there appears to have a high degree of agency in determining where the dollars are going now.

At the same time, the partnership model should allow developed countries to share energy systems expertise directly rather than just dollars, potentially to the benefit of their own domestic private sector interests.

But advocates also point to some early causes for concern that could derail this new approach in a way that instead fuels distrust, while actively hindering responses to climate change.

The most obvious of these is that, more than six months after the announcement of the first JETP, there are still no details on the contribution of each of South Africa’s partner countries. It is also unclear what form the US$8.5 billion will take, such as the amount in grants versus loans. This is despite the fact that South Africa has acted in good faith, including advancing regulatory legislation and establishing governance bodies to lead the planned transition of its power system.

Joe Thwaites, who specializes in international climate finance for the Washington-based Natural Resources Defense Council, expressed concern that the United States in particular is holding up its end of the bargain, given how difficult the president is. Joe Biden to secure climate funds through Congress. This risks providing “another example of [developing countries] they are asked to jump through a lot of hoops and then the money is not there at the end of the day,” he warned.

Acting quickly could become even more difficult as the model is extended to other countries, starting with those mentioned in the G20 statement. While South Africa’s JETP can serve as a model, each will have its own unique energy transition challenges – not to mention different combinations of partner countries – that could make it difficult to strike deals and monitor them.

There are also concerns, voiced by environmental groups, about whether the ‘fairness’ aspect will be given enough prominence alongside the push to cut emissions, particularly if the money is flowing to governments whose track record in terms of human rights is fragile. Eddy Perez, head of international climate diplomacy for Climate Action Network Canada, pointed to Vietnam – which recently sentenced a prominent environmental activist to two years in prison – as an example of where caution will be needed in this regard.

The biggest fundamental concern with JETPs, however, is its narrow targeting compared to other types of international climate finance.

Much of this other money, including through the pledged $100 billion, is intended to help countries build resilience to natural disasters, extreme weather and other climate change impacts – in some cases, a more urgent need than the reduction of their emissions, which is the sole purpose of the JETPs. It is therefore imperative that governments ensure that the new model is complementary, rather than replacing other forms.

Also, unlike more traditional development funds, JETPs are currently primarily aimed at large economies.

“Let’s say a number of these agreements are negotiated with 10 major developing countries,” Ms. Usman said. “And the little ones? They could slip through the cracks. I think this is a major, major problem.

For her, however, this means that once JETPs are agreed with larger countries, the model must be adapted to smaller ones – not that it should be abandoned altogether, when new approaches to climate finance are so cruelly required.

In other words, the perfect should not be the enemy of the good – something we hear a lot these days, from those working in this space.

They have qualms about JETPs. But they are tired of waiting for the money to flow one way or another. And it’s hard to deny the benefits of accelerating the energy transition and creating clean energy jobs in places that might otherwise be responsible for a growing share of global emissions.

Now the partners who are supposed to provide the funding need to get on with it, while getting enough detail to avoid setting bad precedents.

And countries like Canada, which are expected to play a leading role in supporting the developing world’s climate transition, need to watch the South Africa test case closely – and learn lessons so that this model can evolve to make up for some of the lost time and nonchalant effort to date.

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