COP27: Is a green wave of climate finance finally gaining momentum?

SHARM EL-SHEIKH, Egypt — In the run-up to this global gathering of climate leaders, the collective vibe was that this wouldn’t be a ​“big COP” like Paris in 2015. Back then, following years of incremental haggling, the people, politics and pressure aligned to produce an unprecedented commitment to limit climate warming to 1.5°C. Nothing like that is yet in the cards here at COP27, but expectations are rising that real progress may emerge on the question of who will pay for climate damage. (See our first and second COP27 dispatches.)

The U.S. plan, for now

After news leaked earlier this week, the U.S. officially announced its new carbon-offsets plan — and kicked up a sandstorm of criticism. The plan could let corporations neutralize their emissions by buying offsets from avoided emissions in developing countries. But the details are sketchy for now, and until they are hammered out, worries will fester that the program could be dogged by the same weaknesses as past carbon-credit schemes, including questions about credibility and additionality. Watch for the specifics of the U.S. plan to take shape in coming months.

Whether or not the U.S. plan proves fruitful, the world needs new kinds of financing mechanisms to get money to developing countries quickly. ​“Emerging economies need support to phase out fossil assets while delivering energy security and economic prosperity for their citizens,” said RMI CEO Jon Creyts. ​“Status quo financing will not be sufficient. We need more innovative solutions on top of other types of funding already available to unlock private capital.”

A higher price? 

How much money will be needed each year to help developing countries cut their greenhouse gas emissions and adapt to the effects of the climate crisis? The estimated price tag continues to grow.

Rich countries have so far promised $100 billion per year — and failed to deliver. Some estimates have put the needed total at closer to 10 times that amount. But as climate damage intensifies faster than modeled and inflation drives up costs, newly revised analysis suggests that developing countries will need $2 trillion per year by 2030, reports The Guardian. The grim reality is that this number is likely to keep rising even after emissions peak.

💲Dig deeper: For more on the climate-finance targets being discussed at COP27, check out RMI’s Climate 101: NCQG, the Most Important Climate Goal You’ve Never Heard Of.

Taking small steps

For decades, rich countries have refused to offer ​“loss and damage” compensation to poorer countries that have been hit hard by climate disasters. But that freeze is beginning to thaw, The New York Times reports, as some nations are now pledging this type of direct climate aid. This week Scotland promised $5.7 million, on top of $2.2 million pledged last year, and Ireland pledged $10 million.

These are relatively modest amounts, given the rising estimates of need (see above), but the small steps may portend bigger commitments to come later this week and next.

Why access is equity

Whether millions, billions or trillions, the wave of climate funding that will flow to help developing economies can crash into a little-known barrier: too few experts with the time and know-how to navigate the bureaucratic labyrinth of global financial players, funding requirements and applications necessary to secure and disperse the funds. This means countries with the most urgent need for assistance to cope with the climate crisis spend years bogged down in the climate-finance system.

Expertise in this area can be developed, though, and multiplying the number of experts able to navigate climate-finance arcana in recipient economies will speed the deployment of the funding and boost its impact. RMI designed and coordinates the Climate Finance Access Network (CFAN), which supports countries by training dedicated experts in the skills needed to access support for their climate goals. CFAN announced new funding at COP that will enable it to extend its reach — from eight countries in the Pacific to additional Pacific and Caribbean nations — thanks to support from the government of Canada, the Open Society Foundations and an anonymous donor.

📲 Follow @cfanadvisors on Twitter to track CFAN’s work helping to unlock climate finance for developing countries.

Visualizing (way more) emissions 

Climate Trace — a nonprofit backed by Al Gore, RMI and a coalition of other big environmental players — on Wednesday announced that it can now track greenhouse gas emissions at more than 70,000 hot spots around the globe, including individual cargo ships at sea, single cattle feedlots, small oil fields and specific steel mills.

In the past, by combining satellite sensors with big data analysis, the team showed that the emissions self-reported by the oil and gas industry were undercounted. The new release of the tool shows that underreporting of oil and gas emissions is far worse than previously known, with actual emissions up to three times higher than claimed in countries’ self-assessments submitted to the U.N. Framework Convention on Climate Change.