The start of week two of COP27 in Sharm El-Sheik has seen a series of financial declarations from countries and businesses around the world to help developing nations deal with and tackle the climate crisis.
Climate disaster aid scheme ‘Global Shield’
A G7-led plan dubbed “Global Shield” to provide funding to countries suffering climate disasters has been launched at the United Nations COP27 summit, although there are some who have questioned the effectiveness of the planned scheme.
Coordinated by Group of Seven (G7) president Germany, and the Vulnerable Twenty (V20) group of climate-vulnerable countries, the plan launched on Monday aims to rapidly provide prearranged insurance and disaster protection funding after events such as floods, droughts, and hurricanes.
Backed by 170 million euros in funding from Germany and 40 million euros from other donors including Denmark and Ireland, the Global Shield will in the next few months develop support to be deployed in countries including Pakistan, Ghana, Fiji, and Senegal when climate disaster events occur.
Some countries and campaigners were cautious, however, concerned that the plan risked damaging efforts to secure a substantive deal on financial help for so-called “loss and damage.”
German Development Minister Svenja Schulze said the Global Shield aimed to complement, not replace, progress on loss and damage. “It is not a kind of tactic to avoid formal negotiation on loss and damage funding arrangements here,” Schulze said. “Global Shield isn’t the one and only solution for loss and damage. Certainly not. We need a broad range of solutions.”
Some research suggests that by 2030, vulnerable countries could face $580bn (£488bn) per year in climate-linked “loss and damage”. Ghana’s Finance Minister Ken Ofori-Atta, who chairs the V20 group of vulnerable countries, called the creation of the Global Shield “long overdue.”
“It has never been a question of who pays for loss and damage, because we are paying for it,” he said in recorded remarks at the summit in the Egyptian resort town of Sharm el-Sheikh. Our economies pay for it in lost growth prospects, our enterprises pay for it in business disruption, and our communities pay for it in lives and livelihoods lost.”
US, Japan, and partners mobilise $20bn (£16bn) to move Indonesia away from coal power
Announced on Tuesday, a coalition of countries will mobilise $20 billion of public and private finance to help Indonesia shut coal power plants and bring forward the sector’s peak emissions date by seven years to 2030.
The Indonesia Just Energy Transition Partnership (JETP), more than a year in the making, “is probably the single largest climate finance transaction or partnership ever”, a US Treasury official told reporters.
The Indonesia JETP is based on last year’s $8.5bn initiative to help South Africa more quickly decarbonise its power sector that was launched at COP26 in Glasgow by the United States, Britain, and European Union.
To access the programme’s $20bn worth of grants and concessional loans over a three- to five-year period, Indonesia has committed to capping power sector emissions at 290 million tons by 2030 – and with a peak that same year. The public and private sectors have pledged about half of the funds each.
Indonesia also has set a goal to reach net zero emissions in its power sector by 2050, a full decade before its current target set in its national climate plan, and to double the pace of renewable energy deployment so that it accounts for at least 34% of all power generation by 2030.
“We’ve built a platform for cooperation that can truly transform Indonesia’s power sector from coal to renewables and support significant economic growth,” US Special Envoy on Climate Change John Kerry said. “We’ve wrestled with countless issues to arrive at today’s groundbreaking announcement.”
The United States and Japan are co-leading the effort with Indonesia on behalf of the other G7 democracies Britain, Canada, France, Germany, Italy, as well as partners Norway, Denmark, and the European Union.
EIB Global & AllianzGI to invest $100m in renewable energy
The European Investment Bank (EIB) and the global investment arm of the Allianz group, AllianzGI have pledged $100m to Alcazar Energy Partners II, to help facilitate the development of renewable energy projects in the Middle East, North Africa, Eastern Europe and Central Asia.
The EIB and AllianzGI previously partnered to establish the Emerging Markets Climate Action Fund (EMCAF) at COP26 in Glasgow last year. EMCAF will contribute $25m to Alcazar, and EIB Global, the arm of the EIB for non-EU funding, will provide $75m. The funds will be invested in solar and wind power, totalling an estimated 2GW of capacity. The Alcazar Energy Partners II fund has a target of $500m.
“To meet the Paris climate goals and strengthen global energy security, the world’s energy systems must decarbonise as soon as possible,” said Ambroise Fayolle, EIB vice president.
“To do this, the financial system needs to mobilise trillions of dollars from private sector green energy projects. I am delighted that we are announcing investments from EMCAF and EIB Global in the Alcazar Energy Partners II Fund today.”
Daniel Calderon, co-founder and managing partner of Alcazar Energy, said: “AEP-II is privileged to have the confidence of an outstanding group of public and private institutions to invest and develop in renewable energy projects, mobilising more than $2bn of foreign direct investment from OECD economies to build sustainable infrastructure where it is needed most.”
