Macron supports trillions of dollars for the climate

SHARM EL-SHEIKH, Egypt — Climate change talks have long been stalled by demands for transfers of billions of dollars — on Monday, French President Emmanuel Macron backed a new push for the conversation to be measured in trillions.

Speaking at the COP27 climate summit in Sharm el-Sheikh, Egypt, Macron gave his backing to elements of a plan presented by Barbados Prime Minister Mia Mottley that aims to overhaul the way the Climate finance is channeled to the countries that need it most.

He called for a “huge shock of concessional financing”, the suspension of the debt of the stricken countries and the formal notice of the International Monetary Fund (IMF).

This speech marked a change of tone that developing countries have long been calling for.

In the first day of official speeches, wealthy country leaders stressed the need for “solidarity” with developing countries after a year in which calamitous disasters and a seething debt crisis contributed to reshape the often contentious conversation about climate finance.

“It’s the right thing to do,” British Prime Minister Rishi Sunak said.

Money is at the center of this year’s climate talks given the widening gap between what has been promised and what is needed. It ranges from everything from clean energy transitions to strengthening countries’ defenses against climate impacts to potential payments for irreparable climate damage.

In September, Barbados issued the world’s first pandemic and natural disaster bond. “Now is the time to introduce natural disaster-pandemic clauses into our debt instruments,” Mottley said.

“God forbid, if we get hit tomorrow, we will unlock 18% of GDP over the next two years, because what we are doing is effectively pausing all of our debt,” he said. she declared.

Macron has called for the rules of the IMF, World Bank and other major lenders to be changed to make clauses that stop debt repayment in the event of a disaster are much more common.

“What you ask of us in terms of debt repayment and guarantees, when we are hit by a climatic shock, when we are victims of a climatic accident, to a certain extent there must be a suspension of these conditions “, declared the French president.

Broken promises

With the funding need to spur the clean energy transition across the world and hedge against the ravages of climate change already running into the billions, the UN climate system remains stuck on a broken promise. rich countries, ten years old. They have pledged to provide $100 billion a year in climate finance by 2020, but that isn’t expected to happen until next year.

As climate impacts have become more extreme and prolific, calls for new and more innovative forms of financing have intensified. Swelling debt in the wake of the pandemic has intensified these calls, with dozens of vulnerable countries threatening a debt strike ahead of COP27.

Mottley has been a champion of escalating the debt crisis facing nations like his and highlighted how it adds to climate inequality. The plan she presented in September relies on debt relief, increased funding and new post-disaster recovery mechanisms, such as bonds.

The Barbadian leader’s call to arms and Macron’s overwhelming support have brought a new reality and breadth to the financial discussion.

Mottley pushed for IMF special drawing rights to be used to help climate-vulnerable countries recover and respond to climate impacts. That could be used to help unlock a lot more money from the private sector – $500 billion from the IMF could trigger $5 trillion in investment, she said on Monday.

The challenge is to get the shareholders of these financial institutions to accept reforms.

Officials in the United States, Germany and other major economies have pushed for an overhaul of how multilateral development banks lend to enable them to provide more climate finance. US Treasury Secretary Janet Yellen called on the World Bank to draft a roadmap by the end of the year that could then be used to drive reform efforts at other development banks.

On Monday, Macron went further, saying that by next spring, global financial institutions should find ways to “come up with concrete solutions to activate these innovative financing solutions and help us provide access to new liquidity.”

He paid tribute to Mottley’s “strength of character” and said the two leaders – one who commands an economy 600 times larger than the other – had agreed to form a group of “wise men” to draw up suggestions for the overhaul of the international financial system. .

But one suggestion from Mottley that Macron deflected was his call for fossil fuel companies to pay a tax on their profits into a fund for disaster-stricken countries.

“How do companies make $200 billion in profits in the last three months and not expect to contribute at least 10 cents of every dollar of profit to a loss and damage fund?” she asked.