GDP Center Round-up: 2023 United Nations Climate Change Conference (COP28)
By Claire Paul
From November 28-December 12, the 2023 United Nations Climate Change Conference (COP28) will be held in Dubai, United Arab Emirates. The conference comes at a “milestone moment,” as participating representatives will assess their country’s progress in adhering to the goals set out by the Paris Agreement and conclude the first-ever Global Stocktake.
Ahead of COP28, the Boston University Global Development Policy Center has produced a suite of research investigating trends in climate finance, economic implications of climate change in climate vulnerable countries, under-supported research trends in solar and wind energy supply chains, how the International Monetary Fund (IMF) should incorporate climate and development into its operations and more.
Below, see a summary of the latest research:
Unpacking Climate Finance at COP28 and Beyond: Insights from New Data on Climate Negotiations and National Climate Funds
Climate finance is expected to dominate the COP28 agenda.
Updates to two data interactives maintained by the GDP Center – the Climate Negotiations Database and National Climate Funds (NCF) Tracker – seek to provide critical context to the issue of climate finance ahead of COP28. The Climate Negotiations Database categorizes negotiation agenda items starting at the first UN Conference of Parties in 1995. The NCF Tracker presents an inventory of 154 NCFs across 99 countries and tracks their major attributes, including scope, legal form, host country and more.
A new blog from Rishikesh Ram Bhandary provides an analysis of the data updates and highlights trends to follow on climate finance at COP28. The Climate Negotiations Database, now updated to include the COP26 Glasgow and COP27 Sharm el-Sheikh agendas, reveals that while finance has been a consistent issue in international climate change negotiations since 1995, a significant gap persists. The NCF Tracker reflects growing interest in NCFs, but a key challenge for governments and stakeholders will be to adequately empower these NCFs so that they can play an effective role in mobilizing domestic and external resources. Bhandary also highlights three trends to watch on climate finance at COP28: the growing adaptation finance gap, underwhelming private finance mobilization and the impacts of debt distress on climate ambition and action. Read the blog.
Economic and Fiscal Implications of Climate Change for Vulnerable Countries in Central America and the Caribbean
Climate vulnerable countries, such as those in Latin America and the Caribbean, are currently locked in a cycle of debt and climate: Extreme weather events are driving up debt burdens, shrinking already-limited fiscal space and leading to higher costs of capital. Governments are left unable to adequately invest in adaptation measures or meet nationally determined contributions (NDCs), leading to increased losses and damages when disaster strikes.
How, then, can climate vulnerable countries both respond to climate impacts and invest in climate and development goals while maintaining fiscal stability?
A new technical paper from the Task Force on Climate, Development and the IMF assesses the potential impact of climate change on economic growth and fiscal accounts for six Central American and Caribbean countries: Barbados, Dominican Republic, El Salvador, Guatemala, Honduras and Saint Lucia (CAC6). The researchers illustrate existing economic barriers, estimate resource needs and outline policy recommendations for international financial institutions like the IMF to support investment in climate and development goals. Read the technical paper and read the summary blog.
Safeguarding Decades of Development: The International Monetary Fund’s Role in Addressing Loss and Damage
Climate-induced loss and damage can affect the macroeconomic health and general well-being of climate vulnerable economies, rolling back decades of development gains.
The United Nations Framework Convention on Climate Change (UNFCCC) has adopted a two-pronged approach to financing loss and damage. First, governments agreed to establish a dedicated Loss and Damage Fund, with negotiations by the Transitional Committee set to conclude by COP28. Second, governments agreed to invite international financial institutions to incorporate loss and damage into their work. As the global institution charged with maintaining fiscal and financial stability, the IMF has an important role to play in addressing climate-induced loss and damage.
A new policy brief from the Task Force on Climate, Development and the IMF proposes a ‘loss and damage package’ at the IMF that spans its surveillance, lending toolkit and global policy coordination. Read the policy brief.
How to Stop a Boom from Busting: A Policy-Oriented Research Agenda for Capitalizing on China’s Demand for Transition Materials in Latin America
Avoiding catastrophic climate change requires the dramatic acceleration of renewable energy deployment. This expansion is already occurring, with China playing the largest role in the expansion of solar and wind energy supply chains. Several of these supply chains begin in Latin America, which leads the world in deposits of lithium, copper and other critical transition minerals. Thus, the Latin America-China economic relationship will likely be key to the global expansion of renewable energy to mitigate climate change.
A new report by the Working Group on Development and Environment in the Americas explores knowledge gaps within current research trends on the form that these new supply chains are likely to take and the applicability of policy lessons learned during previous commodity booms. Identifying areas of under-supported research is critical to developing financially, socially and environmentally sustainable supply chains. Given the urgency of deploying supply chains to support renewable energy expansion, it is vital for researchers to lay the groundwork for practitioners, policymakers and civil society as they face the opportunities and challenges of leveraging Latin America’s location-specific assets in transition metals into sustainable and inclusive growth. Read the report and read the summary blog.
Green Horizons? China’s Global Energy Finance in 2022
A new update to the China’s Global Energy Finance (CGEF) Database, managed by the GDP Center, estimates that from 2000-2022, China’s two development finance institutions (DFIs)—the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM) — have provided 331 loans, totaling $225 billion for 65 foreign governments for energy projects around the world from 2000-2022. For the year 2022, the CGEF Database recorded a total of zero new energy sector loan commitments from CDB and CHEXIM to foreign governments, signifying two consecutive years of no new lending.
A new policy brief by Cecilia Springer, Ishana Ratan, Nathan (Yudong) Liu and Jia Gu analyzes the state of China’s global energy finance during this period of flux. Despite China’s 2021 commitment to step up support for green and low-carbon energy in developing countries, the researchers find that a shift towards renewable energy development finance has yet to emerge. As the world recovers from the COVID-19 pandemic and as the costs of renewable energy decrease, China’s established financial and technical prowess is uniquely positioned to foster green energy transitions abroad. In addition, China’s recent Belt and Road Forum indicated significant support for scaling up overseas green-energy related activities. Read the policy brief and explore the data.
The IMF Should be an Analytical Partner on the UN Global Stocktake – Here’s Why
At COP28, the first-ever assessment of how countries are meeting their climate pledges under the Paris Agreement – the Global Stocktake (GST) – will conclude. This review process will provide countries vital context and insight for course correcting NDCs and globally coordinated efforts.
Recent research from the Task Force on Climate, Development and the IMF illustrates areas where the IMF could better lead on climate and act as an analytical partner on the GST. Drawing on this research, Rishikesh Ram Bhandary explains in a new blog how the IMF can inform policy actions following the forthcoming GST and better advance future GSTs in three key ways: by assessing and managing cross-border spillovers, gauging the quality of climate pledges and identifying and unlocking macroeconomic constraints limiting climate action and ambition. Read the blog.
Understanding China’s Global Power: 2022 Update
China has financed electric power plants around the world for several decades through foreign direct investment (FDI) and loans from its DFIs, CBD and CHEXIM.
What is the status of China’s global power plants? In how many countries are they operating, and what are the dominant energy sources? What is the current pipeline of China’s overseas power plants, given Chinese leader Xi Jinping’s 2021 announcement to stop building new coal-fired power plants overseas and instead ramp up renewable energy support to developing countries?
The China’s Global Power (CGP) Database, created and managed by the GDP Center, reveals new insights on the state of China’s global power amid a global push for decarbonization. A recent policy brief summarizes the state of Chinese-financed overseas power plants as of September 2022, finding estimated emissions for currently operating Chinese-financed plants total 245 million tons (Mt) of CO2 per year, approximately equaling the energy-related CO2 emissions from the entire country of Spain or Thailand on an annual basis. This could cumulatively consume 1.7 percent of the global carbon budget for a 50 percent chance of limiting global warming to 1.5 degrees Celsius. Read the policy brief and explore the data.
Opportunities for US-China Engagement on Development Finance for Overseas Renewable Energy
A dramatic scaling of renewable energy is needed to achieve global climate goals, particularly in the Global South. However, geopolitical tensions between the United States and China have spilled over into the realm of climate cooperation, stymying ambitious collaboration and climate action. Time is of the essence for finding ways to leverage American and Chinese financing to accelerate and expand renewable energy investment in the Global South.
A recent working paper by Joanna Lewis and Cecilia Springer argues that US-China coordination and cooperation could increase resources available for renewable energy development in developing countries through multilateral, bilateral and triangular engagement. Their analysis finds that the greatest gains for the climate can be had from the initiatives that require close cooperation and engagement, which underscores the importance of US-China engagement abroad. Read the working paper and read the summary blog.
Debt Relief for a Green and Inclusive Recovery: Guaranteeing Sustainable Development
A debt crisis is emerging in the Global South at the precise moment when substantial investment is needed to meet shared climate and development goals. Yet, the Group of 20 (G20) Common Framework has been unable to engage all creditor classes or link debt relief to climate and development.
A recent report by Luma Ramos, Rebecca Ray, Rishikesh Ram Bhandary, Kevin P. Gallagher and William N. Kring for the Debt Relief for a Green and Inclusive Recovery (DRGR) Project analyzes new data on the level and composition of public and private external sovereign debt for emerging market and developing economies (EMDEs). It estimates the size of debt restructuring and suspension necessary for the 61 EMDEs in or at high risk of debt distress to achieve debt sustainability and put them on a path towards meeting their development goals and climate commitments. Urgent action is needed to immediately help EMDEs restore debt sustainability and mobilize resources to achieve shared development and climate change goals. The authors argue that the G20 Common Framework needs immediate reform to provide debt relief for a green and inclusive recovery. Read the report and read the summary blog.
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