COP27 got underway in earnest yesterday with some world leaders pressing calls to action to prevent “climate catastrophe”: World leaders struck a serious and somber note with warnings of “irreversible” climate chaos and calls for cooperation and shared responsibility on the first day of the COP27 leaders’ summit yesterday. Inaugurating the conference, President Abdel Fattah El Sisi said we are in a “world of suffering” and called on all countries to assume responsibility to tackle climate change “to the degree that they can” (watch, runtime: 19:50).

One clear message: The status quo can’t continue. “Greenhouse gas emissions keep growing. Global temperatures keep rising. And our planet is fast approaching tipping points that will make climate chaos irreversible,” said UN Secretary General Antonio Guterres (watch, runtime: 10:15). “We are on a highway to climate hell with our foot still on the accelerator.”

THE GREAT ENERGY DEBATE

Coming under fire? Slow-to-act developed economies: Global leaders have a “credibility problem” when it comes to taking action on climate change, said former US Vice President and long-time climate advocate Al Gore (watch, runtime: 14:50). Developed nations’ continued pursuit of Africa’s gas resources is “fossil fuel colonialism,” said Gore, and will lead to “climate chaos and bns in stranded assets, especially here in Africa.”

Africa could be the “renewable energy superpower,” Gore said. 40% of the global potential for renewables is in Africa, he added.

Rich countries have already turbocharged climate change — now they need to help emerging markets cope with the fallout. El Sisi called for “concrete action that has a clear, tangible impact” — and that helps emerging markets develop their economies. Guterres called for a “climate solidarity pact” to increase emissions reduction efforts (a rich-country demand), spur the energy transition and help vulnerable countries adapt to climate change. This pact should focus particularly on “phasing out” coal usage everywhere by 2040: “The two largest economies — the United States and China — have a particular responsibility to join efforts to make this pact a reality,” Guterres added.

But not everyone’s on board with a move away from fossil fuels: “The UAE is considered a responsible supplier of energy and it will continue playing this role as long as the world is in need of oil and gas,” said UAE President Mohammed bin Zayed Al Nahyan, who took the stage immediately after Guterres (watch, runtime: 7:33). Dubai will host COP28 next year. Senegal’s President and Chairperson of the African Union Macky Sall, underscored a similar point, saying: “We are for a green transition that is equitable and just, instead of decisions that jeopardize our development, including universal access to electricity to which 600 mn Africans remain deprived,” he said (watch, runtime: 07:48).

CLIMATE FINANCE IS THE CARROT-

The success of the drive to put climate at the top of the world’s agenda hinges on the delivery of climate finance, former UN climate chief Patricia Espinosa told Reuters. World leaders have been focused on the threat of a global recession and the war in Ukraine, making COP27 “a very important conference” to put climate change back at the top of the agenda, she said.

That makes finance for adaptation, loss and damage key, Espinosa told the newswire. Will we see rich countries agree at COP27 to set up a new funding facility for this? “I hope so, but I would not be that optimistic about it,” she said.

A “commitment to unlocking concessional funding for climate vulnerable countries,” is essential, said Barbados Prime Minister Mia Mottley, speaking at the summit opening (watch, runtime: 13:35). “There is no way that developing countries … can fight this battle” without this funding, she added.

Mottley wants the IMF to give the private sector more money for climate projects, reiterating her call from last year for the IMF to issue USD 500 bn a year in special drawing rights (SDRs) earmarked specifically for climate finance. SDRs are a kind of international reserve currency or asset designed to act as a supplement to IMF member countries’ reserves, EnterpriseAM noted previously.

Sobering testimony from Pakistan shows what’s at stake: Pakistan needs immediate debt relief and loss and damage compensation to get back on its feet after disastrous floods earlier this year claimed north of 1k lives, caused more than USD 10 bn of damage, and displaced >30 mn people, Prime Minister Shehbaz Sharif said at a joint press conference with Guterres yesterday (watch, runtime: 13:04). Climate compensation advocates — including Egypt climate czar Mahmoud Mohieldin — have repeatedly called for debt-reduction mechanisms and an emphasis on investment to help emerging market climate change adaptation.

AND THEN THERE ARE STICKS…

The price of carbon needs to more than double to average at least USD 75 / ton by 2030 for global climate goals to succeed, IMF Managing Director Kristalina Georgieva told Reuters on the sidelines of COP. Without this, “we simply don't create the incentive for businesses and consumers to shift,” Georgieva added, characterizing the pace of change in the real economy as “way too slow.” In many countries, “the acceptance of pricing pollution is still low,” said Georgieva. California currently prices carbon allowances at just under USD 30 / ton, Reuters notes.

FUNDING ANNOUNCEMENTS

We saw now grand single- or muti-nation announcement on climate funding yesterday. Instead:

Saudi Arabia is contributing USD 2.5 bn to its Middle East Green Initiative in the coming 10 years, Reuters reports Crown Prince Mohammed bin Salman saying yesterday. The initiative — launched by MbS last year — aims to reduce CO2 emissions from regional hydrocarbon production by over 60%. KSA previously said it planned to contribute 15% of the USD 10.4 bn needed for the clean energy projects it would run, Reuters notes. The Kingdom’s sovereign wealth fund, the Public Investment Fund, is also aiming for net-zero emissions by 2050, MbS added.

The ticket sizes got smaller and smaller from there:

• Belgium is earmarking EUR 2.5 mn for loss and damage out of a new EUR 25 mn support package to Mozambique from 2023-2028, Minister for Development Cooperation Frank Vandenbroucke said in a statement yesterday. It’s a pittance, but Belgium is only the third country — other than Scotland and Denmark — to pledge funding for climate change-driven loss and damage, Reuters notes.
• The UK is investing over GBP 100 mn (USD 115 mn) to help developing countries implement climate change adaptation measures, Foreign Minister James Cleverly said.

OTHER FUNDING-

The Bill & Melinda Gates Foundation has pledged USD 1.4 bn to increase resilience in the work practices of smallholder farmers in sub-Saharan Africa and South Asia, to ultimately improve food security, it announced in a statement yesterday. The funds will go towards climate smart agriculture projects, applying innovations like digital tech, and supporting women farmers — who make up some 43% of agricultural laborers in developing countries, but whose access to finance is often restricted, Reuters notes.

The Bezos Earth Fund announced USD 50 mn would be used to support Africa’s “locally led restoration movement,” as part of a USD 1 bn commitment to restoration made last year at COP26, in a statement. Still, philanthropic organizations shouldn’t be expected to fill the climate finance gaps left by governments, Bezos Earth Fund President and CEO Andrew Steer told the Guardian ahead of COP.

COOPERATION PLEDGES-

Over 25 countries launched a group yesterday to spur accountability and action on a pledge to end deforestation by 2030 announced at COP26, according to a statement issued by COP26 President Alok Sharma. The countries announced USD bns in additional financing to fulfill the pledge. The group collectively accounts for some 35% of the world’s forests and will aim to meet biannually for progress updates, Reuters notes.

Drought-stricken countries are banding together to share tech and expertise to manage water scarcity — with Senegal and Spain taking the lead, Reuters reported. The alliance will mobilize resources on an as-needed basis, Spain’s President Pedro Sánchez Pérez-Castejón is reported to have said in a statement, without revealing what level of funding would be provided.