Vanya Walker-Leigh
Hosting 50 heads of state and government at his One Planet Summit in Paris next Wednesday, France's President Emmanuel Macron aims to launch a new drive to mobilise money needed worldwide to combat climate change.
His initiative marks the second anniversary of the adoption in Paris of the Paris Agreement on Climate Change - which entered into force on 4 November 2016 and is currently ratified by 170 nations. This June, President Trump announced his intention to withdraw the USA (the world's second largest emitter) - which can only come into effect as from 4 November 2020 - the day after the next US presidential elections.
Three weeks after the latest UN climate change conference (COP 23) in Bonn where countries remained divided on key issues of finance, the Paris summit will be flanked by a several days' side events' organised by government ministries, international agencies and private sector actors involving hundreds of non-state representatives (mayors, NGOs, trade unionists, business leaders etc). Some civil society demos are also projected.
The urgent need for far more extensive climate change action than under current policies or announced future commitments was dramatised most recently in October by dire warnings of looming catastrophe in reports from UN Environment and the World Meteorological Organisation. Commitments to reduce greenhouse gas emissions as from 2020 made by all nations under the Paris Agreement will only deliver one-third of the effort needed to keep the world on track by 2030 to limiting the rise in global temperatures above pre-industrial levels to the Agreement's agreed goals (well below +2c and pursuing efforts to achieve +1.5c by 2100).
The financing challenge is huge, amounting to several trillion Euros needed a year and for decades to bring about a technological revolution in energy, industrial production, transport, and agriculture. In addition broad support is needed for developing nations to adapt to progressively increasing climate change impacts - already evident in the growing number of recent extreme weather events (heatwaves, floods, droughts, hurricanes). Energy production and use along with transport are the leading contributors of carbon dioxide emissions - the main greenhouse gas. 'Decarbonisation' of the world's economies (to be fully achieved by 2100) means the replacement by 'clean' energies of carbon dioxide emitting fossil fuels (coal, gas, oil). A prospect energetically resisted by countries and companies producing and trading them.
The High-Level conference on Clean Energy Finance, co-hosted by the European Commission and the European Parliament on 7 November did not address the UN's challenge or focus on EU's current/possible financial support for climate action in non-EU nations. Asked by this reporter at a press conference about whether he would invite Member States to ponder tripling their current emission reduction goals (amounting to a EU-wide 40% cut below 1990 levels by 2030), Energy and Climate Commissioner Miguel Arias Cañete snapped back "EU's 2030 commitments are line with the Paris Agreement."
Just achieving EU's climate and energy 2030 commitments would require annual investments of €379 billion mainly in energy efficiency, renewable energy generation and infrastructure, Commission briefing documents indicate.
EP President Antonio Tajani emphasised that "every Euro invested in reducing emissions yields a substantial return, both as a driver of the economy and by mitigating potential environmental disasters. For that reason we should encourage greater public and private investment in energy efficiency and clean energy sources...EU must step up its role as a political, economic and technological leader..grasping the new opportunities created".
Commissioner Cañete stated that the €379 billion figure could only be reached by the "necessary combination of national, public and private investment". The common EU budget is to be used to fund key EU priorities and stimulate private flows while the Commission has proposed a 40% climate target for the infrastructure and innovation window under the currently discussed reform of the European Fund for Strategic Investments. The recently launched Smart Finance for Smart Buildings Initiative "will spur innovative financial instruments and financing platforms to aggregate projects", he added.
Commission Jurki Katainen, Vice-President for Jobs, Growth, Investment and Competitiveness proposed that investment platforms should be encouraged for pooling projects by location or sector while EFSI finance could be combined with other EU budget tools such as the European Structural and Investment Funds and the Connecting Europe Facility. "Efforts need to be accompanied by right reforms to strengthen our single market and sustain a business friendly environment", he emphasised.
The Vice-President for the Energy Union, Maroš Šefčovič urged individual energy consumers to join together in renewable energy communities and cooperatives, while underlining the key role of cities, now supported by the "One Stop Shop for Cities" centralizing all EU city-related EU programmes, funds and assistance. The Commission was also discussing a new 'urban platform' with the European Investment Bank to be set up by the New Year.
Werner Hoyer, President of the European Investment Bank hailed the recent Commission/EIB launch of the Leaner Transport Facility, supporting financing solutions for recharging facilities and leasing products for electric vehicle deployment. "Ensuring the affordability of the energy transformation requires a low cost of capital and providing financiers and international capital markets more broadly with a stable and predictable investment climate," he urged. "In the ten years since EIB launched its first Climate Awareness Bond over €18 billion have been raised for nearly 160 renewable energy and energy efficiency projects across the globe".
In common with President Tajani and the Commissioner he appealed for the adoption via the 'trialogue' (Commission/Parliament/Council process) of the EC's proposed Clean Energy for All Europeans package - some of whose key targets (critical to achieve the 2030 climate and energy goals) were increased by a vote in the Parliament's ITRE (Industry, Research and Energy) committee last week.
Presentations made by nine MEPs and ten private sector/industry association speakers focused overwhelmingly on technical rather than financial aspects. With one exception, emailed requests from this reporter for related texts to these bodies' press departments remain unanswered nor were available from the Parliament or Commission.
Speakers did not include leaders from the institutional investor or capital markets and the growing 'green bonds' sector - increasingly vocal at and between UN climate change conferences - nor heads of major European non-state banks . . nor EU's financial services centres such as Malta. But then only two national politicians in charge of financial issues were in the lineup: the Minister of Finance of Latvia and Estonia's Deputy State secretary at the Ministry of Economic Affairs and Communications. Spain's state lending arm - the Istituto de Crédito Oficial - sent its chairman.
Green Party MEP Claude Turmes (the only 'exception' as above), slammed the EU 2030 climate and energy targets - adopted one year before the Paris Agreement - as not respecting the Agreement's spirit or letter. Nor is EU even on track to meet these inadequate goals he claimed. The EC's Clean Energy Package proposals are being justified by 'hiding behind' a flawed impact assessment with a new model underway based on the same flaws.
Further criticism emerged from Wendel Trio, Director the Climate Action Network Europe (Nature Trust Malta is one of its 140 member NGOs in 30 countries). "Member states and the EU itself fail on the Paris Agreement's obligations by continuously and systematically providing hundreds of Euros annual subsidies for fossil fuel production as well EU, EIB and EFS funding for related projects. EU funds' potential to accelerate the clean energy transformation remains largely untapped. Member States plan to spend a mere 7% of their EU 2014-2020 Cohesion Policy funding on energy efficiency, renewables, electricity distribution, storage and smart grids. The Connecting Europe facility is biased toward gas projects at the cost of electricity interconnection".
What EU nations or the Presidency representation at the Paris summit (list not yet published) will contribute to President Macron's 'new dawn' for climate change financing remains a question mark - for the next six days.