Paris climate summit seeks global finance reform

Dozens of global leaders will gather in
Paris Thursday for a summit to tease out a new consensus on international
economic reforms to help debt-burdened developing countries face a growing
onslaught of challenges, particularly climate change.

French President Emmanuel Macron has said the Summit for a New Global
Financial Pact is aimed at finding the financial solutions to the interlinked
global goals of tackling poverty, curbing planet-heating emissions and
protecting nature.

He is hosting the meeting with Barbados Prime Minister Mia Mottley, who has
become a powerful advocate for reimagining the role of the World Bank and
International Monetary Fund in an era of climate crisis.

“We can make a huge difference for the planet and against poverty,” Macron
said on Twitter on Wednesday.

Economies have been battered by successive shocks in recent years, including
Covid-19, Russia’s invasion of Ukraine, spiking inflation, debt, and the
spiralling cost of weather disasters intensified by global warming.

Leaders set to attend the summit include Kenyan President William Ruto,
German Chancellor Olaf Scholz, Chinese Premier Li Qiang and European
Commission head Ursula von der Leyen.

“President Ruto will underscore the urgent need to move beyond incremental
measures that fall short of effectively combating the climate crisis and fail
to generate investment benefits for Africa,” Ruto’s office said ahead of the
summit.

UN Secretary-General Antonio Guterres will also attend, as will US Treasury
Secretary Janet Yellen, IMF director Kristalina Georgieva and freshly minted
World Bank chief Ajay Banga.

Climate campaigners Greta Thunberg and Vanessa Nakate will be in the French
capital, while Billie Eilish will perform at Global Citizen’s “Power Our
Planet” concert on Thursday evening, lending star appeal to a macroeconomic
niche unused to such a limelight.

– Climate goals –

France says the two-day summit will be a platform for ideas ahead of a
cluster of major economic and climate meetings in the coming months.

But observers are looking for tangible progress — including keeping promises
already made.

“We’d need to see some down payments from the richer countries and their
development finance institutions,” said Alex Scott of the think tank E3G.

One likely announcement is that a 2009 pledge to deliver $100 billion a year
in climate finance to poorer nations by 2020 will finally be fulfilled,
albeit three years late.

A second pledge to rechannel $100 billion in unused “special drawing rights”
(SDRs) — the IMF’s tool to boost liquidity — will also be in the spotlight.

The summit comes amid growing recognition of the scale of the financial
challenges ahead.

Last year, a UN expert group said developing and emerging economies excluding
China would need to spend around $2.4 trillion a year on climate and
development by 2030.

On Wednesday, the International Energy Agency released a report that said
annual investment just for non-fossil fuel energy in these countries will
need to jump from $260 billion to nearly $2 trillion within a decade.

The IEA said investment must remain at those levels until mid-century to keep
alive the Paris Agreement targets of limiting global warming to “well below”
two degrees Celsius since pre-industrial times, and below 1.5C if possible.

– ‘Great leap’ –

Countries are calling for multilateral development banks to help unlock
climate investments and significantly increase lending, while stressing that
new debt arrangements should include, as Barbados has, disaster clauses
allowing a country to pause repayments for two years after an extreme weather
event.

“If a cyclone comes, it doesn’t differentiate,” Samoa’s Fatumanava Pa’olelei
Luteru, chair of the Alliance of Small Island States (AOSIS) told AFP.

“It will set back your development for years,” he said, adding that countries
should be given the fiscal space to recover.

Other ideas on the table include taxation on fossil fuel profits and
financial transactions to raise climate funds.

The French presidency has said it wants to give “political impetus” to the
idea of an international tax on carbon emissions from shipping, with hopes of
a breakthrough at a meeting of the International Maritime Organization in
July.

Observers are also keenly awaiting details of a plan from South American
countries to create a global structure for so-called debt-for-nature swaps.

Ecuador announced the largest such transaction of its kind last month, aimed
at directing vast resources to Galapagos Islands conservation.

After meetings in Germany last week, Colombia’s President Gustavo Petro said
there had been discussions with the United States, Germany and African
countries about the idea.

Petro said it “could be humanity’s first great leap forward to address its
biggest problem”. (BSS/AFP)