Tuesday, January 31, 2023
 
 

New climate finance tools emerging around COP27

US, Japan and other countries will offer a climate finance deal worth as much as $20 billion to help Indonesia shift its power grid away from coal

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To catalyze private capital to accelerate the clean energy transition in developing countries, the US’ Special Presidential Envoy for Climate John Kerry, The Rockefeller Foundation, and the Bezos Earth Fund announced on the sidelines of COP 27 a partnership to work toward the creation of an Energy Transition Accelerator (ETA).

Unprecedented investment in clean energy is needed in this critical decade to limit warming to 1.5°C and avert catastrophic climate impacts on communities worldwide.  Annual clean energy investment must triple to $4.2 trillion by 2030, according to the International Energy Agency, and more than half of that investment must be in emerging and developing economies.

The partnership will work towards launching the ETA as an innovative, independent initiative to drive private investment in comprehensive energy transition strategies that accelerate the deployment of renewable power and the retirement of fossil fuel assets in developing countries, the US State Department said in a press release.

The ETA is expected to deliver deeper and earlier emissions reductions, help developing countries achieve and strengthen their nationally determined contributions (NDCs) under the Paris Agreement, and help them advance broader sustainable development goals, including expanded energy access. It will also generate new finance to strengthen adaptation efforts in vulnerable countries.

Chile and Nigeria are among the developing countries expressing early interest in exploring the ETA’s potential benefits. Bank of America, Microsoft, PepsiCo, and Standard Chartered Bank have also expressed interest in informing the ETA’s development, with decisions on whether to formally participate pending the completion of its design. The ETA will also be open to sovereign government investments and engagement.

To help promote an inclusive, just transition, the energy transition strategies of participating jurisdictions will include social safeguards and benefits to local economies, including support for job creation and training.

To promote environmental integrity in the use of carbon credits, one idea for the ETA will be to open it only to companies committed to achieving net zero no later than 2050 and science-based interim targets.

Germany and Japan pledge funds to help developing nations

On November 7, Germany also reportedly committed $170 million to help developing nations facing loses and damages related to climate change.

Meanwhile, the US, Japan and other countries will offer a climate finance deal worth as much as $20 billion to help Indonesia shift its power grid away from coal, Bloomberg reported on November 11, adding that the “just energy transition partnership,” or JETP, a pact with Japan, the US and others follows roughly a year of negotiations. The deal would reportedly help Indonesia speed up efforts to shutter excess fossil fuel generation capacity and to limit its pipeline of coal power projects while, at the same time, accelerating the development of renewable energy.

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