The 4th International Conference on Financing for Development comes at a critical moment for climate and development finance. Despite progress—such as increased climate funding over the past years, the establishment of the Loss and Damage fund, and the inclusion of climate targets in the World Bank’s mission—important challenges persist and remain unresolved.
When the gavel went down in the early hours of Sunday morning in Baku and a decision was reached on the new collective quantified goals (NCQG) on climate finance it caused as much relief as disbelief in the room. The European Union (EU), represented by EU climate commissioner Woepke Hoekstra, praised the decision as “a start of a new era for climate finance”, while the group of least-developed countries stated to be “outraged and deeply hurt by the outcome of COP29“ and referred to “the bulldozed” NCQG as “a glaring symbol of this failure“. Some countries, notably India and Nigeria, openly objected the adopted decision on the NCQG, calling the „document little more than an optical illusion” – prompting loud applause in the plenary. (mehr …)
© European Union / David Martin, Source: https://www.flickr.com/photos/cor-photos/53379323878/in/album-72177720313008202/
When Sultan Al-Jaber, the United Emirates of Arabia President of COP28, finally presented an amended text for adoption in the closing plenary, the EU seemed relieved: For the first time in 30 years of climate negotiations, the decision now explicitly addressed fossil fuels. At last years “COP27” UN climate change conference, the EU took many by surprise with a gamble it appeared to have taken. Europe conceded to developing countries’ demands with regard to establishing a designated funding mechanism to deal with loss and damage resulting from climate change literally in an overnight turnaround. It had expected to yield returns with regard to mitigation ambition, yet, these did not materialize at COP27. Following the establishment of the Transitional Committee there was no way back for the EU in the run up to COP28. Indeed, the EU now needed to be seen to walk the talk and deliver on loss and damage finance, which in fact it has done. Still, return on investment, if you will, remained uncertain until the very last hours of extra-time at this year’s COP28.
As a top priority for COP28, the EU’s aim was to land a deal on the „phase-out“ of fossil fuels and the „phase-in“ of renewable energy. While the final decision falls short of the desired wording on fossil-fuel phase out, it does introduce the „transitioning away from fossil fuels“, which signifies nothing less but a game changer. Moreover, the decision includes the tripling of renewable energy and doubling of energy efficiency by 2030 as initiated by the EU ahead of COP28. This led EU Climate Commissioner Wopke Hoekstra to conclude that: “The world just adopted a historic decision at COP 28 to set in motion an irreversible, accelerated transition away from fossil fuels. With that, we have achieved what we set out to do: keep 1.5 within reach and mark the beginning of the end of fossil fuels“.
While it is hard to assess the EU’s specific role in securing this outcome, it is fair to appraise its consistency in „holding the line“- a metaphor used by civil society organisations to refer to the need to limit global warming to 1.5 degrees Celsius, as stipulated in the Paris Agreement. The EU’s Green Deal and its domestic climate law which entails a reduction of CO2 emissions by at least 55% by 2030 compared to 1990 levels underpinned European delegates with the necessary self-confidence to do so and to present itself once more as a global leader on climate policy. Moreover, the EU can claim to be the world’s largest provider of climate finance for developing countries – an achievement that shines all the brighter in the glaring contrast to the US, among others, who have been failing to contribute their fair share for a long time. Accordingly, Teresa Ribeira, the Spanish environment minister who led the EU Delegation on behalf of the Spanish Presidency, as well as a host of EU representatives including German foreign minister Annalena Baerbock, could authentically threaten to not accept a COP outcome that would be way below the EU’s expectations. It also made the EU a credible partner for the so-called “High Ambition Coalition” (HAC) of countries, prominently including the Alliance of Small Island States among others, which insisted on fossil-fuel phase out. It is here, arguably, that the EU’s upfront investment on Loss and Damage eventually payed off. On balance, the EU did everything that was needed to „hold the line“ of including fossil fuel language into the final decision as a means to keep 1.5 degrees within reach.
This was no mean feat – as was evidenced by the fierce negotiations throughout the two weeks of COP28. While in the past, the EU has often struggled to present a united position in UN climate change negotiations, it came to Dubai well-prepared and with an ambitious negotiating mandate. Throughout COP 28, the EU managed to stand and act together – most notably when the UAE Presidency presented a draft final text for the first Global Stocktake that many parties – including the EU – considered inadequate. Unambiguously and jointly stating that the EU was not willing to accept this outcome, it kept engaging in particular through the High-Ambition Coalition to secure a substantially improved deal.
Yet, there is little reason for exuberance. The real-world impact of the unprecedented, but lukewarm language on fossil fuels remains to be seen. And there remain a number of unresolved issues and unfinished business that are hardly less important in comprehensively meeting the objectives of the Paris Agreement, not least with regard to adapting to climate change consequences that can no longer be avoided.
With regards to adaptation, the EU in Dubai failed to send strong signals of solidarity with the most vulnerable countries. The EU did not stand up strongly for an ambitious Global Goal on Adaptation (GGA) and the establishment of a framework that can guide nations in their efforts to adapt to climate change and promote climate-resilient development. While the GGA has formally been adopted in Dubai, it falls disappointingly short of quantifiable financial targets and a clear recognition of Common but Differentiated Responsibilities. Here, the EU chose to side with other wealthy countries, most notably the US, in not supporting more ambitious outcomes, mainly referring to the existing goal of doubling adaptation finance and the upcoming process of defining a new collective quantified goal (NCQG).
The EU will need to step up its game ahead of COP 29 in Azerbaijan. While rightly pointing to the large shares of climate finance it provides, the EU failed to act convincingly as “Team Europe” at the COP stage in this respect. At the start of COP 28, the COP Presidency landed two coups: a swift adoption of the agenda and the adoption of the framework of the new loss and damage fund. Together with Germany, it also presented the first pledges of 100 million each to the fund, hoping to unlock other countries’ contributions. During this opening plenary, other European governments came in -notably France, Italy and Denmark- to announce their bilateral contributions. Very good – and yet, the spokesperson for the Spanish Presidency was left to sum up these contributions and present them as a „Team Europe“. Imagine if the EU had opened the COP with a joint pledge of almost half a billion! That would have been a truly strong European signal and could be an important lesson for future EU announcements on adaptation and the NCQG.
Moreover, the decision on transitioning from fossil fuels is not supported by a package of support for developing countries to decarbonise their economies and to invest in renewables. While this weak support for so-called means of implementation is not only the EU’s fault, it also did not demonstrate leadership in this respect. In particular with regard to the Just Transition Work Programme, there remains a clear divide between the G77+ and rich countries, with the former advocating for more far-reaching visions of just transition (to address all of society, economy, justice and equity) and wealthy countries merely calling for social dialogue and stakeholder participation around Just Transitions.
In addition, when deciding on its own position in the process to define the new finance goal by then end of 2024 (the NCQG) the EU needs to be aware of the expectations of developing countries (represented as the G77 plus China in the UNFCCC). In Dubai, the EU used every opportunity to refer to the need to make all financial flows consistent with climate change and by this mainly refers to the alignment of private capital towards climate action. This is reasonable, knowing how difficult it will be for many member states to provide significantly larger amounts as public climate finance. Yet, the EU’s stance risks a rift with the G77 and China which has already stated in Dubai that it would not support such a position, referring to the provisions under the Paris Agreement that requires developed countries to assist developing countries to address mitigation and adaptation. Add this to the EU’s position to extend the contributor base of climate finance (indirectly pointing at China and other emerging economies) and you know how far positions are still apart.
Finally, the EU’s Carbon Border Adjustment Mechanism (CBAM) continues to stir controversies. Following Brazil’s request on behalf of the so-called BASIC group of countries (Brazil, China, India and South Africa), COP28 adopted an agenda item on “Concerns with unilateral trade measures related to Climate Change “, obviously targeting CBAM. The EU repeatedly stated CBAM was not coming up as an issue in the negotiating rooms, but will rather be dealt with under the WTO. However, it is clear that developing countries affected by CBAM expect greater financial and technical support packages from the EU to adapt.
Brief, the EU needs to brace itself for COP29 – complacency is never a good adviser. The Union needs to further ‚capitalize‘ on the investments it has been making, and to build on the (renewed) trust it has been generating in the context of the High-Ambition Coaliton: clear support for means of implementation and new and additional sources of funding, an ambitious collectively quantified goal with public finance at its core and much stronger support for adaptation ahead of the new round of enhanced Nationally Determined Contributions (NDCs) that are due in 2025.
Early in the morning of Saturday 19 November 2022, Frans Timmermanns, the EU’s climate chief, appeared in front of the press at COP27 in Sharm-El-Sheikh with the 13 EU ministers still present. He had a clear message to convey: “All ministers, as they have told me — like myself — are prepared to walk away if we do not have a result that does justice to what the world is waiting for.“
The EU collectively decided to make this unorthodox intervention after the Egyptian presidency presented a draft of the cover decision that, in the EU’s view, would have been tantamount to forfeiting the 1.5-degree objective of the Paris Agreement. Timmermanns also announced that the EU had one final offer to make: it was willing to support the creation of a „Loss and Damage Fund“ which it had previously rejected, if this fund was targeted at the most vulnerable countries and if the base of contributors was broadened to include today’s big emitters and major oil- and gas-exporting countries like China and Saudi Arabia. The EU also called for more ambition when it comes to reducing emissions (with a peak of emissions in 2025) and expected all countries to stand by their commitment to a 1.5-degree pathway as agreed upon in the Glasgow Climate Pact at the previous COP. Yet, no country of the G77 & China group of developing countries openly declared its support for the EU’s position. On early Sunday morning, when the final decision was accepted by all parties, it was clear that the EU had only been moderately successful – perhaps because few would have expected the EU to have actually walked away.
The EU can however claim an important role in breaking the deadlock regarding Loss and Damage (L&D), in no small part due to Germany’s persuasion on the matter. Indeed, the co-chairing of the negotiations on L&D by Jennifer Morgan, State Secretary and Special Envoy for International Climate Action in the German Federal Foreign Office and her counterpart, the Chilean environment minister María Heloísa Rojas Corradi, proved conducive to a constructive outcome on this highly controversial agenda item. Ultimately, the Sharm-El-Sheikh cover decision includes the establishment of a L&D fund and a process to develop commensurate funding arrangements for supporting the most vulnerable countries to address the costs of extreme weather events caused by climate change, with details to be agreed on at COP28. This is a substantive result that was far from certain during negotiations. It is in itself a major success for developing countries and only became possible once the EU reconsidered its initial, year-long resistance to any such fund.
The L&D breakthrough was also the reason the EU decided against walking away from an otherwise sobering and underwhelming outcome of COP27. Notably the EU’s efforts to include a mitigation work programme that would tighten climate targets by industrialised countries with annual reviews by high-level government officials were in vain. Timmermanns openly addressed his disappointment and the EU’s inability to achieve more: „The EU has come here to make sure we agree on strong statements and we are disappointed that we have not been able to do that“. Yet, he also indicated the moral dilemma the EU was facing in not signing an agreement that included the L&D fund breakthrough for vulnerable countries. In a way, the EU thus found tables turned from the Glasgow COP when climate vulnerable developing countries had only grudgingly accepted a cover decision that appeared ambitious on mitigation, but lukewarm on adaptation and, crucially, without progress on L&D.
So the question remains if the EU could have done more. Or could it have engaged differently to achieve a more ambitious result of COP27, in particular with regards to reducing emissions or international climate finance? During the first week of the COP, the EU’s climate diplomacy was remarkably silent and was not yet present at Sharm-El-Sheik with a strong negotiating mandate or bold announcements of new initiatives. As the EU’s main climate representative, Timmermans was instead preoccupied with internal EU climate action negotiations during the first COP week, during which the EU made progress in increasing emissions reduction targets for member states (effort sharing) and legislation on carbon sinks. This, in theory, would allow the EU to increase its Nationally Determined Contribution (NDC) from a 55% to a 57% reduction by 2030 compared to 1990. Timmermans presented this option of an update of the European NDC at the COP, yet this change to the EU’s NDC still has to go through a formalised process where the Commission proposes it to the member states, who would then have to adopt this change with a qualified majority. With a decision on that still open, the EU was hampered from fully capitalizing on actually ‘walking the talk’ in its decision-making.
It also didn’t help that the EU had no ‚fresh money‘ to offer with regards to climate finance, as a request by the European Parliament to dedicate 10% of the EU’s Emission Trading to international climate finance was rejected by the Council. The EU thus remained largely inward-looking and ‚reactive‘ at COP27, without strong ideas of how to globally become more ambitious with regards to limiting global greenhouse gas emissions and to living up to its self-proclaimed leadership aspirations on global climate governance. While India’s push to call for a „phase-out“ of all fossil fuels and not just coal in the cover decision failed to attract sufficient support, many observers did not perceive the EU as a leading voice among the 80 countries that supported building on the ambitions agreed in Glasgow.
Yet, it is also questionable how credible the EU can currently ‚sell‘ such a phase-out, in view of some member states’ ‚dash-for-gas‘ in other parts of the world, including Africa. European leaders portray energy diversification as an intermediate step to become less dependent on Russia while intensifying investments into renewable energies. Others blame the EU for double standards and hypocrisy given its push at COP26 to phase out fossil fuel-oriented external investment (including in Africa) while continuing to allow such investment within its own borders and for adopting a ‘taxonomy’ that risks facilitating greenwashing. On balance, the EU’s international credibility and role as a leader on climate has seen tremendous damage, when trust and credibility are key ingredients to forging alliances and mobilising support for positions.
Key lessons for the EU as it prepares for the next rounds of global climate negotiations, including COP28 in Dubai, is to act decisively in the months ahead, to enter the negotiations in good time and to demonstrate resolve on key issues, now including L&D. This requires the EU to dedicate more time and energy into its climate diplomacy and to live up to its announcements and pledges with commensurate resources politically, technically and, indeed, financially.
One can hardly accuse Timmermans for lack of passion and conviction. Yet, his portfolio in managing the European Green Deal’s implementation domestically while also representing the EU in global climate diplomacy may be too demanding a combination. German foreign minister Baerbock‘s decision to appoint a dedicated, high-profile State Secretary for climate diplomacy certainly helped in Germany’s global climate representation and visibility. Much the same could be said of John Kerry’s role as Special Presidential Envoy for Climate of the US State Department. The EU could consider a similar approach and nominate a senior political representative with the role of EU global climate envoy, who would still work under the leadership of Timmermanns but could dedicate more time and capacity into global climate diplomacy than Timmermanns actually can in his dual role. This mandate for EU climate diplomacy should include both the global representation of the EU and the ‘internal’ negotiations with the EU’s 27 member states to bolster the EU’s position and engagement in multilateral climate politics.
Either way, the EU with its forthcoming stance on the establishment of a dedicated L&D Fund has positioned itself to rebuild trust among developing countries. It will now need to follow up on this move with credible action and contributions to prepare and launch the process that settles the details of the prospective L&D fund and corresponding funding arrangements. Sustaining that momentum will require to swiftly operationalise the fund, ensure it has a broad financing base, and a significant financing volume to boot.
Moreover, and especially in the light of COP27’s blatant failure to deliver on an ambitious mitigation work package, new and additional alliances with countries willing ‚to do more‘ are also urgently needed. Just Energy Transition Partnerships, like the one recently agreed on with Indonesia, can be promising stepping stones, especially in the context of the G20. Broader alliances seem also feasible and could help to build international momentum for a phase-out of all fossil fuels, for instance in the context of the Climate Club initiative of the German G7 Presidency or a reinvigorated High Ambition Coalition among progressive Parties to the UNFCCC. Being seen to walk the talk with ambitious domestic reforms and the implementation of its European Green Deal should enable the EU to resume a leading role in such alliances and, indeed, global climate governance.
Germany is the world’s second largest development donor after the US, and the European Union’s (EU) largest aid provider. And yet its financial heft is not commensurate with its positioning on development in the EU. For the second time, Germany reached the aid target of 0.7 percent of gross national income (GNI) in 2020 (the first being in 2016, albeit in part due to its response to the high influx of refugees into the country), making significant contributions to the global pandemic response, including through the EU, COVAX, and the WHO. With a new government taking over the helm of the country and building on its financial firepower, Germany now has the opportunity to fully embrace a leadership role in the EU as an agenda-setter in development, driving forward innovative ideas, rather than as a mere broker.