UN ECOSOC Financing for Development Forum 2023 workshop: The sustainable development challenge – climate policies for development

Organized by UNCTAD and the Agence Française de Développement
 

Your Excellency, Pedro Luis Pedroso Cuesta, Permanent Representative of Cuba,

Dear delegates,

Ladies and gentlemen,

We are in a triple planetary crisis. Climate change, nature loss, and pollution, the triple planetary crisis as SG Guterres calls them, are likely the biggest challenges for our and future generations.

We need urgent and decisive action.

But there is less consensus on what policies to use than on the gravity of the situation as we will see later.

For most developing countries the challenge is less about choice and more about means. They struggle to mobilize the necessary funds for adaptation and mitigation for tomorrow as they need to prioritize investment in immediate food and fuel crisis and their development. These fiscally constrained countries are faced with a trade-off between the present and the future.

Adapting to climate change requires enormous amounts of funds.

Based on nationally determined contributions, the estimated cost of bringing emissions in developing countries in line with the Paris Agreement is at least six trillion US dollars by 2030, and possibly substantially more.

Developed countries have committed to an annual goal of 100 billion US dollars. They have so far provided only 83.3 billion and mostly in the form of loans. This is a small fraction of what developing countries need and not in the form. They mostly need grants.

Yet, international financial institutions have been slow to release their financial firepower to meet such needs.

In addition, access to low-cost finance is very uneven. In general, financing does not reach the countries that need it most.

The choice of policies to address climate change also matters.

Developed economies are implementing programmes, some supported by huge investments, in adaptation and mitigation. Some focus on disinvesting from sectors dependent on fossil fuels including through carbon pricing policies. Each of these policies must be assessed for their spill-over effects and unintended consequences in developing countries, including the race to access critical minerals needed for the transition.

Another major concern is technology. The energy transition and adaptation require access to green technologies. Many developing countries do not have this access, at least at reasonable prices. The bulk of intellectual property rights are owned by corporations in advanced economies with no incentives to share with their counterparts in developing countries.

We thus need to change course. We require a just transition.

Let me emphasize five conditions for reaching this objective:

First, we need to reduce emissions faster. With the current policies, global warming is likely to increase by 2.7 degrees by 2100. As advanced countries have more resources, they need to accelerate mitigation efforts so that we come closer to the 2-degree target and ideally not exceed 1.5 C.

Second, accelerated mitigation and adaptation cannot be achieved without expansionary domestic fiscal and monetary policies. This requires large investments by the public and private sectors. This investment toward “green” sectors will boost long-term economic growth, but maybe slowed by trade and investment frameworks limiting public subsidies, local contents, etc.

Third, we need much more climate finance and more multilateral efforts. There is an important responsibility of developed economies and international financial institutions. This also requires reforming the global debt architecture and ensuring access to concessional loans or yet better grants to prevent adding to the already heavy debt burden of many developing countries, which further limits their possibilities for climate action. 

Fourth, green technologies must be made affordable to all countries. This will not only support the energy transition in developing countries but also enable them to tap their vast potential in renewable energies. In a nutshell, green technology transfer to developing countries must be a deliberate process – one that addresses IP barriers and shares knowledge based on the principle of common but differentiated responsibilities.

Developing countries should not have to negotiate individually with mostly multinationals, especially given the complex and growing number of intellectual properties contained in any technology.

Fifth, many of the critical minerals for the transition are in developing countries that could benefit from adding value to these minerals before export, thus providing much-needed revenues to finance their transitions.

Dear friends,

When the Paris Agreement was reached in 2015, it was a landmark.

We need another landmark: A genuine commitment to a more development- and climate-friendly global economic governance. It is only then that we can unlock a just transition.

Thank you for your attention.