Three things that could make COP27 a success

Another COP is coming – the 27th United Nations Climate Change Conference. While much of the world continued to struggle through the COVID-19 pandemic, world leaders, media and public scrutiny descended on Glasgow for COP26 in 2021, to negotiate even greater reductions in national climate emissions of greenhouse gases. COP27 in Egypt is going to be taking place alongside war in Europe, concerns about energy security, and significant weather events occurring in both developed and developing countries. In addition, there is growing dismay, and anger in many quarters, that the unmet promises of past COPs, especially in providing finance to those that are suffering loss and damage from climate change, are going to make COP27 even more challenging.

Despite this backdrop, it is vital that we have a high ambition for what we will achieve together. What we need is genuine progress on getting the money, technology and innovation to where it is needed most: in less-developed countries hardest hit by climate change. The question on everyone’s lips is whether leaders will commit to the actions needed for a truly global green transformation for the many, not for the few?

The resources are there, but disconnected

At a macro level, there’s enough green technology, infrastructure, and finance out there to mitigate and address the worst impacts of climate change. But as the EY teams report on the Green Power Gap highlighted, these resources are disconnected and concentrated in a handful of countries. Right now, the US and China lead the way in investments, research and development, patents, venture capital, and installed capacity, followed by India, the UK, France and Germany.

?The International Finance Corporation estimates that the green transition represents an investment opportunity worth about US$23t between 2016 and 2030.1 So how do we convert investment opportunity into actual investment?

Climate funding has been committed …

The Paris Agreement committed wealthier nations to provide US$100b in climate finance funding every year until 2025, extending commitments from 2009. Climate finance support enables less-developed countries to unlock the resources needed to combat climate change, for which they are largely not responsible.

These commitments were an integral part of a worldwide effort to keep global temperature increases to below 1.5C degrees and avoid putting the lives of millions of people at risk from heatwaves, poverty and mass migration caused by the climate crisis.

?… but these climate finance commitments are not being fulfilled

?The target of US$100b in climate finance funding has never been met. While the last few years have been marked by uncertainty, owing to a number of influences including the global pandemic and the war in Ukraine, the need for greater climate action is more urgent than ever.

By leaving this finance funding gap unaddressed, we risk slowing the transition toward a global green economy, and greater costs in adapting to the harshest consequences of climate change in the future. We need leading green countries, like those identified in the EY Green Power Gap report, to use their capabilities, financial and technological strengths, to support others. Less-developed countries need to be part of a transition to a global green economy for it to be successful. ?

There’s huge demand for sustainable infrastructure and technology

Green infrastructure is a key element in addressing climate change. The UN has already committed US$7.7t to meet current International Energy Agency (IEA)-predicted scenarios for how the climate crisis will play out.?But is it enough? Recent?analysis by EY teams suggests that future global renewable energy development will require an additional US$5.2t by 2050.

If developing countries can’t get the green technology and infrastructure they need, they’ll rely on fossil fuels and lose out on new approaches to high-emitting processes such as cement manufacturing (which generates?2.8b tonnes of CO2 per year , more than all countries combined other than the US and China).

Key developments to look out for at COP27

?So, if those are the big issues, what are the big solutions that have genuine potential to be delivered at COP27? Is there cause for optimism?

Here are three developments I’d like to see at COP27 to address the biggest challenges:

1.??????A new mechanism that compels multilateral development banks to help improve funding and thereby help close the Green Power Gap

2.??????More collaboration around the world, like the trailblazing US$8.5b Just Energy Transition Partnership (JETP) to support South Africa’s decarbonization announced last year

3.??????Finance targets and a roadmap to help deliver the US$100b per year in climate finance that was pledged from 2020 to 2025

It’s not too late for optimism

Mature, market-ready technologies are only expected to deliver 25% of the global emissions reductions needed for net zero.

The IEA predicts that nearly half will come from technologies that are still immature. There’s a huge opportunity to spread development more equitably around the world, which would create jobs, create new, local opportunities for entrepreneurs, and build innovative businesses.

It takes political will to address these complex, intertwined issues, with collaboration and action from governments, investors, business leaders, and consumers alike. There is still reason for optimism, and it’s developments like these that will help businesses move from pledges and promises to progress and performance.

?This article was originally published in Business Green.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.