December 2, 2023

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Paris Summit Goals – DW – 06/21/2023

Paris Summit Goals – DW – 06/21/2023

Try to stop Global temperature will rise And preparing for the inevitable effects of climate change is expensive. However, there is still insufficient investment in climate protection. This is due, in part, to multinational financial institutions.

This week, a number of heads of state and government from industrialized and developing countries are meeting in Paris to discuss an international financial framework and possible financing models for increased climate protection.

With climate change, the financing needs of developing countries increase, explains Lola Vallejo, director of the climate program at the Paris Institute for Sustainable Development (ITDRI, its acronym in French).

However, international financial institutions such as the World Bank and the International Monetary Fund are not ready to respond adequately.

“These institutions were established after World War II, and half of today’s states still don’t exist,” Vallejo explained to DW. And he continues: “They are guided by the precept that the power and possibility to set the rules rests in the hands of the developed nations.”

According to the International Monetary Fund, 43 of the 59 developing countries most affected by climate change are at high risk of financial crisis.

Private investments are essential for climate protection. Image: Schalk van Zuydam/AP Photo/Image Alliance

Loan waivers for poor countries?

Vallejo asserts that a weak economy and high debt limit states’ financial room for maneuver to invest in climate change adaptation measures and to rebuild and strengthen economies after a climate disaster.

Currently, many developing countries need more money to repay debt than they need for sustainable development and adaptation to climate change, the expert explains: “If they interrupt their interest payments, they will have enough money to fulfill their plans. .

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Therefore, debt forgiveness and suspension of interest payments are the summit’s issues, as well as better access to emergency funding from the IMF. Already last year, the Prime Minister of Barbados, Mia Mottles, promoted the Alliance of Developing Countries, which demanded that industrialized countries access the funds of the untapped fund.

For Friederike Röder, NGO Global Citizen, the summit, dedicated exclusively to finance, represents a “historic opportunity”.

The most affected countries are asking for help

The coalition around Barbados has also called for the creation of a US$100 billion annual fund for damages and losses caused by climate change.

In May this year, German Foreign Minister Annalena Baerbach announced that the $100 billion target could be reached by 2023. However, it is clear that this is not enough. According to the IMF, by mid-century, several trillion dollars a year will need to be invested in climate protection and adaptation to a warming planet.

Another year with record temperatures

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More private investment is needed

Lola Vallejo clarifies that public funding is not enough to solve this problem, so the possibility of increasing private investment will also be discussed at the summit. By 2030, the IMF indicates that current private investments in developing countries, at $250 billion a year, will double.

Alternative financial models

Also, in Paris, alternative financing models will be discussed. Facing pressure from Pacific island nations, France, for example, is proposing a global tax on container ships. For its part, the IMF calculates that the cost of heavy crude oil consumption in the shipping industry could generate up to $60 billion in climate protection.

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Finally, Vallejo says a potential tax on CO2 emissions has never had as much support as it does today.