COP27 is over and Climate.Table is back to its usual weekly rhythm. We took a short breather, unpacked our bags and got right back to work. There is a lot to report.
After all, COP ended with a breakthrough after almost endless negotiations: After 30 years of intense negotiations, the countries agreed on a loss and damage fund to finance climate damage. The wealthy nations take an important step toward the most vulnerable countries.
Just how many countries in the Global South need financial aid is revealed by our conversation with Achim Steiner, head of the UN Development Program: More than 50 countries face bankruptcy due to rising prices for energy and food. Due to debt servicing, the countries lack the money for energy transition and climate adaptation. Steiner calls for a restructuring of the international financial system and warns against driving countries into ever greater dependency through new loans. And the UNDP chief also calls for skimming off excess profits from fossil energy companies.
However, the COP results were disappointing when it came to reducing emissions. The countries could not bring themselves to higher ambitions. Ukraine is one of the few countries that can be forgiven for this at present. The Russian attack devastated large parts of the energy infrastructure and wiped out the billions invested in renewables in recent years, writes Komila Nabiyeva about Ukraine’s energy transition.
Keen readers may have noticed an error in our last COP issue. In “Four climate tasks for 2023” we wrote that Indonesia would hold the G20 presidency next year. The correct country is, of course, India. We apologize for the confusion. Next year, as G20 chair, India could enter into a similar partnership with the industrialized countries to phase out coal as Indonesia did in 2022. We will keep a close eye on this.
Mr. Steiner, you pointed out a sensitive issue at COP27, but it was hardly debated: The enormous debt of many developing countries, which limits their responses to the climate crisis. How bad is the situation?
The debt situation in many countries has worsened dramatically. It started because of the consequences of the Covid crisis. The rising prices of energy and food due to Russia’s war in Ukraine, and now the increase in interest rates on the international financial markets, have escalated the situation. Our data from UNDP’s latest World Development Report is clear: 54 countries, mostly in Africa, are currently in a state of debt distress – they are on the verge of being unable to make interest payments or even repay their loans. The next step is insolvency.
The World Bank and the IMF are supposed to prevent such crises.
But the World Bank and IMF were unable to take sufficient action at their fall meeting because of the geopolitical situation. And the G20 is also paralyzed, primarily by the Ukraine war. There is currently no initiative to address this crisis: Dozens of developing countries are on the verge of default. The prospect of a global recession makes this even more difficult.
What does this development have to do with climate protection?
We are asking developing countries to invest more and more in climate protection and the transition to a carbon-neutral economy. At the same time, the industrialized countries have not kept their promise to provide poor countries with 100 billion dollars a year. Now we are increasingly seeing reflexes of despair among developing countries. They say, ‘You can’t keep asking us for more and more if you don’t keep your own promises. You’re not meeting your own emissions targets, and you’re asking us to go faster and faster.’
How does the situation affect the sustainable development of countries?
It is a huge setback. Our UNDP World Development Report shows: We have fallen back globally to where we were in 2016, mainly due to Covid. And that doesn’t even take the development caused by the Ukraine war this year into account. But the 2022 Sustainable Development Indicators are very clear: We are clearly on the wrong track. That is why UN Secretary-General António Guterres also proposed a stimulus package for investment in the UN’s sustainable development goals. We need to find a way to solve the debt crisis while making the necessary investments for climate protection.
What would be the consequences if many of these states went bankrupt?
Political systems can collapse when the state can no longer provide food or fuel. We have just seen this in Sri Lanka. This can spread very quickly in many countries. But the effects of such developments can trigger ten- to twenty-fold losses (of the original defaults) on the financial markets when investors pull out on the stock exchanges. This then affects even German savers and taxpayers. It is just like the climate crisis: Better to take action now than to pay a very high bill later.
How does climate change play into this crisis?
The room for maneuver for countries has become much smaller. Amid the financial crisis, countries can barely meet their climate targets and are even more vulnerable to climate shocks. And the Ukraine war is dividing opinion. Some want to return to the age of fossil fuels, while others want to move even faster to renewables. The path to renewables is the right one, but when you see how our emissions have to fall to meet the climate targets by 2030, you have to say: We are losing at least two, three, maybe even five years that we simply do not have.
At COP, a fund to help with climate damage has now been agreed upon. Is that enough?
This is a historic decision and a big step. But is it enough? No. We have to restructure the financial system, as the UN Secretary General also called for. We also need to clarify through the international financial organizations how this crisis can be tackled together. Not even superpowers can solve these problems alone. But if the members and shareholders of the World Bank do not agree, they cannot address these problems. A reformed World Bank could mobilize a great deal of very much needed capital on the capital markets for development and climate protection.
But it could also make the situation worse if highly indebted countries now receive new loans.
That is true, we cannot simply offer developing countries new loans. That would only increase their debt. That is also the case with the promised 100 billion, most of which are loans that further fuel the debt. The maximum will soon be reached. But it is also a distorted discussion: The Global North often overlooks the fact that developing countries already invest hundreds of billions of their own financial resources in climate protection, adaptation and damage limitation. When Pakistan fights the consequences of floods or renewables are created in Kenya, these are largely from their own funds. We need to get away from the misconception that one side gives money and the other does nothing and just waits for that money.
So should only grants be given instead of loans? Or debt cuts, as was also called for at the COP, for example by the Bridgetown Agenda of Mia Mottley, the Prime Minister of Barbados?
This discussion has begun in Sharm el-Sheikh, and that is good. But it is not yet sufficient and is urgent. We need to make progress on this by the time the World Bank and IMF meet in the spring at the latest. And yes, we should make much more use of the idea of ‘debt for climate’. Write off debts in exchange for higher investments by developing countries in renewable energies or forest protection.
This will be expensive for the countries that granted these loans.
It is not just a matter of public funds, after all. But with them, we need to pave the way for private investment in renewable energy systems for the next 20 years. So far, this money has bypassed Africa, for example: in 2021, 2.6 billion dollars went into renewables across the continent – that is 0.6 percent of global renewable investment of 433 billion. And that is on a continent where 600 million people still have no access to electricity and 1.4 billion people are soon to be connected to the grid. This is fatal: If we let these trends continue, we will now force Africa to rely on the fossil fuel path for its electricity supply.
Many countries have large debts to China. At COP, however, the attempt to get China on board to finance climate protection failed. What does that mean for the debt problem?
You have to differentiate here: For the first time in history, the bulk of developing country debt is with private lenders. Among public lenders, China has indeed become the largest lender. So far, both private and public lenders refuse to negotiate debt cuts. But that is changing. So China also needs to be more involved in the solution. But there also needs to be a new way of thinking and a coordinated approach to financial sources, such as the exorbitant profits of fossil fuel companies in the current crisis. The oil company Saudi Aramco made more than 40 billion in profits in the last quarter, and the US oil and gas companies 200 billion. And Norway will also take in over 100 billion more than planned from its fossil exports this year. Some of these windfall profits should play an important role in financing climate protection.
Can there be global climate protection without global financial reform?
The financing of the necessary transformations called for by the Paris Agreement cannot be achieved through traditional channels. There is not enough public aid, and the private capital market is virtually inaccessible to many poor developing countries. This means we cannot get the volumes of finance we need. But we also apply double standards: During the pandemic, the industrialized countries mobilized 16 trillion dollars for economic stimulus measures. In the current energy price crisis, Europe spends hundreds of billions to protect its citizens. But how do we explain to poor countries that we mobilize just two or three billion dollars a year in grants through the Green Climate Fund and the Environment Facility? That is a glaring disparity.
Has COP realized this? Not much was heard about the Paris goal of redirecting major financial flows toward sustainability.
There was no serious debate on this at COP. That is why I have repeatedly pointed this out. After all, no one disagrees with the basic insight. But there is a lack of will to act. Many countries are politically paralyzed when it comes to standing up for international issues in the way that is necessary, also in the self-interest of these countries in a globalized economic and financial world. There is a total capital of 430 trillion dollars in this world. We need to mobilize one to two trillion of this annually for transformation. We can do that.
Achim Steiner has headed the UN Development Programme since 2017. The 61-year-old looks back on a long career in international organizations. Between 2006 and 2016, he served as Executive Director of the UN Environment Programme (UNEP). Before that, he held high-ranking positions in Kenya and South Africa.
Before the start of the Russian invasion, Ukraine significantly improved its climate policy. Although it was still rated as “highly insufficient” by the Climate Action Tracker at the end of 2021, the trend was largely positive. In 2021, Ukraine:
Ukraine’s NDC target was conditional on access to international funding: back in 2021 the government estimated the cost of its implementation at 102 billion euros for the period of 2020-2030.
Meanwhile, the costs of damage to Ukraine’s economy, energy infrastructure and environment are increasing with each day of the war. As of today, almost 50 percent of the overall power infrastructure in Ukraine was damaged, causing regular blackouts and water supply shortages across the country.
As an international conference on Ukraine’s recovery kicked off on 25 October in Berlin, hopes were high for new pledges to urgently need funding for the immediate and post-war reconstruction. According to the joint estimate by the World Bank and the Ukrainian government, the current cost of reconstruction and recovery in Ukraine amounts to 349 Billion euros. At the conference, co-hosted by the German G7 Presidency and the European Commission, Ukraine’s prime minister Denys Smyhal said that this estimate already reached 700 billion euros.
But the conference did not bring clarity on long-term plans and funding for the reconstruction of Ukraine, Yevheniia Zasiadko, head of the climate department of NGO Ecoaction said. “The focus was on the short-term needs. We also did not see an updated government draft recovery plan.”
The war exacerbates existing barriers to the rapid expansion of renewable energy. According to a 2022 report by the Renewable Energy Policy Network for the 21st Century (REN21) and the UN Economic Commission for Europe (UNECE), Ukraine has installed 8.3 GW of new solar and wind capacity between 2017 and 2021. In 2019, Ukraine ranked 17th in the world’s top 30 countries for renewable energy investment. In 2020, it overachieved its 11 percent target of renewable energy share in electricity generation, including large hydropower, having hit 14 percent.
This growth was driven by highly lucrative green tariffs. The largest single investor DTEK – at the same time the largest coal company, controlled by oligarch Rinat Akhmetov – owns more than 1 GW of solar and wind
The ongoing war led to decommissioning of 90 percent of wind and up to 50 percent of solar capacity, with most facilities on occupied territories or active war zone. Apart from the physical damage to facilities, the war did not bring new challenges to the renewable energy sector, but rather worsened the existing ones, Kirill Trokhin, head of solar project developer IPP said.
According to Trokhin, major challenges are a non-liberalized energy market and subsidized electricity tariffs for households. Currently, they are two to three times lower than tariffs for the industry, which has to partly cover the difference.
The government was not ready for the rapid growth of renewable energy, including solar PV, which skyrocketed from 742 MW in 2017 to more than seven GW by the end of 2021. As a result, the debt of the guaranteed buyer – a state-owned entity, purchasing electricity, – to renewable energy companies before the war accounted to up to 90 percent of the payment obligations, Trokhin said
In 2020, “the dark time” for renewable energy came, Oleksandr Kozakevich, Chairman of Ukrainian renewable energy association (UARE) said. The government passed a law on retrospective cuts of tariffs for solar and wind power facilities
It also announced plans to switch to auctions in 2020, but the date was shifted several times. As a result of this reform, in 2020, investments in renewable energy broke down to 1.4 billion USD from 4.1 billion USD in 2019.
“The Ministry of Energy said it will not announce auction quotas for new renewable energy capacity till the end of the war. So, at the moment there is effectively no legislation for the development of utility-scale renewable energy generation,” Olga Sukhopara, Director of Development at UARE said.
For further growth of renewable energy, Kirill Trokhin said, many challenges need to be addressed, including:
“We do not have any other way to become energy independent, but deploy as many renewables as possible,” Kozakevich of UARE says. By Komila Nabiyeva
Christoph Bals is not only recognizable at climate conferences by his characteristic gray hair and gray beard – above all by the fact that there is usually a swarm of listeners standing around him in a corner somewhere. The political director of the German environment and development organization Germanwatch has had another very intensive two weeks. In Sharm el-Sheikh, as at all previous climate conferences, Christoph Bals kept a close eye on developments. He talked to delegates and activists, moved in front of and behind the scenes, kept a short line to the German and other delegations – and not least provided journalists with background information.
Bals is an icon of the German and international climate scene. At COP27, he witnessed a major step forward: the Loss and damage fund. Finally, says the 62-year-old: “Until now, the industrialized countries have always blocked this.” Germanwatch has been campaigning for a just climate policy for more than 30 years.
At the same time, Bals also criticizes countries for not doing enough to fight the climate crisis. And he is outraged by the Egyptian COP27 presidency, which has led the negotiations with an authoritarian style, gagging civil society and violating UN rules.
Bals studied economics and theology, and later attended lectures in sociology, philosophy and physics. In the mid-1980s, he took a seminar with Bonn physics professor and IPCC member Klaus Heinloth. It was about the greatest challenges for the coming century. Global climate change is one of them. “That impressed me,” Bals says. “It was hardly a topic at the time, but at the same time it would become so relevant in the future.”
After graduating, Bals joined the Global Challenges Network and founded a journalism office focusing on climate issues. Since the 1990s, he has been working for Germanwatch, where he first set up the Climate department, then the Sustainable Finance department. Today, he is, among other things, an observer of the German government’s Sustainable Finance Advisory Council and a member of the spokesperson’s council of the Climate Alliance Germany.
Bals co-founded Germanwatch in 1991, originally out of concern about a new nationalism in a unified Germany. The organization is financed by membership fees, project funds, donations and grants from the “Stiftung Zukunftsfähigkeit.” “We wanted to keep a close eye on the government after German unification, to make sure that as a German government and partner in the EU, it was also advancing solidarity-based policies in the Global South.”
Especially in the poorer countries, climate change has been a central issue from the very beginning, says Bals. In 1991, the task was to prepare for the Earth Summit in Rio de Janeiro, where the United Nations negotiated environment and development issues for the first time. “For us, it was about how Germany would engage diplomatically in Rio and implement what it agreed to at home,” Bals says.
Bals is a keen observer, and his analyses go far beyond the current negotiations. That makes him a popular interlocutor: He describes the big picture, for example, between climate conferences, the private sector, geopolitics and political developments in the countries concerned. And he is often constructive. Those who seek hope now and then in the agonizingly slow COP process will gain new insights from him.
Bals also keeps a close eye on his own government. “Germany has always had an ambivalent role,” says Bals: progressive in international negotiations, sluggish at home. Only since the European Green Deal and the Federal Constitutional Court’s ruling on the 2021 Climate Protection Act has there been any change to Germany’s sluggishness, he says. At the time, Germanwatch was one of the organizations that filed a lawsuit against the German government’s climate policy. The ruling at the time was considered historic and calls for improvements to the Climate Protection Act, as it is incompatible with fundamental rights.
During Germany’s G7 presidency this year, the government launched a “Global Shield against Climate Risks“. Bals could imagine a pioneering group of industrialized countries paying into a fund for loss and damage. Because unlike past climate conferences, it is not an agreement that must necessarily be agreed to by all. “Thank goodness we’re no longer in a forum where you need consensus for every step in implementation,” says Bals, “otherwise things would look even worse.” Jana Hemmersmeier/bpo
COP27 is over and Climate.Table is back to its usual weekly rhythm. We took a short breather, unpacked our bags and got right back to work. There is a lot to report.
After all, COP ended with a breakthrough after almost endless negotiations: After 30 years of intense negotiations, the countries agreed on a loss and damage fund to finance climate damage. The wealthy nations take an important step toward the most vulnerable countries.
Just how many countries in the Global South need financial aid is revealed by our conversation with Achim Steiner, head of the UN Development Program: More than 50 countries face bankruptcy due to rising prices for energy and food. Due to debt servicing, the countries lack the money for energy transition and climate adaptation. Steiner calls for a restructuring of the international financial system and warns against driving countries into ever greater dependency through new loans. And the UNDP chief also calls for skimming off excess profits from fossil energy companies.
However, the COP results were disappointing when it came to reducing emissions. The countries could not bring themselves to higher ambitions. Ukraine is one of the few countries that can be forgiven for this at present. The Russian attack devastated large parts of the energy infrastructure and wiped out the billions invested in renewables in recent years, writes Komila Nabiyeva about Ukraine’s energy transition.
Keen readers may have noticed an error in our last COP issue. In “Four climate tasks for 2023” we wrote that Indonesia would hold the G20 presidency next year. The correct country is, of course, India. We apologize for the confusion. Next year, as G20 chair, India could enter into a similar partnership with the industrialized countries to phase out coal as Indonesia did in 2022. We will keep a close eye on this.
Mr. Steiner, you pointed out a sensitive issue at COP27, but it was hardly debated: The enormous debt of many developing countries, which limits their responses to the climate crisis. How bad is the situation?
The debt situation in many countries has worsened dramatically. It started because of the consequences of the Covid crisis. The rising prices of energy and food due to Russia’s war in Ukraine, and now the increase in interest rates on the international financial markets, have escalated the situation. Our data from UNDP’s latest World Development Report is clear: 54 countries, mostly in Africa, are currently in a state of debt distress – they are on the verge of being unable to make interest payments or even repay their loans. The next step is insolvency.
The World Bank and the IMF are supposed to prevent such crises.
But the World Bank and IMF were unable to take sufficient action at their fall meeting because of the geopolitical situation. And the G20 is also paralyzed, primarily by the Ukraine war. There is currently no initiative to address this crisis: Dozens of developing countries are on the verge of default. The prospect of a global recession makes this even more difficult.
What does this development have to do with climate protection?
We are asking developing countries to invest more and more in climate protection and the transition to a carbon-neutral economy. At the same time, the industrialized countries have not kept their promise to provide poor countries with 100 billion dollars a year. Now we are increasingly seeing reflexes of despair among developing countries. They say, ‘You can’t keep asking us for more and more if you don’t keep your own promises. You’re not meeting your own emissions targets, and you’re asking us to go faster and faster.’
How does the situation affect the sustainable development of countries?
It is a huge setback. Our UNDP World Development Report shows: We have fallen back globally to where we were in 2016, mainly due to Covid. And that doesn’t even take the development caused by the Ukraine war this year into account. But the 2022 Sustainable Development Indicators are very clear: We are clearly on the wrong track. That is why UN Secretary-General António Guterres also proposed a stimulus package for investment in the UN’s sustainable development goals. We need to find a way to solve the debt crisis while making the necessary investments for climate protection.
What would be the consequences if many of these states went bankrupt?
Political systems can collapse when the state can no longer provide food or fuel. We have just seen this in Sri Lanka. This can spread very quickly in many countries. But the effects of such developments can trigger ten- to twenty-fold losses (of the original defaults) on the financial markets when investors pull out on the stock exchanges. This then affects even German savers and taxpayers. It is just like the climate crisis: Better to take action now than to pay a very high bill later.
How does climate change play into this crisis?
The room for maneuver for countries has become much smaller. Amid the financial crisis, countries can barely meet their climate targets and are even more vulnerable to climate shocks. And the Ukraine war is dividing opinion. Some want to return to the age of fossil fuels, while others want to move even faster to renewables. The path to renewables is the right one, but when you see how our emissions have to fall to meet the climate targets by 2030, you have to say: We are losing at least two, three, maybe even five years that we simply do not have.
At COP, a fund to help with climate damage has now been agreed upon. Is that enough?
This is a historic decision and a big step. But is it enough? No. We have to restructure the financial system, as the UN Secretary General also called for. We also need to clarify through the international financial organizations how this crisis can be tackled together. Not even superpowers can solve these problems alone. But if the members and shareholders of the World Bank do not agree, they cannot address these problems. A reformed World Bank could mobilize a great deal of very much needed capital on the capital markets for development and climate protection.
But it could also make the situation worse if highly indebted countries now receive new loans.
That is true, we cannot simply offer developing countries new loans. That would only increase their debt. That is also the case with the promised 100 billion, most of which are loans that further fuel the debt. The maximum will soon be reached. But it is also a distorted discussion: The Global North often overlooks the fact that developing countries already invest hundreds of billions of their own financial resources in climate protection, adaptation and damage limitation. When Pakistan fights the consequences of floods or renewables are created in Kenya, these are largely from their own funds. We need to get away from the misconception that one side gives money and the other does nothing and just waits for that money.
So should only grants be given instead of loans? Or debt cuts, as was also called for at the COP, for example by the Bridgetown Agenda of Mia Mottley, the Prime Minister of Barbados?
This discussion has begun in Sharm el-Sheikh, and that is good. But it is not yet sufficient and is urgent. We need to make progress on this by the time the World Bank and IMF meet in the spring at the latest. And yes, we should make much more use of the idea of ‘debt for climate’. Write off debts in exchange for higher investments by developing countries in renewable energies or forest protection.
This will be expensive for the countries that granted these loans.
It is not just a matter of public funds, after all. But with them, we need to pave the way for private investment in renewable energy systems for the next 20 years. So far, this money has bypassed Africa, for example: in 2021, 2.6 billion dollars went into renewables across the continent – that is 0.6 percent of global renewable investment of 433 billion. And that is on a continent where 600 million people still have no access to electricity and 1.4 billion people are soon to be connected to the grid. This is fatal: If we let these trends continue, we will now force Africa to rely on the fossil fuel path for its electricity supply.
Many countries have large debts to China. At COP, however, the attempt to get China on board to finance climate protection failed. What does that mean for the debt problem?
You have to differentiate here: For the first time in history, the bulk of developing country debt is with private lenders. Among public lenders, China has indeed become the largest lender. So far, both private and public lenders refuse to negotiate debt cuts. But that is changing. So China also needs to be more involved in the solution. But there also needs to be a new way of thinking and a coordinated approach to financial sources, such as the exorbitant profits of fossil fuel companies in the current crisis. The oil company Saudi Aramco made more than 40 billion in profits in the last quarter, and the US oil and gas companies 200 billion. And Norway will also take in over 100 billion more than planned from its fossil exports this year. Some of these windfall profits should play an important role in financing climate protection.
Can there be global climate protection without global financial reform?
The financing of the necessary transformations called for by the Paris Agreement cannot be achieved through traditional channels. There is not enough public aid, and the private capital market is virtually inaccessible to many poor developing countries. This means we cannot get the volumes of finance we need. But we also apply double standards: During the pandemic, the industrialized countries mobilized 16 trillion dollars for economic stimulus measures. In the current energy price crisis, Europe spends hundreds of billions to protect its citizens. But how do we explain to poor countries that we mobilize just two or three billion dollars a year in grants through the Green Climate Fund and the Environment Facility? That is a glaring disparity.
Has COP realized this? Not much was heard about the Paris goal of redirecting major financial flows toward sustainability.
There was no serious debate on this at COP. That is why I have repeatedly pointed this out. After all, no one disagrees with the basic insight. But there is a lack of will to act. Many countries are politically paralyzed when it comes to standing up for international issues in the way that is necessary, also in the self-interest of these countries in a globalized economic and financial world. There is a total capital of 430 trillion dollars in this world. We need to mobilize one to two trillion of this annually for transformation. We can do that.
Achim Steiner has headed the UN Development Programme since 2017. The 61-year-old looks back on a long career in international organizations. Between 2006 and 2016, he served as Executive Director of the UN Environment Programme (UNEP). Before that, he held high-ranking positions in Kenya and South Africa.
Before the start of the Russian invasion, Ukraine significantly improved its climate policy. Although it was still rated as “highly insufficient” by the Climate Action Tracker at the end of 2021, the trend was largely positive. In 2021, Ukraine:
Ukraine’s NDC target was conditional on access to international funding: back in 2021 the government estimated the cost of its implementation at 102 billion euros for the period of 2020-2030.
Meanwhile, the costs of damage to Ukraine’s economy, energy infrastructure and environment are increasing with each day of the war. As of today, almost 50 percent of the overall power infrastructure in Ukraine was damaged, causing regular blackouts and water supply shortages across the country.
As an international conference on Ukraine’s recovery kicked off on 25 October in Berlin, hopes were high for new pledges to urgently need funding for the immediate and post-war reconstruction. According to the joint estimate by the World Bank and the Ukrainian government, the current cost of reconstruction and recovery in Ukraine amounts to 349 Billion euros. At the conference, co-hosted by the German G7 Presidency and the European Commission, Ukraine’s prime minister Denys Smyhal said that this estimate already reached 700 billion euros.
But the conference did not bring clarity on long-term plans and funding for the reconstruction of Ukraine, Yevheniia Zasiadko, head of the climate department of NGO Ecoaction said. “The focus was on the short-term needs. We also did not see an updated government draft recovery plan.”
The war exacerbates existing barriers to the rapid expansion of renewable energy. According to a 2022 report by the Renewable Energy Policy Network for the 21st Century (REN21) and the UN Economic Commission for Europe (UNECE), Ukraine has installed 8.3 GW of new solar and wind capacity between 2017 and 2021. In 2019, Ukraine ranked 17th in the world’s top 30 countries for renewable energy investment. In 2020, it overachieved its 11 percent target of renewable energy share in electricity generation, including large hydropower, having hit 14 percent.
This growth was driven by highly lucrative green tariffs. The largest single investor DTEK – at the same time the largest coal company, controlled by oligarch Rinat Akhmetov – owns more than 1 GW of solar and wind
The ongoing war led to decommissioning of 90 percent of wind and up to 50 percent of solar capacity, with most facilities on occupied territories or active war zone. Apart from the physical damage to facilities, the war did not bring new challenges to the renewable energy sector, but rather worsened the existing ones, Kirill Trokhin, head of solar project developer IPP said.
According to Trokhin, major challenges are a non-liberalized energy market and subsidized electricity tariffs for households. Currently, they are two to three times lower than tariffs for the industry, which has to partly cover the difference.
The government was not ready for the rapid growth of renewable energy, including solar PV, which skyrocketed from 742 MW in 2017 to more than seven GW by the end of 2021. As a result, the debt of the guaranteed buyer – a state-owned entity, purchasing electricity, – to renewable energy companies before the war accounted to up to 90 percent of the payment obligations, Trokhin said
In 2020, “the dark time” for renewable energy came, Oleksandr Kozakevich, Chairman of Ukrainian renewable energy association (UARE) said. The government passed a law on retrospective cuts of tariffs for solar and wind power facilities
It also announced plans to switch to auctions in 2020, but the date was shifted several times. As a result of this reform, in 2020, investments in renewable energy broke down to 1.4 billion USD from 4.1 billion USD in 2019.
“The Ministry of Energy said it will not announce auction quotas for new renewable energy capacity till the end of the war. So, at the moment there is effectively no legislation for the development of utility-scale renewable energy generation,” Olga Sukhopara, Director of Development at UARE said.
For further growth of renewable energy, Kirill Trokhin said, many challenges need to be addressed, including:
“We do not have any other way to become energy independent, but deploy as many renewables as possible,” Kozakevich of UARE says. By Komila Nabiyeva
Christoph Bals is not only recognizable at climate conferences by his characteristic gray hair and gray beard – above all by the fact that there is usually a swarm of listeners standing around him in a corner somewhere. The political director of the German environment and development organization Germanwatch has had another very intensive two weeks. In Sharm el-Sheikh, as at all previous climate conferences, Christoph Bals kept a close eye on developments. He talked to delegates and activists, moved in front of and behind the scenes, kept a short line to the German and other delegations – and not least provided journalists with background information.
Bals is an icon of the German and international climate scene. At COP27, he witnessed a major step forward: the Loss and damage fund. Finally, says the 62-year-old: “Until now, the industrialized countries have always blocked this.” Germanwatch has been campaigning for a just climate policy for more than 30 years.
At the same time, Bals also criticizes countries for not doing enough to fight the climate crisis. And he is outraged by the Egyptian COP27 presidency, which has led the negotiations with an authoritarian style, gagging civil society and violating UN rules.
Bals studied economics and theology, and later attended lectures in sociology, philosophy and physics. In the mid-1980s, he took a seminar with Bonn physics professor and IPCC member Klaus Heinloth. It was about the greatest challenges for the coming century. Global climate change is one of them. “That impressed me,” Bals says. “It was hardly a topic at the time, but at the same time it would become so relevant in the future.”
After graduating, Bals joined the Global Challenges Network and founded a journalism office focusing on climate issues. Since the 1990s, he has been working for Germanwatch, where he first set up the Climate department, then the Sustainable Finance department. Today, he is, among other things, an observer of the German government’s Sustainable Finance Advisory Council and a member of the spokesperson’s council of the Climate Alliance Germany.
Bals co-founded Germanwatch in 1991, originally out of concern about a new nationalism in a unified Germany. The organization is financed by membership fees, project funds, donations and grants from the “Stiftung Zukunftsfähigkeit.” “We wanted to keep a close eye on the government after German unification, to make sure that as a German government and partner in the EU, it was also advancing solidarity-based policies in the Global South.”
Especially in the poorer countries, climate change has been a central issue from the very beginning, says Bals. In 1991, the task was to prepare for the Earth Summit in Rio de Janeiro, where the United Nations negotiated environment and development issues for the first time. “For us, it was about how Germany would engage diplomatically in Rio and implement what it agreed to at home,” Bals says.
Bals is a keen observer, and his analyses go far beyond the current negotiations. That makes him a popular interlocutor: He describes the big picture, for example, between climate conferences, the private sector, geopolitics and political developments in the countries concerned. And he is often constructive. Those who seek hope now and then in the agonizingly slow COP process will gain new insights from him.
Bals also keeps a close eye on his own government. “Germany has always had an ambivalent role,” says Bals: progressive in international negotiations, sluggish at home. Only since the European Green Deal and the Federal Constitutional Court’s ruling on the 2021 Climate Protection Act has there been any change to Germany’s sluggishness, he says. At the time, Germanwatch was one of the organizations that filed a lawsuit against the German government’s climate policy. The ruling at the time was considered historic and calls for improvements to the Climate Protection Act, as it is incompatible with fundamental rights.
During Germany’s G7 presidency this year, the government launched a “Global Shield against Climate Risks“. Bals could imagine a pioneering group of industrialized countries paying into a fund for loss and damage. Because unlike past climate conferences, it is not an agreement that must necessarily be agreed to by all. “Thank goodness we’re no longer in a forum where you need consensus for every step in implementation,” says Bals, “otherwise things would look even worse.” Jana Hemmersmeier/bpo
