To tackle the climate crisis, “everything, everywhere, all at once” must happen, warns António Guterres. But in politics, progress is often only made with small steps: In the UK, climate change has taken a back seat to energy security issues over the past few months. The government’s new climate plan is being criticized as lacking innovation and not providing any new funding. In the trade agreement between the EU and the Mercosur states, there is currently – again – quarrel over sustainability issues. It is a back-and-forth over a treaty that was actually already considered negotiated, but is highly controversial.
And the World Bank reform did not achieve much at the Spring Meetings either. Progress in climate financing is generally slow. That is why Ani Dasgupta, head of the World Resources Institute, calls in today’s interview on the World Bank to do more to leverage private money. But private investors such as wealth and pension funds still have trillions invested in fossil fuel companies, as a recent NGO study shows. And even new players like China have done too little regarding climate finance in the last few years.
A small silver lining in the end: The expansion of wind and solar energy is already proceeding at a fairly steady pace. Many countries have greatly expanded wind and solar power in recent years. But here, too, we need to stay on the ball and step up the pace!
The European Union is meeting resistance with its request to oblige the four Mercosur states to protect the rainforest. The EU Commission wants to encourage Argentina, Brazil, Paraguay and Uruguay to sign a binding addendum to the free trade agreement that has been negotiated but not yet signed. But the governments there have so far refused to do so.
Negotiators from both sides were supposed to meet this Wednesday and Thursday in Buenos Aires to discuss Europe’s demands. On the table this time was supposed to be a text proposal from the Mercosur governments on the additional declaration requested by the EU. However, the physical meeting was postponed yesterday at short notice until May. The Mercosur side in particular needed more time to prepare, according to EU sources. Both sides “remain determined to finalize the agreement, including the supplementary instrument, as soon as possible”, a Commission spokeswoman said.
During the first round of negotiations in March, the Commission presented its proposal to flesh out the commitments made under the sustainability section of the trade agreement. The aim: Addressing concerns in the EU states and the European Parliament that free trade with the South American countries could potentially contribute to the deforestation of the rainforest. This way, the Commission wants to win approval for the agreement, which particularly France, Austria and the Netherlands find highly controversial.
The European text proposal was leaked before Easter. It involves these areas:
The European proposal contained 19 references to the Paris Agreement alone. It provides for voluntary objectives for the signatory states and does not include any sanctions to enforce them. South America is concerned that the EU could introduce sanctions through the back door by introducing a binding addendum. For example, tariff concessions agreed in the EU-Mercosur Treaty could be suspended if the national targets of the Paris Agreement are missed, warns an official from Uruguay. In Brasilia, too, fears are voiced that the wording could be a gateway for trade sanctions if the government does not severely restrict deforestation in the Amazon region.
The Mercosur countries are also opposed to introducing issues into the negotiations that were not part of the fundamental political agreement in 2019. These include, in particular, the Global Biodiversity Framework, which was agreed upon in Montreal last December but has not yet been ratified by the countries. Governments also believe that the text proposed by the EU is heavily weighted towards environmental conservation and ignores the other two pillars of sustainable development – the social and economic aspects. This is an old dispute between the two trading blocs.
Furthermore, Mercosur governments are concerned about how the EU regulation on deforestation-free products or the Carbon Border Adjustment Mechanism (CBAM), which were passed in the European Parliament on Wednesday, are related to the EU-Mercosur agreement. “They are unilateral and may affect the balance of the agreement, which took 20 years to negotiate,” Brazilian government sources stated.
The EU Commission is trying to dispel these concerns. Such disputes should not be settled through sanctions, but with the help of an expert panel, a high-ranking EU official says.
However, the Commission itself is facing pressure: The German Greens, in particular, have so far made their consent to the agreement dependent on improved enforcement of the sustainability agreements. What is needed is “a new version of the supplementary agreement, including dispute settlement mechanisms with sanctions, so that effective forest protection measures are actually enshrined”, demanded Maik Außendorf, a Green member of the Bundestag, after a hearing on the Mercosur agreement in the Economic Committee.
Now it comes to a showdown. Both sides express great interest in the trade agreement. They have declared their intention to reach an agreement by the end of the year at the latest. In July, Brazil takes over the presidency of Mercosur for six months. In the EU, Spain takes over the presidency, which is also committed to the agreement.
The free trade agreement with the four South American countries would be the economically most significant treaty the EU has ever signed: It could save exporters four billion euros in customs tariffs per year. By comparison, the deal with Japan saves about one billion euros. Brazil and other countries protect their markets with high import tariffs of 35 percent on cars. Mechanical engineering, the agricultural, chemical and pharmaceutical sectors would also benefit.
However, the economic advantages are not the only reason why Commission President Ursula von der Leyen and German Chancellor Olaf Scholz support the trade agreement: They see it as a means of pulling Latin American countries over to their side in the geopolitical power struggle. China has greatly increased its trade with the region over the past few years and has replaced the EU as its main trading partner.
In fact, China is by far the biggest trading partner for Brazil. This is reflected in the very pro-Beijing course that President Lula da Silva is now pursuing. During his visit to Beijing, Lula made it clear that he does not share the West’s course of distancing itself from authoritarian states like China and Russia. Furthermore, China and Brazil agreed in late March to conduct more trade directly in their own national currencies in the future, thus reducing their dependence on the US dollar.
Lula has announced that he also wants to negotiate a trade agreement with Beijing. Before that, however, he wants to finalize the deal with the Europeans, according to Brussels. In the Mercosur countries, there is “an interest in maintaining the EU as a counterweight to the USA and China,” says a high-ranking EU official. By Daniela Chiaretti and Till Hoppe
Mr. Dasgupta, the World Bank is supposed to provide more money for climate action and adaptation – that was the key topic of last week’s Spring Meeting. What has the meeting achieved?
The World Bank should definitely be a leader in bringing climate and development together. For many, it is not happening fast enough, including us at WRI. But the current context is also highly complex – with the consequences of the Covid pandemic, the Ukraine war, the excessive debt of many countries and the food and energy crisis.
How should the bank respond?
Firstly, it should lend more money. And secondly, it should definitely see climate and development as one. And finally, and most difficult in my opinion, it should cooperate more with other stakeholders to find financing solutions. Instead of simply lending itself, it should help countries to develop joint financing solutions from public funds, private capital and World Bank money. Because without private money, the change to a climate-friendly world will not be possible. We don’t have enough public money to do it. There was little progress in this regard at the Spring Meeting.
What are the chances that mobilizing more private capital will actually succeed?
Private donors shy away from high risks. But when the World Bank gets involved, it adds predictability. Together with the International Monetary Fund, whose task is to ensure macroeconomic stability, it can create a more predictable environment for private donors. This is especially important for countries with a particularly low-income level, to which the World Bank subsidiary IDA grants long-term loans at particularly good conditions.
Why should this work better in the future than it has in the past?
It can only work if the World Bank plays a different role than it has done so far. It must see itself more as part of a larger network and as a kind of catalyst that brings different donors together. It can create the necessary trust. Achieving this is the challenge for the Bank’s new president.
Perhaps the most concrete outcome of the spring meeting was that the bank’s loan-to-equity ratio is to drop from 20 to 19 percent. How much does that help the climate?
The hope is that the lower ratio will mobilize an additional four to five billion US dollars per year. Part of this is to flow into climate financing. That is an important first step. But it is not enough.
How important would debt relief be?
The debt crisis is a serious and growing problem, particularly for countries with especially low-income levels. They spend a considerable part of their public funds on debt servicing. The money is then not available for other things – including climate action, climate change adaptation and repairing climate damage. At least the major donors seem to have recognized the problem. There were consultations on this at the spring meeting, in which China also took part. But my impression is that there was hardly any concrete progress.
If the framework conditions for the World Bank’s work have become so much more difficult: How much can it do for the climate at all, given the multiple crises?
To believe that fighting poverty and protecting the climate are mutually exclusive goals is a misconception. The two go hand in hand. Developing countries need economic growth, but in a climate-friendly way. The Bank’s overarching goal is to fight poverty – good! But equally important are the fight against climate-related disasters, adaptation to climate change and the opportunities that climate action offers for economic development, for example by creating jobs in clean industries.
NGOs criticize that the World Bank still finances fossil fuel projects and complain about a lack of transparency. How credible is the promise of climate-friendly change?
The criticism of a lack of transparency is legitimate. It is difficult to track how much money is actually flowing into climate-friendly investments at the moment. The Bank could change that relatively easily in order to strengthen its credibility. And of course, it is not easy to change the way the World Bank works. I worked there for 20 years. The Bank does business in its own way – but it is also different from 40 years ago. It has evolved. In the same way, it has to change now, at a time when we need enormous sums of money to manage the global, climate-friendly transformation.
What do you expect from the future World Bank President Ajay Banga?
I am optimistic. Banga is from India, just like me. So he grew up in a country with a lot of poverty. That is a very important experience. And with Mastercard, he has successfully led a big company. But running the World Bank is an art of its own. There is hardly any other place where so many smart, good people work. To lead them, you have to be a good listener and willing to learn. And the challenges are great. A lot will depend on what priorities Banga sets.
What actual decisions can still be expected from the upcoming meetings leading up to the annual meeting of the IMF and the World Bank in Marrakech next fall?
I believe we will get a better idea of what Banga wants to focus his work on. And perhaps more details of the future global financial architecture will emerge at the financial summit hosted by French President Emmanuel Macron in June. Reforming the World Bank alone is not enough. We should think about the whole financial system and what role the World Bank can play in it – and what role the other parts of the system can play. I hope that this debate will happen at the Paris meeting.
Ani Dasgupta is President and CEO of the World Resources Institute (WRI) in Washington, D.C.. Before joining WRI in 2014, he served as Director of Knowledge and Learning at the World Bank.
Since the invasion of Ukraine by Russia over twelve months ago, energy security has become the main mantra of the UK Prime Minister Rishi Sunak and his short-lived predecessor Liz Truss, while “climate change” appears to have largely disappeared from the government’s vocabulary.
Indeed, the raft of announcements covered by the “Powering Up Britain” paper, the Government’s “blueprint for the future of energy in this country” was published on what ministers billed “energy security” day, with previous plans to use a “green day” label quietly dropped.
Sunak’s decision to replace the Department for Business, Energy and Industrial Strategy (BEIS) with the Department for Energy Security and Net Zero (DESNZ) with a remit to focus on energy supply, markets and the move to net zero was largely welcomed as a positive step for climate action. Yet, real action is missing. For the moment, no government department has decided to speed ahead with actions to cut emissions in line with climate science and the urgency demanded by the latest report from the Intergovernmental Panel on Climate Change published in March 2023.
While former UK Prime Minister Tony Blair insisted back in 1996 that education, education, education was his priority, it would seem that for Sunak, it is security, security, security. Powering Up Britain focuses on delivering net zero through energy security, climate security, consumer security and economic security.
Yet, the measures set out to deliver:
are largely a repackaging of previous announcements.
Ed Matthew from climate think tank E3G said most of the policies had already been announced last year and were “not bold enough to keep the UK competitive in the clean tech race or put us back on track to net zero”. He described the whole package as “underwhelming”.
UK-based climate campaigners were particularly critical about the lack of new money on the table to speed up the journey to net zero, especially given the massive amount of investment available for clean energy technologies in the US’ Inflation Reduction Act (IRA) and the large amounts of finance expected to be generated by EU’s recently proposed Net Zero Industry Act. The UK government said it would delay publishing any financial response to these policies until autumn 2023.
Jess Ralston from the Energy and Climate Intelligence Unit (ECIU), a think tank, said the delay could be “the final nail in the coffin for businesses and offshore wind investors who will simply move investment to where there is long-term policy and regulatory certainty”.
“Without finance, nothing on net zero will get done,” said E3G’s Matthew. He called for the UK’s newly launched Green Finance Strategy “to be underpinned by a comprehensive net zero investment plan, an independent tracking of net zero financial flows, a strong net zero mandate for regulators and a credible green taxonomy“.
The strategy was part of the promise made by Sunak as UK Chancellor of the Exchequer (finance minister), under the leadership of Boris Johnson, at COP26 in Glasgow in 2021 to make Britain a world-leading net-zero financial center.
Since Johnson was forced to resign as UK Prime Minister in July 2022, nobody at the top of the UK government tree has taken up the mantle to push climate action as a key policy priority. Whenever there are signs of progress, a bump in the road often appears, which slows down momentum and suggests the current UK government is not fully committed to getting to net zero emissions by mid-century.
In the foreword to Powering Up Britain, Grant Shapps, Secretary of State for Energy Security and Net Zero, talks about “committing to a different future. One that breaks with the fossil fuels that powered our past two centuries”. Yet, climate minister Graham Stuart has voiced support for a new coal mine in Cumbria, northwest England, and called for a more nuanced take on fossil fuels rather than viewing them as “the spawn of the devil”.
The government has come forward with a new scheme to help people insulate their homes, but, says E3G, it will only insulate 100,000 more homes a year when there are 17 million homes in the UK with poor insulation
Many of the updates in Powering Up Britain were made in response to the independent Net Zero Review recently carried out by the Conservative backbench MP Chris Skidmore. Published in January 2023, it argued that the transition to net zero is also an opportunity for growth, and that the UK is well-placed to benefit from increasing demand for net zero goods and services
“Net zero will make us warmer and richer (not colder and poorer) and is the economic opportunity of the decade, if not this century,” argued Skidmore in the House of Commons at the end of May.
His recommendations – the result of interviews with “thousands of individuals business and companies”- also made clear, however, that the UK must make ambitious policies and public and private investments to reap these benefits.
It is still not apparent whether the government has fully taken on board these conclusions or whether Sunak and his ministers are, in Skidmore’s words, “climate delayers” and “the new climate deniers“. Philippa Nuttall Jones
It is positive news: Wind and solar energy have expanded rapidly in many countries over the past few years. Today, 12.1 percent of the world’s electricity is generated by wind and solar power plants. In 2015, the share was still at 4.6 percent, as a report by the think tank Ember shows. And the growth continues: Over the weekend, the G7 countries decided to add another 150 gigawatts of offshore wind capacity and 1,000 gigawatts from photovoltaics by 2030.
And yet, growth is just about enough from a climate perspective. According to the IEA net-zero emissions scenario:
According to Ember, growth rates between 2015 and 2021 came close to these targets: Solar energy grew by an average of 26 percent annually worldwide, and wind energy by 14 percent. But the pace would have to be maintained. In absolute terms, an annual increase of 25 percent would mean sustained growth. However, the International Renewable Energy Agency (IRENA) recently warned that the pace of renewables expansion would have to increase significantly in order to meet current climate targets. Ember also points out that hydropower needs to grow faster.
The capacities to produce the required solar panels are secured, at least in the short term. China, as the world’s leading manufacturer, has increased capacities by a whopping 66 percent to 600 gigawatts between 2021 and 2022, according to Ember. In the short term, potential supply will therefore still exceed demand. nib
In recent weeks, there has been a heated debate in Germany about heating. Should hydrogen also be used for private heating or should there be a greater focus on heat pumps and renewable energies? Simone Peter has a clear opinion: “The calls for the recognition of hydrogen-ready heating systems are counterproductive in this context, because they have less the welfare of consumers or the climate in mind than the prolonged sales of fossil gas boilers”. The president of the German Renewable Energy Federation (BEE) is calling on the Bundestag to ensure that the requirement for newly installed heating systems to use 65 percent renewable electricity from next year is “binding and without exceptions”. Yesterday, an amendment to the law on the subject was passed by the federal cabinet. The Bundestag still has to approve it.
Peter has been fighting for renewables as BEE chairwoman since 2018. Germany is far from a sufficient expansion of renewables, the former Green Party chairwoman says: “We are now experiencing the consequences of a policy that no longer gave renewables the priority guaranteed by law.” Germany has lost the photovoltaic industry to Chinese competition. One reason, he said, was that the government cut the feed-in tariffs for the plants. Rotor blade manufacturing for wind turbines also no longer exists in Germany. “That hurts a lot.”
In order to reclaim the position of a climate action pioneer, politicians must advance the expansion of renewables in the electricity, heating and transport sectors. So far, the government has been too cautious in tackling the heat transition in buildings, says Peter. “There’s still a lot of ground to be covered here.” And if that happens, Peter believes the energy transition as a whole could move even faster than anyone thought at the beginning of 2022.
Simone Peter became interested in sustainability and green issues at an early age. When the construction of the French nuclear power plant in Cattenom near the German border was announced, thousands protested nuclear energy in Saarland. Among them were the teenager Simone Peter and her entire family. “I am a classic child of the 1980s,” says the current president of the German Renewable Energy Federation (BEE). Awareness of environmental issues ran in the family: “We were the first in town with solar cells on the roof and an electric car. That was in 1988.”
Simone Peter was born in Quierschied, Saarland, in 1965. She studied biology at Saarland University and obtained her doctorate in 2000 as the Chair of Microbiology.
Politically, Peter became involved with the Green Party early on. “I was drawn to the Greens and their topics – from dying forests to women to peace policy.” Peter’s commitment turned into a career. In 2009, she became environment minister in her home state, and in 2013, federal chairwoman of the Alliance 90/The Greens party.
At the EU level, Peter is currently fighting against the threat of a new “planned economy” in the electricity sector. She believes promoting renewables through so-called contracts for differences is the wrong way. The market design must be sustainable in the long term, she says. “That doesn’t mean replacing one rigid system with another rigid system,” Peter says. What renewables need, she says, is more flexibility in the electricity market.
Despite the slow progress in Germany, the BEE president recognizes movement in politics: “We recognize that the German government has done more with its 30 or so legislative packages in recent months than the last few governments have done in the past ten years.”
Is she still a party member? “Of course, I’m still with the Greens. That is and will remain part of my biography.” However, the BEE is organized across party lines. And that’s a good thing, she says. Svenja Schlicht
To tackle the climate crisis, “everything, everywhere, all at once” must happen, warns António Guterres. But in politics, progress is often only made with small steps: In the UK, climate change has taken a back seat to energy security issues over the past few months. The government’s new climate plan is being criticized as lacking innovation and not providing any new funding. In the trade agreement between the EU and the Mercosur states, there is currently – again – quarrel over sustainability issues. It is a back-and-forth over a treaty that was actually already considered negotiated, but is highly controversial.
And the World Bank reform did not achieve much at the Spring Meetings either. Progress in climate financing is generally slow. That is why Ani Dasgupta, head of the World Resources Institute, calls in today’s interview on the World Bank to do more to leverage private money. But private investors such as wealth and pension funds still have trillions invested in fossil fuel companies, as a recent NGO study shows. And even new players like China have done too little regarding climate finance in the last few years.
A small silver lining in the end: The expansion of wind and solar energy is already proceeding at a fairly steady pace. Many countries have greatly expanded wind and solar power in recent years. But here, too, we need to stay on the ball and step up the pace!
The European Union is meeting resistance with its request to oblige the four Mercosur states to protect the rainforest. The EU Commission wants to encourage Argentina, Brazil, Paraguay and Uruguay to sign a binding addendum to the free trade agreement that has been negotiated but not yet signed. But the governments there have so far refused to do so.
Negotiators from both sides were supposed to meet this Wednesday and Thursday in Buenos Aires to discuss Europe’s demands. On the table this time was supposed to be a text proposal from the Mercosur governments on the additional declaration requested by the EU. However, the physical meeting was postponed yesterday at short notice until May. The Mercosur side in particular needed more time to prepare, according to EU sources. Both sides “remain determined to finalize the agreement, including the supplementary instrument, as soon as possible”, a Commission spokeswoman said.
During the first round of negotiations in March, the Commission presented its proposal to flesh out the commitments made under the sustainability section of the trade agreement. The aim: Addressing concerns in the EU states and the European Parliament that free trade with the South American countries could potentially contribute to the deforestation of the rainforest. This way, the Commission wants to win approval for the agreement, which particularly France, Austria and the Netherlands find highly controversial.
The European text proposal was leaked before Easter. It involves these areas:
The European proposal contained 19 references to the Paris Agreement alone. It provides for voluntary objectives for the signatory states and does not include any sanctions to enforce them. South America is concerned that the EU could introduce sanctions through the back door by introducing a binding addendum. For example, tariff concessions agreed in the EU-Mercosur Treaty could be suspended if the national targets of the Paris Agreement are missed, warns an official from Uruguay. In Brasilia, too, fears are voiced that the wording could be a gateway for trade sanctions if the government does not severely restrict deforestation in the Amazon region.
The Mercosur countries are also opposed to introducing issues into the negotiations that were not part of the fundamental political agreement in 2019. These include, in particular, the Global Biodiversity Framework, which was agreed upon in Montreal last December but has not yet been ratified by the countries. Governments also believe that the text proposed by the EU is heavily weighted towards environmental conservation and ignores the other two pillars of sustainable development – the social and economic aspects. This is an old dispute between the two trading blocs.
Furthermore, Mercosur governments are concerned about how the EU regulation on deforestation-free products or the Carbon Border Adjustment Mechanism (CBAM), which were passed in the European Parliament on Wednesday, are related to the EU-Mercosur agreement. “They are unilateral and may affect the balance of the agreement, which took 20 years to negotiate,” Brazilian government sources stated.
The EU Commission is trying to dispel these concerns. Such disputes should not be settled through sanctions, but with the help of an expert panel, a high-ranking EU official says.
However, the Commission itself is facing pressure: The German Greens, in particular, have so far made their consent to the agreement dependent on improved enforcement of the sustainability agreements. What is needed is “a new version of the supplementary agreement, including dispute settlement mechanisms with sanctions, so that effective forest protection measures are actually enshrined”, demanded Maik Außendorf, a Green member of the Bundestag, after a hearing on the Mercosur agreement in the Economic Committee.
Now it comes to a showdown. Both sides express great interest in the trade agreement. They have declared their intention to reach an agreement by the end of the year at the latest. In July, Brazil takes over the presidency of Mercosur for six months. In the EU, Spain takes over the presidency, which is also committed to the agreement.
The free trade agreement with the four South American countries would be the economically most significant treaty the EU has ever signed: It could save exporters four billion euros in customs tariffs per year. By comparison, the deal with Japan saves about one billion euros. Brazil and other countries protect their markets with high import tariffs of 35 percent on cars. Mechanical engineering, the agricultural, chemical and pharmaceutical sectors would also benefit.
However, the economic advantages are not the only reason why Commission President Ursula von der Leyen and German Chancellor Olaf Scholz support the trade agreement: They see it as a means of pulling Latin American countries over to their side in the geopolitical power struggle. China has greatly increased its trade with the region over the past few years and has replaced the EU as its main trading partner.
In fact, China is by far the biggest trading partner for Brazil. This is reflected in the very pro-Beijing course that President Lula da Silva is now pursuing. During his visit to Beijing, Lula made it clear that he does not share the West’s course of distancing itself from authoritarian states like China and Russia. Furthermore, China and Brazil agreed in late March to conduct more trade directly in their own national currencies in the future, thus reducing their dependence on the US dollar.
Lula has announced that he also wants to negotiate a trade agreement with Beijing. Before that, however, he wants to finalize the deal with the Europeans, according to Brussels. In the Mercosur countries, there is “an interest in maintaining the EU as a counterweight to the USA and China,” says a high-ranking EU official. By Daniela Chiaretti and Till Hoppe
Mr. Dasgupta, the World Bank is supposed to provide more money for climate action and adaptation – that was the key topic of last week’s Spring Meeting. What has the meeting achieved?
The World Bank should definitely be a leader in bringing climate and development together. For many, it is not happening fast enough, including us at WRI. But the current context is also highly complex – with the consequences of the Covid pandemic, the Ukraine war, the excessive debt of many countries and the food and energy crisis.
How should the bank respond?
Firstly, it should lend more money. And secondly, it should definitely see climate and development as one. And finally, and most difficult in my opinion, it should cooperate more with other stakeholders to find financing solutions. Instead of simply lending itself, it should help countries to develop joint financing solutions from public funds, private capital and World Bank money. Because without private money, the change to a climate-friendly world will not be possible. We don’t have enough public money to do it. There was little progress in this regard at the Spring Meeting.
What are the chances that mobilizing more private capital will actually succeed?
Private donors shy away from high risks. But when the World Bank gets involved, it adds predictability. Together with the International Monetary Fund, whose task is to ensure macroeconomic stability, it can create a more predictable environment for private donors. This is especially important for countries with a particularly low-income level, to which the World Bank subsidiary IDA grants long-term loans at particularly good conditions.
Why should this work better in the future than it has in the past?
It can only work if the World Bank plays a different role than it has done so far. It must see itself more as part of a larger network and as a kind of catalyst that brings different donors together. It can create the necessary trust. Achieving this is the challenge for the Bank’s new president.
Perhaps the most concrete outcome of the spring meeting was that the bank’s loan-to-equity ratio is to drop from 20 to 19 percent. How much does that help the climate?
The hope is that the lower ratio will mobilize an additional four to five billion US dollars per year. Part of this is to flow into climate financing. That is an important first step. But it is not enough.
How important would debt relief be?
The debt crisis is a serious and growing problem, particularly for countries with especially low-income levels. They spend a considerable part of their public funds on debt servicing. The money is then not available for other things – including climate action, climate change adaptation and repairing climate damage. At least the major donors seem to have recognized the problem. There were consultations on this at the spring meeting, in which China also took part. But my impression is that there was hardly any concrete progress.
If the framework conditions for the World Bank’s work have become so much more difficult: How much can it do for the climate at all, given the multiple crises?
To believe that fighting poverty and protecting the climate are mutually exclusive goals is a misconception. The two go hand in hand. Developing countries need economic growth, but in a climate-friendly way. The Bank’s overarching goal is to fight poverty – good! But equally important are the fight against climate-related disasters, adaptation to climate change and the opportunities that climate action offers for economic development, for example by creating jobs in clean industries.
NGOs criticize that the World Bank still finances fossil fuel projects and complain about a lack of transparency. How credible is the promise of climate-friendly change?
The criticism of a lack of transparency is legitimate. It is difficult to track how much money is actually flowing into climate-friendly investments at the moment. The Bank could change that relatively easily in order to strengthen its credibility. And of course, it is not easy to change the way the World Bank works. I worked there for 20 years. The Bank does business in its own way – but it is also different from 40 years ago. It has evolved. In the same way, it has to change now, at a time when we need enormous sums of money to manage the global, climate-friendly transformation.
What do you expect from the future World Bank President Ajay Banga?
I am optimistic. Banga is from India, just like me. So he grew up in a country with a lot of poverty. That is a very important experience. And with Mastercard, he has successfully led a big company. But running the World Bank is an art of its own. There is hardly any other place where so many smart, good people work. To lead them, you have to be a good listener and willing to learn. And the challenges are great. A lot will depend on what priorities Banga sets.
What actual decisions can still be expected from the upcoming meetings leading up to the annual meeting of the IMF and the World Bank in Marrakech next fall?
I believe we will get a better idea of what Banga wants to focus his work on. And perhaps more details of the future global financial architecture will emerge at the financial summit hosted by French President Emmanuel Macron in June. Reforming the World Bank alone is not enough. We should think about the whole financial system and what role the World Bank can play in it – and what role the other parts of the system can play. I hope that this debate will happen at the Paris meeting.
Ani Dasgupta is President and CEO of the World Resources Institute (WRI) in Washington, D.C.. Before joining WRI in 2014, he served as Director of Knowledge and Learning at the World Bank.
Since the invasion of Ukraine by Russia over twelve months ago, energy security has become the main mantra of the UK Prime Minister Rishi Sunak and his short-lived predecessor Liz Truss, while “climate change” appears to have largely disappeared from the government’s vocabulary.
Indeed, the raft of announcements covered by the “Powering Up Britain” paper, the Government’s “blueprint for the future of energy in this country” was published on what ministers billed “energy security” day, with previous plans to use a “green day” label quietly dropped.
Sunak’s decision to replace the Department for Business, Energy and Industrial Strategy (BEIS) with the Department for Energy Security and Net Zero (DESNZ) with a remit to focus on energy supply, markets and the move to net zero was largely welcomed as a positive step for climate action. Yet, real action is missing. For the moment, no government department has decided to speed ahead with actions to cut emissions in line with climate science and the urgency demanded by the latest report from the Intergovernmental Panel on Climate Change published in March 2023.
While former UK Prime Minister Tony Blair insisted back in 1996 that education, education, education was his priority, it would seem that for Sunak, it is security, security, security. Powering Up Britain focuses on delivering net zero through energy security, climate security, consumer security and economic security.
Yet, the measures set out to deliver:
are largely a repackaging of previous announcements.
Ed Matthew from climate think tank E3G said most of the policies had already been announced last year and were “not bold enough to keep the UK competitive in the clean tech race or put us back on track to net zero”. He described the whole package as “underwhelming”.
UK-based climate campaigners were particularly critical about the lack of new money on the table to speed up the journey to net zero, especially given the massive amount of investment available for clean energy technologies in the US’ Inflation Reduction Act (IRA) and the large amounts of finance expected to be generated by EU’s recently proposed Net Zero Industry Act. The UK government said it would delay publishing any financial response to these policies until autumn 2023.
Jess Ralston from the Energy and Climate Intelligence Unit (ECIU), a think tank, said the delay could be “the final nail in the coffin for businesses and offshore wind investors who will simply move investment to where there is long-term policy and regulatory certainty”.
“Without finance, nothing on net zero will get done,” said E3G’s Matthew. He called for the UK’s newly launched Green Finance Strategy “to be underpinned by a comprehensive net zero investment plan, an independent tracking of net zero financial flows, a strong net zero mandate for regulators and a credible green taxonomy“.
The strategy was part of the promise made by Sunak as UK Chancellor of the Exchequer (finance minister), under the leadership of Boris Johnson, at COP26 in Glasgow in 2021 to make Britain a world-leading net-zero financial center.
Since Johnson was forced to resign as UK Prime Minister in July 2022, nobody at the top of the UK government tree has taken up the mantle to push climate action as a key policy priority. Whenever there are signs of progress, a bump in the road often appears, which slows down momentum and suggests the current UK government is not fully committed to getting to net zero emissions by mid-century.
In the foreword to Powering Up Britain, Grant Shapps, Secretary of State for Energy Security and Net Zero, talks about “committing to a different future. One that breaks with the fossil fuels that powered our past two centuries”. Yet, climate minister Graham Stuart has voiced support for a new coal mine in Cumbria, northwest England, and called for a more nuanced take on fossil fuels rather than viewing them as “the spawn of the devil”.
The government has come forward with a new scheme to help people insulate their homes, but, says E3G, it will only insulate 100,000 more homes a year when there are 17 million homes in the UK with poor insulation
Many of the updates in Powering Up Britain were made in response to the independent Net Zero Review recently carried out by the Conservative backbench MP Chris Skidmore. Published in January 2023, it argued that the transition to net zero is also an opportunity for growth, and that the UK is well-placed to benefit from increasing demand for net zero goods and services
“Net zero will make us warmer and richer (not colder and poorer) and is the economic opportunity of the decade, if not this century,” argued Skidmore in the House of Commons at the end of May.
His recommendations – the result of interviews with “thousands of individuals business and companies”- also made clear, however, that the UK must make ambitious policies and public and private investments to reap these benefits.
It is still not apparent whether the government has fully taken on board these conclusions or whether Sunak and his ministers are, in Skidmore’s words, “climate delayers” and “the new climate deniers“. Philippa Nuttall Jones
It is positive news: Wind and solar energy have expanded rapidly in many countries over the past few years. Today, 12.1 percent of the world’s electricity is generated by wind and solar power plants. In 2015, the share was still at 4.6 percent, as a report by the think tank Ember shows. And the growth continues: Over the weekend, the G7 countries decided to add another 150 gigawatts of offshore wind capacity and 1,000 gigawatts from photovoltaics by 2030.
And yet, growth is just about enough from a climate perspective. According to the IEA net-zero emissions scenario:
According to Ember, growth rates between 2015 and 2021 came close to these targets: Solar energy grew by an average of 26 percent annually worldwide, and wind energy by 14 percent. But the pace would have to be maintained. In absolute terms, an annual increase of 25 percent would mean sustained growth. However, the International Renewable Energy Agency (IRENA) recently warned that the pace of renewables expansion would have to increase significantly in order to meet current climate targets. Ember also points out that hydropower needs to grow faster.
The capacities to produce the required solar panels are secured, at least in the short term. China, as the world’s leading manufacturer, has increased capacities by a whopping 66 percent to 600 gigawatts between 2021 and 2022, according to Ember. In the short term, potential supply will therefore still exceed demand. nib
In recent weeks, there has been a heated debate in Germany about heating. Should hydrogen also be used for private heating or should there be a greater focus on heat pumps and renewable energies? Simone Peter has a clear opinion: “The calls for the recognition of hydrogen-ready heating systems are counterproductive in this context, because they have less the welfare of consumers or the climate in mind than the prolonged sales of fossil gas boilers”. The president of the German Renewable Energy Federation (BEE) is calling on the Bundestag to ensure that the requirement for newly installed heating systems to use 65 percent renewable electricity from next year is “binding and without exceptions”. Yesterday, an amendment to the law on the subject was passed by the federal cabinet. The Bundestag still has to approve it.
Peter has been fighting for renewables as BEE chairwoman since 2018. Germany is far from a sufficient expansion of renewables, the former Green Party chairwoman says: “We are now experiencing the consequences of a policy that no longer gave renewables the priority guaranteed by law.” Germany has lost the photovoltaic industry to Chinese competition. One reason, he said, was that the government cut the feed-in tariffs for the plants. Rotor blade manufacturing for wind turbines also no longer exists in Germany. “That hurts a lot.”
In order to reclaim the position of a climate action pioneer, politicians must advance the expansion of renewables in the electricity, heating and transport sectors. So far, the government has been too cautious in tackling the heat transition in buildings, says Peter. “There’s still a lot of ground to be covered here.” And if that happens, Peter believes the energy transition as a whole could move even faster than anyone thought at the beginning of 2022.
Simone Peter became interested in sustainability and green issues at an early age. When the construction of the French nuclear power plant in Cattenom near the German border was announced, thousands protested nuclear energy in Saarland. Among them were the teenager Simone Peter and her entire family. “I am a classic child of the 1980s,” says the current president of the German Renewable Energy Federation (BEE). Awareness of environmental issues ran in the family: “We were the first in town with solar cells on the roof and an electric car. That was in 1988.”
Simone Peter was born in Quierschied, Saarland, in 1965. She studied biology at Saarland University and obtained her doctorate in 2000 as the Chair of Microbiology.
Politically, Peter became involved with the Green Party early on. “I was drawn to the Greens and their topics – from dying forests to women to peace policy.” Peter’s commitment turned into a career. In 2009, she became environment minister in her home state, and in 2013, federal chairwoman of the Alliance 90/The Greens party.
At the EU level, Peter is currently fighting against the threat of a new “planned economy” in the electricity sector. She believes promoting renewables through so-called contracts for differences is the wrong way. The market design must be sustainable in the long term, she says. “That doesn’t mean replacing one rigid system with another rigid system,” Peter says. What renewables need, she says, is more flexibility in the electricity market.
Despite the slow progress in Germany, the BEE president recognizes movement in politics: “We recognize that the German government has done more with its 30 or so legislative packages in recent months than the last few governments have done in the past ten years.”
Is she still a party member? “Of course, I’m still with the Greens. That is and will remain part of my biography.” However, the BEE is organized across party lines. And that’s a good thing, she says. Svenja Schlicht
