It took a small eternity, but it was worth it: Instead of clearing up the question in the morning with what ideas and demands the EU should travel to COP28 in Dubai in December, the tussle over the European path lasted late into the night on Monday in Luxembourg. But the EU environment ministers reached an agreement after all: On ambitious renewable energy expansion targets, on efficiency and, above all, on the fossil fuel phase-out. But when it came to the new climate target, the Europeans lacked courage. Lukas Scheid spent the night writing about this in this Climate.Special.
There was also a long debate about a new global financial architecture: The World Bank and IMF are supposed to do more than ever in the fight against the climate crisis. Now, under its new head, the World Bank has decided on reforms: A new vision, more money, simpler access to loans for poor countries. Some of the reforms are on their way. However, this will hardly be enough, neither in terms of money nor structural reforms. The new World Bank chief Ajay Banga made it clear immediately: At any rate, much more capital is needed if the poorest are not to become even bigger losers of climate change.
Both issues will accompany us to Dubai and beyond. They are so important that we are presenting them to you without delay in this special. Have an exciting read!
The EU enters the COP28 negotiations in Dubai in late November with a change of course on a key detail: The Europeans are pushing for the expansion of renewables, energy efficiency and rapid decarbonization of the economy. To achieve this, they refuse to use the controversial CCS technology in the energy sector in general – something they still had called for in the spring.
The EU environment ministers defined, among other things, the following negotiating positions for COP28:
The word “unabated” caused the biggest dispute in the internal EU negotiations. It is about the role of CO2 capture technologies (CCS) in decarbonization. On the one hand, the EU wants to accept them when it comes to a global phase-out of unabated fossil fuels. This is because the reports of the Intergovernmental Panel on Climate Change (IPCC) also suggest that it is necessary to use CCS in sectors that are otherwise difficult to decarbonize in order to achieve climate targets.
The picture is different in the energy sector. Here, the EU now wants to focus globally on an “energy sector predominantly free of fossil fuels well before 2050” explicitly without the use of carbon capture. However, large-scale use of CCS in the energy sector is the position of the COP host United Arab Emirates and other oil states. And the EU had agreed on a similar position in the spring. At that time, the Europeans only called for an “energy system free of unabated fossil fuels.” The new position vis-à-vis the oil states is now stricter again, because it reverses the EU position from March, when CCS was also considered for the energy sector.
A success for the EU in Dubai would significantly narrow the loophole for CCS in the energy sector. CCS would be classified as an exceptional application that is cost-effective and useful only in certain sectors, analyzes Linda Kalcher, founder and director of the think tank Strategic Perspectives. “This doesn’t give oil and gas companies a carte blanche to keep emitting as they have in the past.” Kalcher believes this sends an important signal to international partners and clearly differentiates the EU from the position of the COP presidency.
Jennifer Morgan, Germany’s Special Envoy for International Climate Action, also called it a success for ambitious climate action. The EU position clearly signals the “transition to a socio-ecological and just” economy.
In addition, at COP28, the EU countries aim to ensure that no new coal-fired power plants are built anywhere in the world by the end of the 2030s at the latest. Subsidies for fossil fuels will also be discontinued if they neither tackle energy poverty nor serve a just green transition. The EU negotiating position on climate finance is expected to be decided today, Tuesday, at the meeting of economic and finance ministers.
The significantly slimmed-down update of the EU’s 2030 climate target could prove problematic for the climate negotiations at COP28. The European negotiators will not be able to present a higher target than previously in Dubai. The EU’s climate target (NDC) filed with the UN remains at a CO2 reduction of at least 55 percent by 2030 compared to 1990.
EU representatives repeatedly declared their intention to raise the EU NDC to minus 57 percent once the negotiations on the Fit for 55 package had been concluded. This will not happen. Although the EU will officially submit an update of its climate target, it will merely be an additional declaration of the measures that will be taken to achieve the existing target. There is no mention of a raised NDC, nor does the figure 57 appear in the statement. Because of that, Green climate politician Michael Bloss accused the new EU Climate Commissioner Hoekstra of a “crash landing.”
According to council president and Spain’s environment minister Teresa Ribera, many countries had not wanted to see this figure in the text, explaining the absence of an increase. However, she stressed that the EU will exceed its climate target through the Fit for 55 measures. This, she said, is reflected in the declaration. In Dubai, however, where the EU will urge other countries to raise their climate targets, this is unlikely to be particularly convincing. After all, what is on paper will likely be the decisive factor. And the EU still has a 55.
The World Bank and the International Monetary Fund (IMF) have initiated structural reforms to align the international financial system better to combat the climate crisis. At last week’s annual fall meeting in Marrakech, Morocco, the World Bank, in particular, under its new head Ajay Banga, announced measures to better balance poverty reduction and economic growth with climate change mitigation and adaptation. Critics had long called for these changes and some countries, such as Germany and the United States, had pushed for them.
The World Bank will set a decisive new course. The details emerge from the as-yet-unpublished statement by the Chair of the Development Committee of the World Bank and IMF, available to Table.Media:
Many of the ideas arise from a dilemma: The World Bank does not want to require its shareholders, the countries, to increase their capital: After all, strained national budgets, geopolitical rivalry between the United States and China and between developed and emerging countries in general, as well as the Ukraine conflict, make a unified approach difficult. Moreover, unilateral capital increases would shift the balance of votes between the countries.
Nevertheless, World Bank chief Banga made it clear that his bank urgently needs more capital beyond the roughly 100 billion dollars annually it has so far provided for development projects: Economic growth worldwide has dropped from six to five percent annually in recent decades and will continue to fall to four percent in perspective: “With each lost percent, 100 million people are pulled into poverty and another 50 million people are pushed into extreme poverty.” He promised a “better and bigger bank” that will also work to address the financial consequences of environmental damage (six trillion dollars annually, according to Banga) and environmentally harmful subsidies. The bank is also expected to push for an international carbon market.
In turn, German Development Minister Svenja Schule promised to look at other development banks and the entire financial system: “The World Bank is also able to reform itself. It is no longer possible in the 21st century to successfully fight poverty without also getting involved in protecting vital natural resources.”
The environmental and development organization Germanwatch commended the “clear change of direction” for more climate action, food security, digitalization and health at the World Bank. It said Germany and other countries must now ensure that the promises are implemented and also apply to the German KfW, for example. However, the organization said that necessary changes in the decision-making structures of the bank and the IMF had fallen short.
At the IMF, too, a shift toward greater climate action is on the agenda: Barbados Prime Minister Mia Mottley’s Bridgetown Initiative, for example, calls for developed countries to make special drawing rights (SDRs) available for investment in climate action.
The IMF did not reach a uniform arrangement on this issue, but made gradual progress. The quota allocation system to certain countries in the IMF is to be revised. Until this process is completed, the IMF Executive Board is “to propose transitional arrangements, if needed,” according to the final document. That means countries can now allocate more capital to climate issues via “ad hoc” quota increases if they choose to. However, this is unlikely to apply to the EU and Germany: the European Central Bank and the Bundesbank reject this idea because they are politically independent. Germany has, therefore, transferred direct budgetary funds to the IMF.
It took a small eternity, but it was worth it: Instead of clearing up the question in the morning with what ideas and demands the EU should travel to COP28 in Dubai in December, the tussle over the European path lasted late into the night on Monday in Luxembourg. But the EU environment ministers reached an agreement after all: On ambitious renewable energy expansion targets, on efficiency and, above all, on the fossil fuel phase-out. But when it came to the new climate target, the Europeans lacked courage. Lukas Scheid spent the night writing about this in this Climate.Special.
There was also a long debate about a new global financial architecture: The World Bank and IMF are supposed to do more than ever in the fight against the climate crisis. Now, under its new head, the World Bank has decided on reforms: A new vision, more money, simpler access to loans for poor countries. Some of the reforms are on their way. However, this will hardly be enough, neither in terms of money nor structural reforms. The new World Bank chief Ajay Banga made it clear immediately: At any rate, much more capital is needed if the poorest are not to become even bigger losers of climate change.
Both issues will accompany us to Dubai and beyond. They are so important that we are presenting them to you without delay in this special. Have an exciting read!
The EU enters the COP28 negotiations in Dubai in late November with a change of course on a key detail: The Europeans are pushing for the expansion of renewables, energy efficiency and rapid decarbonization of the economy. To achieve this, they refuse to use the controversial CCS technology in the energy sector in general – something they still had called for in the spring.
The EU environment ministers defined, among other things, the following negotiating positions for COP28:
The word “unabated” caused the biggest dispute in the internal EU negotiations. It is about the role of CO2 capture technologies (CCS) in decarbonization. On the one hand, the EU wants to accept them when it comes to a global phase-out of unabated fossil fuels. This is because the reports of the Intergovernmental Panel on Climate Change (IPCC) also suggest that it is necessary to use CCS in sectors that are otherwise difficult to decarbonize in order to achieve climate targets.
The picture is different in the energy sector. Here, the EU now wants to focus globally on an “energy sector predominantly free of fossil fuels well before 2050” explicitly without the use of carbon capture. However, large-scale use of CCS in the energy sector is the position of the COP host United Arab Emirates and other oil states. And the EU had agreed on a similar position in the spring. At that time, the Europeans only called for an “energy system free of unabated fossil fuels.” The new position vis-à-vis the oil states is now stricter again, because it reverses the EU position from March, when CCS was also considered for the energy sector.
A success for the EU in Dubai would significantly narrow the loophole for CCS in the energy sector. CCS would be classified as an exceptional application that is cost-effective and useful only in certain sectors, analyzes Linda Kalcher, founder and director of the think tank Strategic Perspectives. “This doesn’t give oil and gas companies a carte blanche to keep emitting as they have in the past.” Kalcher believes this sends an important signal to international partners and clearly differentiates the EU from the position of the COP presidency.
Jennifer Morgan, Germany’s Special Envoy for International Climate Action, also called it a success for ambitious climate action. The EU position clearly signals the “transition to a socio-ecological and just” economy.
In addition, at COP28, the EU countries aim to ensure that no new coal-fired power plants are built anywhere in the world by the end of the 2030s at the latest. Subsidies for fossil fuels will also be discontinued if they neither tackle energy poverty nor serve a just green transition. The EU negotiating position on climate finance is expected to be decided today, Tuesday, at the meeting of economic and finance ministers.
The significantly slimmed-down update of the EU’s 2030 climate target could prove problematic for the climate negotiations at COP28. The European negotiators will not be able to present a higher target than previously in Dubai. The EU’s climate target (NDC) filed with the UN remains at a CO2 reduction of at least 55 percent by 2030 compared to 1990.
EU representatives repeatedly declared their intention to raise the EU NDC to minus 57 percent once the negotiations on the Fit for 55 package had been concluded. This will not happen. Although the EU will officially submit an update of its climate target, it will merely be an additional declaration of the measures that will be taken to achieve the existing target. There is no mention of a raised NDC, nor does the figure 57 appear in the statement. Because of that, Green climate politician Michael Bloss accused the new EU Climate Commissioner Hoekstra of a “crash landing.”
According to council president and Spain’s environment minister Teresa Ribera, many countries had not wanted to see this figure in the text, explaining the absence of an increase. However, she stressed that the EU will exceed its climate target through the Fit for 55 measures. This, she said, is reflected in the declaration. In Dubai, however, where the EU will urge other countries to raise their climate targets, this is unlikely to be particularly convincing. After all, what is on paper will likely be the decisive factor. And the EU still has a 55.
The World Bank and the International Monetary Fund (IMF) have initiated structural reforms to align the international financial system better to combat the climate crisis. At last week’s annual fall meeting in Marrakech, Morocco, the World Bank, in particular, under its new head Ajay Banga, announced measures to better balance poverty reduction and economic growth with climate change mitigation and adaptation. Critics had long called for these changes and some countries, such as Germany and the United States, had pushed for them.
The World Bank will set a decisive new course. The details emerge from the as-yet-unpublished statement by the Chair of the Development Committee of the World Bank and IMF, available to Table.Media:
Many of the ideas arise from a dilemma: The World Bank does not want to require its shareholders, the countries, to increase their capital: After all, strained national budgets, geopolitical rivalry between the United States and China and between developed and emerging countries in general, as well as the Ukraine conflict, make a unified approach difficult. Moreover, unilateral capital increases would shift the balance of votes between the countries.
Nevertheless, World Bank chief Banga made it clear that his bank urgently needs more capital beyond the roughly 100 billion dollars annually it has so far provided for development projects: Economic growth worldwide has dropped from six to five percent annually in recent decades and will continue to fall to four percent in perspective: “With each lost percent, 100 million people are pulled into poverty and another 50 million people are pushed into extreme poverty.” He promised a “better and bigger bank” that will also work to address the financial consequences of environmental damage (six trillion dollars annually, according to Banga) and environmentally harmful subsidies. The bank is also expected to push for an international carbon market.
In turn, German Development Minister Svenja Schule promised to look at other development banks and the entire financial system: “The World Bank is also able to reform itself. It is no longer possible in the 21st century to successfully fight poverty without also getting involved in protecting vital natural resources.”
The environmental and development organization Germanwatch commended the “clear change of direction” for more climate action, food security, digitalization and health at the World Bank. It said Germany and other countries must now ensure that the promises are implemented and also apply to the German KfW, for example. However, the organization said that necessary changes in the decision-making structures of the bank and the IMF had fallen short.
At the IMF, too, a shift toward greater climate action is on the agenda: Barbados Prime Minister Mia Mottley’s Bridgetown Initiative, for example, calls for developed countries to make special drawing rights (SDRs) available for investment in climate action.
The IMF did not reach a uniform arrangement on this issue, but made gradual progress. The quota allocation system to certain countries in the IMF is to be revised. Until this process is completed, the IMF Executive Board is “to propose transitional arrangements, if needed,” according to the final document. That means countries can now allocate more capital to climate issues via “ad hoc” quota increases if they choose to. However, this is unlikely to apply to the EU and Germany: the European Central Bank and the Bundesbank reject this idea because they are politically independent. Germany has, therefore, transferred direct budgetary funds to the IMF.
