13 December 2023
COP28 signals the journey to the end of the fossil fuel era has begun. For the multilateral development banks (MDBs), just like at COP27, the final text reiterates the message that they have a significant role to play in the transition away from fossil fuels.
The Global Stocktake text calls on the MDBs ‘to scale up investments in climate action and calls for a continued increase in the scale, and effectiveness of, and simplified access to, climate finance, including in the form of grants and other highly concessional forms of finance.’
The text also recognises the updated vision statement from the World Bank to ‘create a world free of poverty on a livable planet’ and acknowledges the commitment by the multilateral development banks to strengthen their collaboration for greater impact via the development of joint country platforms.
Yet if the MDBs are truly committed to reform and to building a livable planet this cannot happen without an end to their direct and indirect financing of fossil fuels. It requires reform that recognises climate justice for the Global South and those suffering the worst impacts of the climate crisis. It also requires reform that includes transparency, democracy, equity, debt - cancellation, the recognition of human rights and commitment to accelerate a 1.5-aligned just transition.
The Global South is owed grants-based and concessional public money that supports people, not profits. It should be used transparently, democratically and equitably to fund proven climate solutions, prioritise community-led renewable energy and deliver a just transition.
The MDBs made a commitment to align with the Paris Agreement in 2017. In Dubai, they provided an update on their joint Paris alignment process. They can do much better: finance and pledges become a meaningless greenwashing exercise if they are not addressing the root cause of the climate crisis or if they are opening the door to dangerous distractions.
The COP28 text and the MDB Paris alignment process leave a door open for false solutions: including fossil gas which adds to emissions and locks countries into a fossil fuel pathway often without addressing energy access needs and unproven technologies such as CCUS that will not deliver any meaningful emissions reduction in the next decade.
The EBRD energy policy due to be finalised the same day as COP ends will provide an important signal on the direction of the MDBs. We will be watching to see if the shareholders of the EBRD will be demonstrating their commitment to supporting a sustainable, just energy transition to renewable energy or greenlighting a policy that allows public money to continue enabling fossil gas projects.
The science is clear, there can be no new finance flowing to fossil fuels. Any role envisaged for the MDBs as part of the solution to climate finance must be prefaced with transformative change that includes a commitment to end new direct and indirect finance for coal, oil and fossil gas projects and to shift this finance to support a just transition that is transparent and upholds the rights of all.
Quotes:
Florence Gichoya, Access Coalition
In the Joint MDBs Statement at COP28, the MDBs indicated they will work together to meet the Paris Agreement goals and continue to ‘support just transition efforts in diverse contexts and regions’, however their recurrent funding of fossil fuel is counterproductive. The dependence on fossil fuels aggravates negative impacts of climate change on people and the environment.
MDBs need to commit to a just energy transition by directing fossil fuel financing to clean energy especially in the Global South.. For instance, Africa has received only two percent/$60 billion of renewable energy investments in the last ten years.
Funding renewable energy is the most cost-effective source for two-thirds of the global population. Climate finance should flow to the last mile communities that are already lagging behind. This is the surest way of fast tracking uptake of clean energy and achieving the SDG 7 targets by 2030.
Bronwen Tucker, Oil Change International
People power put fossil fuels on the UN agenda like never before. Multilateral development banks (MDBs) must feel the pressure to finally do what is right: stop funding fossils, make their governance democratic, and scale up fair funding for climate solutions. The text calls for a transformation of their approach, including the prioritization of grants and highly concessional finance communities need. Ultimately, a fossil fuel phaseout deal was blocked by rich countries claiming climate leadership but failing to attach to it any meaningful commitment to go fastest, share technology, and pay their fair share so that a just energy transition can happen everywhere. After decades of broken promises countries in the Global South needed a strong assurance that a fossil fuel phase out will not leave them behind. This is the same dynamic that has been stopping the MDBs from living up to their climate and development goals.
Shereen Talaat, MenaFem Movement For Economic, Development and Ecological Justice.
In the pursuit of a sustainable future, it's imperative that MDBs must respond to the urgent call to action. A fair, fast, and fully funded #FossilFuelPhaseOut, is non-negotiable. The time for swift, just measures to address climate change is now. MDBs must commit to a transition that leaves no room for compromise, ensuring a future that is both just and sustainable, as well as free from the shackles of fossil fuel dependence. This commitment must be resolute, emphasizing the need for immediate and decisive steps towards a cleaner, more equitable energy system, without perpetuating colonial legacies.
Sophie Richmond, Climate Action Network International
Fossil fuels aren’t the future, they are a death sentence. In Dubai, COP28 has set a pathway to the end of fossil fuels but more must be done. MDBs have been singled out for their role in supporting climate action on this pathway. MDBs must support a people-centred, just,equitable transition to renewable energy that keeps 1.5 alive. They cannot play that role if they are still funding fossil fuels - the very cause of climate change.
Alison Doig, Recourse
Finally after 28 COPs, the text names fossil fuels as the villain of the climate crisis, but the call in the paper to transition away from fossil fuels lacks urgency, and the text includes too many loopholes for fossil gas and false solutions such as blue hydrogen and carbon capture that will delay the urgent action needed for 1.5oC.
Importantly the outcome text also calls for a tripling of renewable energy and the global average annual rate of energy efficiency improvements by 2030. MDBs and public finance must deliver on this. COP28 must herald a race to the top in delivering a just energy transition that builds a new, inclusive and climate resilient energy system of the future. And not hang onto the fossil fuel dependence of the past.