Without help for oil-producing countries, net zero by 2050 is a distant dream

By Ali Allawi, Deputy Prime Minister and Finance Minister of Iraq and Fatih Birol, Executive Director of the International Energy Agency (IEA)

Flames rising from oil refinery pipes in Basra, Iraq. Photo: Shutterstock

This blog post was originally published by the Guardian

In the Middle East and north Africa, global warming is not a distant threat, but an already painful reality. Rising temperatures are exacerbating water shortages. In Iraq, temperatures are estimated to be rising as much as seven times faster than the global average. Countries in this region are not only uniquely affected by global temperature rises: their centrality to global oil and gas markets makes their economies particularly vulnerable to the transition away from fossil fuels and towards cleaner energy sources. It’s essential the voices of Iraq and similar countries are heard at the COP26 climate change conference in Glasgow this November.

To stand a chance of limiting the worst effects of climate change, the world needs to fundamentally change the way it produces and consumes energy, burning less coal, oil and natural gas. The International Energy Agency’s recent global roadmap to net zero by 2050 shows the world’s demand for oil will need to decline from more than 90m barrels a day to less than 25m by 2050. This would result in a 75% plunge in net revenues for oil-producing economies, many of which are dominated by a public sector that relies on oil exports and the revenues they produce.

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Making Special Drawing Rights work for climate action and development

By Members of the Task Force on Climate, Development, and the International Monetary Fund1

The International Monetary Fund (IMF) is proposing a Resilience and Sustainability Trust (RST), aimed at helping countries build resilience, respond to climate change and make the necessary transitions that can support both development and climate. With the proper modalities and regular replenishment, and without onerous conditionalities or increasing member country debt burdens, such a facility would strengthen the climate finance architecture and put the IMF on the climate change map.  

The IMF is considering an RST initially financed through ‘re-channelled’ Special Drawing Rights (SDRs) from the recent $650 billion in SDRs approved by the IMF this summer. The 2021 SDR allocation was the largest in history, but given the structure of SDR allocations the vast majority of SDRs will flow to high-income countries that will not need them. Indeed, just over one percent of the SDR allocation will go to the poorest countries. In recognition of these asymmetries, G7 leaders recently pledged to re-channel upwards of $100 billion of their allocations for “step change” in investments, including clean energy and green growth in low-income countries.

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Intermediate cities and climate action: driving change through urban land use and governance

By Oliver Harman, Cities Economist for Cities that Work, International Growth Centre

In the first blog of this two-part series, it was argued that intermediate cities, through strong rural-urban linkages, especially in low-income settings, can provide an important social safety net in addition to their potential to alleviate poverty in the long-term. Moreover, and although largely undervalued by the international community and countries, intermediate cities can foster both short term climate adaptation and longer term climate mitigation. Namely, two areas currently under climatic strain stand to generate substantial gains through proactive policy: urban land use and municipal finances and urban governance. Through citizen driven mandates and by designing interventions that localise climate issues, stakeholders in climate action can help drive change in this area.

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Intermediate cities: a missing piece in the climate change puzzle

By Oliver Harman, Cities Economist for Cities that Work, International Growth Centre

Research and debate on climate change currently underestimate the importance of a key group of players: intermediate cities. Currently conversation and studies on climate change often centre on large and relatively wealthy capital cities. Their size in population, data availability and comparatively higher energy use per person are factors that draw attention. In comparison, low income intermediate cities (or small and medium sized cities) – those cities that play a linking role between rural and urban, and between cities of different sizes – are often left undervalued in the debate. This is despite these cities (particularly those equatorial or coastal in nature) facing disproportionate risks to climate shocks and stressors. They are vulnerable, and this vulnerability is increasing with rapid urbanisation, while they continue to face limited human and financial capacities.

Of the 100 fastest growing cities, some with populations under one million, the Climate Change Vulnerability Index shows that 84 of them, primarily in Africa, are at extreme risk. The findings from the 1,800 studied cities highlight the lack of adequate healthcare services and disaster mitigation systems, as well as vulnerable populations, as drivers of this exposure. Lower incomes in intermediate cities are another example of vulnerability with, for instance, citizens in primary city districts in Uganda having three times the GDP per capita (USD 2,440) than those in Secondary Districts (USD 719).

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Putting metrics to action: global co-operation and the Anthropocene

By Pedro Conceição, Director of the Human Development Report Office and lead author of the Human Development Report

Forest fires in California and Australia. Heatwaves in Europe and India. Snow in Texas. These are only some of the recent extreme weather events that are increasingly ravaging our planet. Climate change is likely playing a crucial role in all of them. Add in COVID-19, which almost certainly sprang from human interaction with wildlife, we have an even clearer warning of the risks of human pressure on the planet. These pressures have had such an impact that many scientists argue that we have entered a new era, the Anthropocene, or the age of humans, in which humans have become a dominant force shaping the planet.

The ongoing planetary crises pay no attention to national borders, and nor should our efforts to come up with solutions. The most notable and ambitious of these—the Paris Agreement on Climate Action—has prompted virtually all countries to commit to reducing their carbon emissions. Nations have also come together to agree on international frameworks for other goals such as preserving biodiversity.

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Strengthening climate resilience in developing countries: what are the priorities?

By Takayoshi Kato, OECD Development Co-operation Directorate and Nicolina Lamhauge, OECD Environment Directorate

Over the last 12 months, the Philippines has had to fight two rising tides threatening the population of its archipelago: the health and economic impacts of the COVID-19 pandemic, and the consequences of devastating weather events including several typhoons and tropical storms. Not only did Typhoon Goni lead to the evacuation of almost 1 million people from their homes last October, the country has also had to grapple with a string of less extreme, slow-onset changes, such as rising sea-levels, putting houses, schools, shops and infrastructure at risk. The Philippines is not an isolated case: all over the world, the COVID-19 pandemic has all but exposed the fragility of societies to systemic shocks, reminding us of the imperative of investing more resolutely in resilience building mechanisms and enablers.

The impact of climate change on developing countries is a case in point: by altering and intensifying risk patterns, it has been compounding other stressors such as poverty, inequality and discrimination, and threatening the ability of those countries to achieve their sustainable development objectives. Responding to this increasingly pressing need for climate action is a difficult task for administrations already struggling with other environmental challenges, on top of social and economic ones. International co-operation partners can provide critical support to partner countries. However, for finance and technical co-operation to be effective, and not complicate the task of the policymakers they mean to help, those partners must target and manage their support in a smart way, drawing from experience around the globe. As the OECD releases its updated guidance to making development pathways more climate resilient, three priorities emerge from our research and consultation process.

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The IMF’s turn on climate change

By Kevin P. Gallagher, Professor and Director of the Global Development Policy Centre at Boston University’s Pardee School of Global Studies, and Co-Chair of the ‘Think 20’ Task Force on International Finance to the G20

The International Monetary Fund (IMF) has recently pledged to put climate change at the heart of its work. A laggard to date, the IMF has to catch up fast to ensure that the world community can meet its climate change and development goals in a manner that doesn’t bring havoc to the global financial system. The IMF’s first test on climate change will be the extent to which it incorporates climate risk into this year’s reform of IMF surveillance activities. Given that these reforms will lock in for close to a decade, if the IMF doesn’t act now the consequences for prosperity and the planet will be grave.

Kristalina Georgieva has been a strong advocate of greening the financial system through her new post of Managing Director of the IMF, which she began in the fall of October 2019.  Unfortunately, she took office when the shareholder of the IMF with the most voting power, the United States, was led by a President who claimed climate change was a hoax. In the face of that pressure and to her credit, Georgieva steadfastly advocated for incorporating climate change into IMF operations and for a green recovery from the COVID-19 crisis even though her biggest patron made it difficult to put her words into action.

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Transitions in development: the European Green Deal and Latin America

By José Antonio Sanahuja, Director, Fundación Carolina, Spain, Special Advisor for Latin America and the Caribbean to the High Representative of the European Union for Foreign Affairs and Security Policy

The response to COVID-19, the ecological transition and strategic autonomy are the three driving forces of the European Union’s (EU) broad transformative programme. This programme involves deep changes in its own social and economic development model and in its relationship with the world. It is a short-term reaction to a pandemic that has fast become a systemic crisis. But it is also the EU’s long-term response to an international context of globalisation in crisis and challenges to the international order. The future of EU-Latin America relations will be deeply affected by these transformations.  

For the EU, as for Latin America, the pandemic is a catalyst for change. This time the reaction has been quite different in terms of monetary or fiscal measures compared to the self-destructive cycle of austerity adopted in the European debt crisis. Following an immediate response from the European Central Bank, the council adopted a first range of modest financial support measures. But in July 2020 the European Council agreed on an unprecedented package of 1.8 trillion euro, including the new 2021-27 budget and the “Next Generation” recovery programme. The programme involves linking budget, new common taxes and Eurobonds, paving the way to a common treasury. Therefore, this agreement is an important federal step forward, that just six months earlier would have been unbelievable. Beyond its macroeconomic and fiscal impact, these investment instruments will also push the EU towards an ambitious shift in its development model.

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Are African countries heading for a carbon lock-in or leapfrogging to renewables?

By Galina Alova, Smith School of Enterprise and the Environment, University of Oxford

Non-hydro renewables are likely to account for less than 10% of Africa’s power generation by the end of this decade. My recent co-authored study predicts fossil fuels to continue to dominate the electricity mix in many African countries, and the continent as a whole.

Opportunity to power development with renewables

Africa is presented with an important opportunity to make a decisive leap to renewables this decade. The continent’s energy demand is projected to more than double in the coming years, as countries seek to industrialise and improve the development outcomes for their growing populations, including providing affordable power to close the energy access gap. At the same time, Africa – the land of sun and wind – possesses vast renewable energy resources.  

Against this backdrop, renewables have become increasingly more competitive in the past years, with their cost set to decline further compared to conventional fossil-fuel-based generation. The affordability of battery storage has also significantly improved, with lithium-ion battery packs hitting a record low in 2020.

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Climate resilience building in informal settlement upgrading processes

By Jorgelina Hardoy, Instituto Internacional de Medio Ambiente y Desarrollo, IIED – América Latinai

More than half the world’s urban population lives in urban centres with less than a million inhabitants; for Africa, it is 63%; for Asia and for Latin America and the Caribbean it is 54%. These cities get far less attention than their demographic, economic and governance importance deserves – and far less attention to developing their climate change policies. One difficulty facing climate change policy and action in cities is that so much of what is needed is not considered part of climate change policies. Another is that when there is attention paid to climate action, both nationally and internationally, it usually concerns larger cities. We know far less about how intermediary cities are responding to climate change, whom they are engaging with, the types of constraints they face, etc.

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