Macron backs trillions in climate cash – POLITICO

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SHARM EL-SHEIKH, Egypt – Climate change talks have long been blocked by demands for the transfer of billions of dollars – On Monday, French President Emmanuel Macron backed a new push for talks measured in trillions.

Speaking at the COP27 climate summit in Sharm El-Sheikh, Egypt, Macron gave his support to elements of the plan outlined by Barbados Prime Minister Mia Mottley that seeks to change the way climate finance flows to countries that need it most.

He called for a “big shock of concessional financing,” suspending debt for disaster-stricken countries and putting the International Monetary Fund (IMF) on notice.

This is a speech that shows the shift in tone that developing countries have been pushing for.

In the first day of official speeches, leader after leader from wealthy nations highlighted the need to show “solidarity” with developing countries after a year in which catastrophic disasters and a burgeoning debt crisis helped change the often controversial conversation about climate finance.

“It is the right thing to do,” British Prime Minister Rishi Sunak said.

Money is a central focus of this year’s climate talks as the gap widens between what is promised and what is needed. This extends from everything from the clean energy transition to the hardening of the country’s defense against climate impacts to potential payments for irreparable climate damage.

In September, Barbados released the world’s first pandemic and natural disaster bond. “The time has come to introduce a natural disaster-pandemic clause in our debt instruments,” Mottley said.

“Thank God, if we press tomorrow, we unlock 18 percent of GDP over the next two years, because what we are doing is effectively pausing all our debt,” he said.

Macron called for the rules of the IMF, the World Bank and other major lenders to be changed The clause that halt debt repayments in the event of a disaster is much more common.

“What you are asking us about the payment of debt and guarantees, when we are affected by climate shock, when we are victims of climate accidents, at some level, there should be a suspension of the situation,” he said. French president.

Broke the promise

While the financial need to fuel the transition to clean energy around the world and protect against the ravages of climate change has stretched into the trillions, the UN climate system remains stuck on decades of broken promises from rich countries. They promised to deliver $100 billion a year in climate finance by 2020, but they didn’t. possibility lasts until next year.

As climate impacts have grown more extreme and prolific, appeals for new and more innovative forms of finance have escalated. Debt ballooning after the pandemic has intensified that call, with dozens of countries vulnerable threaten debt strike in the lead-up to COP27.

Mottley has been a champion for raising the debt crisis facing nations like his own and highlighting how it adds to climate inequality. The plan he outlined in September hinged on debt relief, increased funding, and new mechanisms for post-disaster recovery, such as bonds.

The Barbados leader’s call for arms and Macron’s heavy support brought reality and a new scale to the financial discussion.

Mottley has pushed for the IMF’s special drawing rights to help climate-vulnerable countries recover and respond to climate impacts. It could be used to help bring in more money from the private sector — $500 billion from the IMF could lead to $5 trillion in investment, he said Monday.

The challenge is to get shareholders in those financial institutions to agree to the reforms.

Officials in the US, Germany and other major economies are pushing for an overhaul of the way multilateral development banks lend to them to extend more climate finance. US Treasury Secretary Janet Yellen has called on the World Bank to draw up a road map by the end of the year that can then be used to drive reform efforts at other development banks.

On Monday, Macron went further, saying that by next spring, global financial institutions must create ways to “produce concrete solutions to activate these innovative financing solutions and help us to provide access to new liquidity.”

He paid tribute to Mottley’s “strength of character” and said the two leaders – one who commands an economy 600 times bigger than the other – had agreed to form a group of “wise minds” to develop recommendations for reforming the international financial system. .

But Mottley’s one suggestion that Macron deviated from was his call for fossil fuel companies to pay a profit tax to fund disaster-stricken countries.

“How can a company make $200 billion in profits in the last three months and not expect to contribute at least 10 cents on every dollar of profit to fund losses and damages?” she asked.

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