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Who Will Foot the Bill in Sharm El-Sheikh?

Who Will Foot the Bill in Sharm El-Sheikh?

Sunday, 9 October, 2022 - 04:30
Najib Saab
Secretary-General of the Arab Forum for Environment and Development (AFED) and editor-in-chief of Environment & Development magazine

The world meets at the Sharm El-Sheikh Climate Summit in less than a month, overwhelmed by worries and conflicting concerns. It will not be easy for negotiators to bypass the consequences of war and the economy, to tackle the challenges of climate change. Even though the Sharm El-Sheikh summit (COP27) is not expected to realize the goals that were anticipated before the gigantic collapses, it is, however, hoped that it will keep the path open to accomplish the task at the 28th summit in Abu Dhabi next year. It is not permissible for concerns prompted by transitory events, as serious as they are, to call off interest in an existential issue such as climate change.


Yet the picture is not entirely bleak. For the first time, populist voices skeptical of climate facts will be absent from the negotiations, as this summit will be characterized by unanimity, except on the issue of funding. Further to full recognition of the existential threat posed by climate change, there is universal agreement that all nations, rich and poor, must engage in rapid action to significantly reduce greenhouse gas emissions and build capacity to address the unstoppable effects of climate change. We are facing a rare moment characterized by unanimity in diagnosing the problem and the need to solve it quickly. So what hinders a full agreement in Sharm El-Sheikh?


The main point of contention, for years, has been the same: Who pays the bill? Answering this question requires agreement on three matters, each of which has repercussions on the economic conditions of countries and their development programs. These start from setting priorities, the order of which varies from one country to another. While some countries put the issue of reducing carbon emissions, by quickly ending the burning of fossil fuels, at the forefront, others believe that the starting point should be rationalizing consumption and improving efficiency, as well as developing technologies for carbon capture and storage, besides safe industrial reuse of captured carbon. While countries are calling to cut emissions from industries first, others insist on starting with cutting agricultural emissions. Yet the biggest disagreement remains over prioritizing mitigating emissions or adapting to unstoppable changes.


Even if an ideal agreement were to be reached to prioritize all these matters, the dispute will still remain over the timetable for implementation. What is the period required to achieve the goals, and what is the appropriate grace period for a smooth transition in developing countries that does not lead to economic and social repercussions? We have recently witnessed protests by cattle breeders in the Netherlands against the severe restrictions that impose a significant reduction in the number of herds to reduce methane emissions, as well as calls for a slowdown in the transition to clean and renewable types of energy, to avoid shocks in the energy markets.


When the negotiators agree that all of these matters are important, the question will arise about the equitable distribution of burdens among countries. This includes switching to clean and renewable energy, water management, modifying agricultural production patterns, and the sustainable management of natural resources, such as forests, oceans and fresh water. It also includes building barriers to ward off high seas, replacing agricultural crops with drought-tolerant ones, and modifying the infrastructure of water, energy and road networks to withstand high temperatures, and strengthening the health sector's ability to deal with new waves of diseases, viruses and epidemics, and the list goes on.


All these matters can be resolved if the required funding is available, braced by good governance. The greatest harm falls on developing countries, which can barely finance basic sustenance needs, let alone climate measures. The need to radically increase the flow of development aid to poor countries preceded the emergence of the climate problem by decades, as the United Nations General Assembly in 1970 called on rich countries to allocate 0.7 percent of their gross national income as aid to the development of poor countries. Had these pledges been fulfilled, the developing countries would be better prepared today to deal with the challenges of climate change. However, history is repeating itself, as rich countries continue to fail to fully commit to fully finance the Climate Fund with $100 billion dollars annually, as promised. If this was the case during years of prosperity, we cannot expect rich countries to open their coffers in Sharm El-Sheikh to inject additional funds, in light of a stifling economic crisis, that has placed solving their national challenges at the forefront. The news that the British Prime Minister might not personally show up at the summit is just an alarming sign.


It has long been proven that the old model, based entirely on grants and loans, is no longer viable as a single solution to development challenges. The latest collapse was nothing more than an "official obituary" of a dying model. Arab countries, in light of global changes, should move towards attracting private investments and partnerships, whether from investors within their countries, from their immediate region, or at the global level. However, this requires setting laws to regulate investments and directing them towards a green economy in order to achieve sustainable development goals, including climate. This has to fit within the framework of long-term and stable national policies, because attracting private-sector investments requires political and legislative stability. When this is achieved, there are no limits to the projects that are profitable to the investor and beneficial to the Arab countries, ranging from clean and renewable energy and hydrogen to sustainable agriculture, thermal insulation of buildings, sustainable tourism, and many others. If the productive projects that help reduce emissions are eligible to attract investments and partnerships, the adaptation measures to reduce the effects of climate change require public sector funding. Here is where the importance of activating the Loss and Damage Fund comes into play so that most of it is used to address those effects that cannot be stopped. Yet industrialized countries still delay complying with the provisions of this fund, which requires them to pay compensation commensurate with their historical responsibility for carbon emissions.


As for Arab oil-exporting countries, they now have a rare opportunity for a fast-track transition, after most of them already launched ambitious programs that include clean and renewable energy, expanding the green cover, water management, and achieving sustainable development goals in general. This was during a period when oil and gas prices were at lower levels, which placed restrictions on funding. The record rise in fuel prices recently gives these countries additional income that allows them to accelerate the implementation of internal transition programs and enhance regional cooperation within the Arab group, thus building better national and regional resilience for the future.


The Sharm El-Sheikh summit can turn disappointments into opportunities if it succeeds in setting fair parameters to share responsibilities. But we should realize that balancing contingent economic concerns with existential climate challenges will require delicate compromises.


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