Sharm El-Sheikh – Egypt is currently hosting the 27th edition of the UN Conference of Parties on Climate Change in Sharm El-Sheikh, which is witnessing advanced negotiations to face climate change.
As countries seek to transition to a green economy to adapt to climate changes imposed by rising carbon emissions and threatening the survival of the planet, Daily News Egypt sat down for an interview with Mahmoud Mohieldin — Egypt’s High-Level Climate Champion at the UN.
How large is the funding volume for climate action worldwide?
The conservative minimum for the financing gap for climate action worldwide is at about $2.5 trillion, and the current funding needs to be increased by at least six times to come close to covering that gap.
The current financing globally depends on debt instruments, as financing through borrowing represents about 60% of the total financing provided, while 12-13% of this financing comes from soft loans. It is also crucial to increase investments.
In addition, if there are no other alternatives, long-term financing must be provided in the manner provided by the international Development Association of the World Bank Group to provide development aid, especially as it grants financing with grace periods extending from seven to 10 years, and repayment of up to more than 40 years. The cost of borrowing does not exceed 1.5%, which is a type of financing that can be used as a last resort.
But the solution for providing financing solutions for climate action is to rely mainly on investments from the private sector, especially those related to reducing carbon emissions and the fields of new and renewable energy, as well as on the part of grants from major countries that pledged to provide $100bn annually to developing countries.
How can developing countries finance climate action in light of highly indebted budgets?
The current situation in most countries is that their public budgets bear the bill for financing climate action. The climate financing model in countries needs restructuring and decisive change.
Only six of the 23 countries that pledged to provide this have fulfilled their obligations, while some other countries provide about 5% or less of their annual pledges. There is an urgent need to review the pledge system.
The COP27 is not being held for renegotiation, but rather to find an implementation mechanism, especially that negotiations have already taken place a long time ago. The Paris Climate Agreement came out with moral pledges to finance climate action.
The most prominent provisions of the Paris Climate Agreement included pledges by major countries to provide $100bn annually, starting in 2020, to help developing countries finance their transition to clean energies and cope with greenhouse gas emissions, given that they are the biggest victims of these emissions.
Developing countries demanded in the text of the agreement that the amount of $100bn annually be only a “minimum.” A new goal will be proposed in 2025.
What distinguishes the Climate Summit in Sharm El-Sheikh is its focus on the core files, especially the adaptation file and the adaptation initiatives in the agricultural sector.
What also makes it different from previous versions of climate summits is that it focuses on implementation and finding viable solutions.
What about innovative financing solutions to finance climate action?
Solutions for financial innovation in climate action are close, especially carbon markets, investment in the areas of environment and governance, as well as “swaps,” which are about reducing debt through investment in the fields of environment and climate action.
Egypt has a strong need to increase private investments in the areas of mitigating carbon emissions and its participation in areas related to adaptation.
How can African countries benefit from the issuance of carbon certificates for the benefit of major countries?
For developing countries to benefit from the issuance of carbon certificates, there must be a special market and no dependence on foreign markets, i.e., benefiting from European expertise in this regard and adapting it to the special needs of developing countries.
The Egyptian government launched the first African voluntary market for the issuance and trading of carbon certificates on the side-lines of this conference.
The African Market for Carbon Certificates is a platform to help economic entities operating in various productive activities in Egypt and Africa to engage in activities to reduce carbon emissions and benefit from the issuance and sale of certificates in favour of other companies.
What factors must be in place to ensure the success of the African carbon market?
The success of the African carbon market depends on implementation and institutional effort to understand the rules and train those in charge of them, as well as make the best of them. Additionally, special media courses must be held; creating a whole integrated system is crucial.
Carbon markets could create about 30 million jobs by 2030. There is a need to achieve fair distribution and transparency in terms of returns on carbon markets while taking into account the dynamics of Africa’s economy to make the most of growth opportunities and attract investment.
I see promising opportunities for investing in carbon markets, as these markets provide carbon balances equivalent to $3m every year by 2030 and are likely to reach $1.5bn by 2050. There are also 13 work programmes to support carbon markets.
How can the break-even point be reached in light of the environmental justice crisis? Who funds climate adaptation?
The most violating justice in the world is environmental justice, as the most affected countries are now required to bear the largest bill for financing and implementing climate action.
Developed countries have contributed the most to the pollution of the planet since the launch of the first industrial revolution, compared to African countries that collectively contribute 3-4% of carbon emissions annually.
It is now required to deal with the consequences of developed countries’ actions through several bills of losses, compensation, climate adaptation, and another bill related to the new technology to reduce carbon emissions, and these bills require huge funds that cannot be provided by the already exhausted state budgets.
These bills are not fair; how can we ask African countries to pay the bill for the development and construction of major countries when they would have to to spend about 30-40% of their states’ general budgets or 7- 10% of their GDP to mitigate climate change.
There are even some islands threatened with extinction and disappearance that are required to spend multiples of their public budget to save their beaches and protect them from the deterioration of climate change.
How does Egypt benefit from the COP27 to promote its tourist attractions?
The Climate Conference is a great opportunity for Egypt to promote its tourism. It is also a great opportunity to maximise investments in climate change issues and its solutions within the framework of obtaining investments that fall under the umbrella of climate change.
What are the most important areas for investment in climate action?
The most difficult investment in climate-related fields is investing in people, especially since those responsible for managing these new types of investment for green projects.
By 2030, the labour market will witness a close link between investments in the areas of sustainability and digital transformation, which has become the main component of human resources in terms of dealing with new requirements for AI, large databases, and emerging projects that manage new platforms or deal with existing platforms, which means having a new industry linking sustainability with digital transformation.
The most important investment in the sustainability system is investing in people to qualify them to deal with new changes and qualify them for the new world. There are tens of thousands who work in power plants using traditional energy sources, but the new world has become dependent on generating energy from clean and renewable sources.
The labour market is a fertile space for investment right now, especially in light of the launch of trillions of projects worldwide to transition from traditional energy to clean and renewable energy.
How can Egypt take advantage of the current efforts to confront climate change?
Egypt is currently working on projects in the field of new energy, especially Zaafarana and Benban, and many strong projects in the hydrogen sector that the state is working on at the moment.
This must be matched by huge investments in the rehabilitation of labour, education, and universities to ensure the exit of a new generation of human resources able to deal with the new variables of the world.
What should Egypt do during the coming period to increase investments in its human resources?
Egypt’s ability to deal with the changes of the new world is mainly related to the extent of its control and its ability to manage the most important issues — climate change, sustainability, and expanding investments in human capital, which includes education, health, and digital transformation.
Investing in people by focusing on digital transformation is the winning horse in the climate action race, and Egypt has the potential to win the race due to the momentum of youths, which is their main strength.
