There is no safe future in a world fueled by coal, oil, and gas. This is the clear message from climate science and a reality already faced by vulnerable communities in the Global South.
Seven years ago the world signed the Paris Agreement. Article 2.1c commits to “making finance flows consistent with a pathway towards low GHG emissions and climate-resilient development.”
But while COP28 delegates work themselves to tears trying to address the climate crisis, the world’s banks and investors merrily ignore that commitment, and keep the finance flowing to the fossil fuel industry. Furthermore, subsidies are lowering the price of fossil fuel products for consumers, disincentivising the use of renewables.
Trillions of dollars in loans, underwriting, investments and subsidies flow to the fossil fuel industry every year. Meanwhile, communities on the frontlines of the climate crisis, especially in the global south, suffer the impacts of decisions made in distant boardrooms on the other side of the world. Communities who have done so little to cause the climate crisis are the ones who must deal with deforestation, land grabs and pollution caused by the relentless financing of fossil fuels – all compounded by the injustices of climate change.
It is time to fix the world’s finance flows so that they stop doing harm.
But how?
COP28 can use the Paris Agreement’s commitments under Article 2.1c to address the harm done by the current dominant direction of the world’s finance flows. Major new steps are needed to transform the financial sector and regulate private finance flows. Fossil fuel subsidies should be rapidly and equitably phased out. International public finance institutions, including multilateral and national development banks, development finance institutions and export credit agencies should exclude fossil fuel financing. State-owned enterprises should redirect investments from fossil fuels. Debt cancellation and restructuring, and tax reforms are also key.
The tricky thing is that the sneaky EU is trying to use the 2.1c agenda to get out of their climate finance obligations by mischievously muddying the waters between Article 9 negotiations on the New Collective Quantified Goal on finance (NCQG) and Article 2.1c.
Negotiations on Article 9 must lead to scaled up climate finance support for developing countries. Negotiations on Article 2.1c must fix all the other finance flows that are wrecking the planet. Both of these agendas are essential. But they are self-evidently distinct and separate.
It is time to use Art 2.1c to de-fossilise the world’s money, and to use Art 9 to really scale up climate solutions. Because if we don’t fix the finance flows quite literally fueling the global warming crisis now, our future will end up in ashes.