COP27 and climate finance. COP27 continues this week as 196 countries and the EU gather to the UN Framework Convention on Climate Change. A key issue at this year’s negotiations is ‘climate finance’ - money provided in different forms from advanced economies to countries in the global South.
Finance for adaptation. Achim Steiner, the UN’s Global development chief, warned that more than 54 poor countries are in danger of bankruptcy and suggested that many were at risk of giving up on the climate talks if developed countries fail to provide the pledged climate finance required to implement their mitigation and adaptation goals.
Loss and damage. A key issue at COP27 has been the issue of ‘loss and damage.’ In UN climate negotiations 'loss and damage' is the term used to describe the principle that rich countries should compensate poor ones for the climate costs their historical emissions have caused. For many countries in the global South this is central to climate justice.
Who is responsible for climate change? Developed countries have always resisted recognising the concept of loss and damage; they fear it is the slippery slope to being held liable in international courts for trillions of dollars in damages although developing countries agree any mechanism would not legally establish liability. The largest 20 economies in the world (the G20) are responsible for 80% of greenhouse gas emissions, whilst the whole of Africa is responsible for 4%, but suffers disproportionate impacts. (See Carbon Brief’s video showing which countries are responsible for cumulative emissions.) A new study published by Christian Aid warns that, under current climate policies, African countries will lose 20% of their average expected GDP by 2050, and 64% by 2100.
Progress so far. Egypt pushed ‘loss and damage’ to the top of the agenda at COP27, but the EU and US have “coordinated a gentle but firm pushback” against the idea of the creation of a dedicated fund for ‘loss and damage’ compensation so far, opting instead for a “mosaic of solutions”.
Lack of investment in healthcare is harming the economy. Andy Haldane, Chief executive of the RSA and former governor of the Bank of England, has said that “more than a century of progress on health and wellbeing was going into reverse, with a direct impact on the economy and the cost of living emergency.” He said that the UK “sits towards the bottom of the pack” in the G7 on spending on healthcare, which is holding back the economy as the workforce has been shrinking since the pandemic.
Care investment is green investment. The Women’s Budget Group has published a feminist vision for tackling the climate crisis and transforming the economy. The report calls for investment in care as “the average job in health and care produces 26 times less greenhouse gas than a manufacturing job”, sets out four structural changes needed to transform the economy and outlines proposals for change in 6 policy areas (Watch their video explainer here.)
CCC urges public investment in energy efficiency. Lord Deben has written to the Chancellor on behalf of the Climate Change Committee (CCC) to advocate stronger action from the government on energy efficiency. Their analysis presents a cost-benefit assessment of various efficiency measures for reducing energy demand in buildings, and argues that high energy prices make many of these measures even better value for money. Their letter highlights that ten years ago 2.3m energy efficiency measures were installed each year through Government-backed schemes, which dropped by 96% (100k per year) in 2021.
NAO investigates energy supplier takeover. Octopus has taken over Bulb, the collapsed energy supplier which was bailed out by the government in a move costing the taxpayer billions. The NAO is investigating, however the government is refusing to share any terms of the takeover, including what costs may be incurred by households, claiming it violates commercial sensitivity. Citizens Advices’s chief executive, Dame Clare Moriarty said: “We need urgent confirmation that the deal won’t, in any circumstances, add to customers’ already sky-high bills.” (Read Citizens Advice’s latest data dashboard on the cost of living.)
Buybacks, dividends and windfall taxes. Centrica, Britain’s biggest household energy supplier, has resumed dividend payments this year and launched a £250mn share buyback (the first since 2014) as profits exceeded expectations following high wholesale gas and energy prices. The FT’s Nathalie Thomas reports that “Chancellor Jeremy Hunt is expected to announce an increase in the UK’s windfall tax on oil and gas producers when he delivers his Autumn Statement on November 17.”
British Business calls for investment in infrastructure. The British Chambers of Commerce (BCC) published a business manifesto containing various proposals for delivering growth: invest in HS2, green and digital infrastructure, speed up regional devolution deals and provide certainty on how the energy support package will work from April so that businesses can plan for the future. Infrastructure investment ranked first on a survey asking what would influence firms to make more investment decisions.
UK EV’s: a “Slow motion car crash.” The government rejected a request for £30mn in funding to prevent Britishvolt, a planned £3.8bn gigafactory in Blyth, going into administration earlier this month. Commenting on the struggles of the electric vehicle (EV) industry a Guardian editorial claims that a lack of funding support and sufficient incentives for companies to invest means the UK is uncompetitive in the global EV production market: “the biggest battery companies need to see a coherent industrial strategy in place – one in which the state has skin in the game and offers serious incentives to invest.“
The Preston Model ten years on. Matthew Brown, Leader of Preston City Council, has written an article for Democracy Collaborative explaining the history of the ‘Preston Model’ of community wealth building and the contents of the wide ranging policy package for progressive municipalities 10 years after its original inception.
Global plan for decarbonising food. The UN’s Food and Agriculture Organisation has announced a plan to align the global food system with a 1.5C warming trajectory, it hopes to mirror the annual reports by the International Energy Agency which increase investment to companies, projects and technologies aligned with the plan.
New EU fiscal rules and green mandates for the ECB? The EU Commission has published its proposal for a reformed European fiscal framework. It includes a focus on medium-term debt sustainability, giving more time to achieve falling debt/GDP ratios, increased flexibility for green investments and more national ownership. The European Central Bank has also “firmly placed climate change within the central bank’s primary mandate of maintaining price stability”.
IFS calls out wealth inequality. IFS’s Deaton Review of Inequalities has argued that “wealth is the growing economic divide in the UK today”, as rising asset prices alongside a long-term stagnation in earnings has increased inequality. They argue that recent falls in social mobility may accelerate as inherited wealth becomes an increasingly important part of lifetime resources.
Autumn Statement. New Economy Brief will cover the Chancellor's Autumn Statement in next week's Digest.