The United States’ plan to develop a new market for carbon credits to finance renewable energy projects in developing countries cannot make up for its failure to provide its fair share of climate finance – about $40 billion on the target not reached of 100 billion dollars per year, according to experts.
At COP15 in Copenhagen in 2009, developed countries pledged to jointly mobilize $100 billion per year by 2020 to help developing countries combat the effects of climate change. Rich countries, however, have failed miserably to provide this funding.
The Energy Transition Accelerator (ETA) proposes that companies purchase carbon credits and the proceeds be used to finance clean energy projects in developing countries seeking to phase out their fossil fuel assets.
Launching the initiative, the US President’s Special Envoy for Climate, John Kerry, said: ”Our intention is to put the carbon market to work to deploy capital to accelerate the energy transition. dirty to clean energy, especially for two purposes – relentlessly withdrawing coal power and accelerating renewables.” Experts, however, said developing countries need predictable funding, not clearing markets. Furthermore, it is unclear whether ETA will make financing available at concessional rates. Vibhuti Garg, Director (South Asia) of the Institute for Energy Economics and Financial Analysis (IEEFA), said: “To achieve climate goals, there is a huge need for finance, especially from developing countries. . Public capital alone cannot meet these requirements and therefore private capital has a central role to play.” ”ETA is a good platform to obtain the required private capital. However, the availability of this capital will be at market rates which developing countries will also be able to access otherwise. What they need is concessional capital,” she said.
It is unclear how this mechanism will ensure the availability of financing at concessional rates. Additionally, it should be clear about which projects may be eligible under this fund and have an appropriate taxonomy in place, otherwise there is a fear of greenwashing, Garg said.
“What developing countries need is predictable financing, not offset markets. The proposed initiative cannot make up for the failure of the United States to provide its fair share of climate finance – about $40 billion of the unmet target of $100 billion per year,” Ulka Kelkar, Program Director on climate change, World Resources Institute, said. “Nor should it substitute for the deep decarbonization needed in the United States and other industrialized countries. For developing countries like India, which have raised their climate ambition, the first priority would be to meet their own targets and not offset reductions in developed countries,” she said.
Navroz Dubash, Professor, Center for Policy Research and IPCC Coordinating Lead Author on AR6 WGIII Report on Mitigation, said: ”Kerry’s announcement can solve a political narrative problem – tell a story on the release of finance – but it is highly unlikely to be actually sufficient, predictable finance in motion.’ down. ”Another risk is that countries may be deterred from improving their NDCs, as offsets will likely only be eligible for actions beyond those in the NDCs. The central mechanism of the Paris Agreement risks being diluted.” PTI GVS ZMN
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