The executive secretary of UN Climate Change warned major investors and nations on Tuesday against setting up a dangerous two-speed global energy transition, as Climate Week in New York unfolded.
In front of economic leaders gathered at the Sustainable Investment Forum, Simon Stiell first explained that “decarbonization is inevitable and constitutes the greatest transformation of the global economy of this century.”
The executive secretary of UN Climate Change also explained that “financial flows for climate action are already estimated at more than $1 trillion” and that “this year, investments in solar photovoltaics are expected to reach more than $500 billion.”
Simon Stiell stressed that “investment opportunities are not limited to solar and wind”, that the transition will affect “all sectors”, which means that there will be “opportunities in all sectors”.
“But – and this is a big but – right now the vast majority of that money is going to projects in the largest economies” and “this big clean energy trend is progressing unevenly,” he worried.
“Everyone will end up losing”
The progress made to decarbonize “North American markets is very encouraging and welcome,” but on the other hand, if there is too much investment in the same markets, it means that other markets will be left behind.
“Let me be frank: if more developing economies do not benefit more from this growing deluge of climate investment, we will quickly establish a dangerous two-speed global transition,” he said, clarifying his thinking.
“On the fastest tracks, well-capitalized companies in the North are reaping huge profits as the transition accelerates and gains momentum,” Stiell said. In contrast, “many other developing countries are struggling to pick up the pace but are being hamstrung by very high costs of capital, often based on outdated or ill-informed perceptions of risk in these markets, or mired in deepening debt crises.”
If this “injustice” and “imbalance” persists, it will make it “almost impossible to halve global emissions” [de gaz à effet de serre] by 2030, with a view to reaching net zero, without which no economy – including the largest – will be able to survive the growing climate carnage,” argued the executive secretary of UN Climate Change.
If a two-speed global transition takes hold, “everyone will end up losing, and losing very badly,” he summed up.
A new agreement on financing
The world therefore needs “a new agreement on financing climate action,” argued Simon Stiell.
This financing must come from public and private sources, “but also from mixed financing, made possible by a deep reform of development banks, and by much stronger climate policies on the part of governments” explained the executive secretary of UN Climate.
He added that “significant progress is urgently needed” both at the climate negotiations to be held at COP29 in Azerbaijan in November and also “by G20 ministers who are shareholders in major development banks.”