Finance is set to be at the heart of COP28, the UN climate summit starting on Thursday in Dubai, with economists saying that around $1 trillion per year is needed to support developing countries in their fight against climate change.
ADVERTISEMENTPakistan is a prime example of a country in dire need of help, given how poor it is and the impact climate change is already having on it, with the whole country almost completely flooded in 2022.
Although it emits less than 1% of the world's greenhouse gas emissions, natural disasters are becoming ever more common and devastating.
During COP28, an agreement is expected to be reached on how much money will go to a new Loss and Damage Fund. It is intended to pay for the costly consequences of extreme weather events.
The World Bank is the provisional host of the fund and prefers to provide loans rather than grants for this purpose.
On the other side, developing countries in the so-called Global South would prefer an independent body to host the fund, but the main discussion will be about how much money to invest and which countries will contribute.
"The European Union has clearly signalled (...) its willingness to support this with contributions that are substantial, which is likely going to be on the level of billions of euros," Cecilia Trasi, an analyst from Brussels-based think tank Bruegel, told Euronews.
"On the other hand, the US envoy John Kerry has also announced contributions of millions of dollars, which is on a very different scale of magnitude and still open is the question of will countries that were considered developing in 1992, like Saudi Arabia and China, will they contribute or not?."
The European Parliament will send a 12-member delegation to the conference. Socialist & Democrat MEPs, included in the group, have defended high money contributions, saying that it helps to show global solidarity.
The political group will propose, in the coming months, that a similar fund be created just for the EU.
"We need to help people adapt to the new situation. We need to help farmers so that they can continue to grow crops that are much more resistant and resilient when it comes to climate change," Mohammed Chaim, a Dutch socialist MEP said in an interview.
"Because at the end of the day, if we help vulnerable communities, we create support for the European Green Deal and that is something that we all benefit from."
For Trasi, the EU can use this instrument to resolve imbalances member states face when it comes to dealing with climate change.
"It would be very interesting to see how this would affect all discussions about fiscal reform, quite simply because perhaps one way of resolving this issue would be to allow more room for manoeuvring to countries that are in difficulty, but that are also suffering the worst consequences of climate change," the analyst told Euronews.
Previous financial promises yet to be fulfilled
Rich countries are still missing out on the first fund created in 2019. The UN's Green Climate Fund was supposed to have collected $100 billion (€91.5 billion) a year to help developing countries invest in the transition to clean energy systems.
"The harsh reality is that $100 billion is probably just a drop in the ocean of developing countries' actual transition needs, which are estimated to be in the billions. Thus, the entire transition is estimated at $4.4 trillion (€4 trillion) and so we clearly see that we need to increase ambitions in terms of climate financing," explained Trasi.
The right-leaning European People's Party (EPP) said that it should be realised as soon as possible.
"At the end of the day, we have to acknowledge the fact that the EU is indeed doing its best for climate transition, but if we do not do it along with the US, China and India, we cannot mitigate climate change," Portuguese EPP MEP, Lidia Pereira told Euronews.
The EU can also play a role by expanding its domestic capacity to produce renewable energy systems that can be exported to the rest of the world, but investment within the bloc is lacking, she added.
ADVERTISEMENT"We need to raise more capital, public and private because we have a prominent position in the development of clean technologies. We have many start-ups flourishing across Europe, but they lack the capital to expand their operations," Pereira said.
Chaim also advocates for more cooperation to transfer clean technology and partnerships involving the private sector, to create a cycle of mutual benefit
"All of Africa has fewer solar panels than a country like the Netherlands. Imagine the results of giving them access to affordable and sustainable solar panels?" he told Euronews.
"One day we could even import this cheap and sustainable energy to Europe. Everyone would benefit from this because the EU is a net importer of energy."
Jorge Moreira da Silva, executive director at the UN Office for Project Services said in an interview that climate action "would require $4-6 billion (€3.6-€5.5 billion) every year and that the majority of this amount should go to developing countries."
ADVERTISEMENT"Infrastructure is responsible for almost 80% of greenhouse gas emissions," he added.
"We need to support developing countries with additional financing so they can access energy that is affordable, that is sustainable, that is clean and that is inclusive and then we also need to deal with loss and damage, and adaptation."
At the same time, with climate change worsening and the intensity and frequency of natural disasters, more and more infrastructure needs to be rebuilt or replaced with more environmentally friendly versions.
Thousand of politicians and scientific advisors at COP28 are expected to issue recommendations on a new framework for international climate finance, as well as a definitive roadmap on how to implement them.
Correction: An initial version of this article misquoted Trasi as saying the cost of the transition is estimated at $4.4 billion instead of $4.4 trillion.
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