SPECIAL FEATURE
I n an increasingly fractious world riven by deep divisions, the need for climate action is one of the few things almost everyone can agree on. The OPEC Fund is part of this effort. At the UN Climate Change Conference COP28 last December in Dubai almost 200 nations reaffirmed their commitment to the Paris Agreement’s goal of limiting “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursuing efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” The urgency is beyond doubt. But hitting these targets is impossible without more funds and faster action. Anything less risks a steep human cost, specifically in terms of lost livelihoods. A new working paper by the economists Adrien Bilal and Diego R. Känzig estimates that climate change could cause a one-third or more loss in long-term human welfare. Employing long-term data on global economic growth and average annual temperature, they find that an additional 1°C of warming will lead to a 12 percent fall in GDP. They warn that a climate-change scenario with more than 3°C warming would be “an equivalent blow to fighting a permanent war.” Yet the chances of achieving the Paris goal are decreasing by the day. The World Meteorological Organization (WMO) said in its most recent report in June 2024 that there is an 80 percent likelihood that the annual global average temperature will temporarily exceed 1.5°C above pre-industrial levels for at least one of the next five years.
The main investment and spending priorities fall into the following categories:
To put this into perspective: When the Paris Agreement was drafted in 2015, such a chance was “close to zero”, the WMO says. The organization also warns that there is an 86 percent chance that a new “hottest year on record” will be set this year. In other words 2023, the dubious current record holder, will seem cool by comparison. Lower temperatures, higher sticker price COP28’s Global Stocktake report showed that the world is “severely off track” on climate. “Governments are taking baby steps,” while they “must make bold strides” instead, said the Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), Simon Stiell. To achieve the Paris Agreement’s targets, global greenhouse gas (GHG) emissions must be cut by around 43 percent by 2030 and 60 percent by 2035 from 2019 levels, aiming for net-zero CO2 emissions by 2050. The costs are immense. The Independent High-Level Expert Group on Climate Finance (IHLEG) said that emerging markets and developing countries (EMDCs), excluding China, need to invest and spend close to US$2.4 trillion a year by 2030 to meet climate and nature goals. That is four times what is currently being invested.
US$1.5 trillion
Energy transition
US$250 billion
Adaptation and resilience
US$300 billion
Loss and damage
US$300 billion
Natural capital and sustainable agriculture
US$75 billion
Just transition
To achieve the Paris Agreement’s targets, global greenhouse gas emissions must be cut by around 43 percent by 2030 from 2019 levels.
Photo: ultramansk/Shutterstock
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