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Contested Spaces and Narratives at COP28: A Reflection Piece

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In this blog, ISS MA student Manju von Rospatt reflects on her experiences at the UN Climate Change conference (COP28) held in Dubai from December 6 to December 13. Manju attended COP28 representing Eutopya and interviewed stakeholders and attendees at COP and contrasts the approach of indigenous, youth, and Global South representatives with the glitz of lobbyists from industry, and representing some of the biggest countries attending.

Image by Author.

From December 6th – December 13th, I took a short break from my regular academic routine at ISS to enter a very different world of high-stakes negotiations around climate change: the controversial and consequential 28th Conference of the Parties (COP28) in the United Arab Emirates. Attending COP28, the largest climate conference to date, in Dubai was a dizzying experience. Like many participants, I entered the conference with ambivalence, unsure what the week would have in store both for me and the final statement. The news coverage that we read about COP28 in the mainstream media tends to be dominated by the progression of the formal (and closed door) negotiations processes taking place between the 200 member states of the UNFCCC. Yet, attending COP28 was so much more than following the official negotiations and drafting of the agreement text.

 

Clashing narratives and crossing paths

Together with the international youth media group Eutopya, I interviewed a host of people across countries and roles at the conference, from indigenous and youth leaders, environmental justice activists, and civil society leaders to researchers, negotiators, and politicians. If you’re interested in these interviews, please look out for updates from our podcast in the following weeks. Speaking to a cross-section of people across age, ethnicity, gender, sectors, roles, and regions, gave me a sense of how COP28 is a contested space, rife with contradictions between various factions campaigning with different methods and interests. Each constituency proposed different solutions: technological, market-based, political, social, or spiritual. Cognitive dissonance permeated my time at COP28, as I jumped between conversations and events with climate justice advocates calling for people-centred just transitions and with organizations focused on energy transitions alone. I found fewer spaces than I had hoped at COP28 that brought these disparate perspectives together into a holistic approach. I found that people tended to stay within their constituency bubbles through self-selection whilst at COP28. Several interviewees also commented that the spatial distribution of pavilions across the Expo City venue further facilitated the segregation of interest groups. Even within buildings at the conference, pavilions were juxtaposed in glaring ways. For example, to visit the climate justice and indigenous youth pavilions, one needed to walk past two floors of pavilions of large energy companies and organizations, including OPEC.

The national pavilions, with multi-million dollar price tags, featured carefully curated narratives of national sustainability. These were further presented and performed by country representatives at side-events. Clearly, green-diplomacy has become an opportunity for many countries to green-wash, exercise soft-power, and legitimize state activities.

The corporate presence at COP was also striking, particularly in the open and commercialized Green Zone,  has been likened to a trade fair.

Single-Person Electric Helicopter featured in the Green Zone

Alongside COP28, I attended the private-sector event World Climate Summit, hosted in a glitzy hotel by the World Trade Center. I heard mining executives explicitly discuss how to maintain and enlarge profit margins, by including corporate social responsibility and sustainability as a flashy ‘side initiative’.

Luxury Electric Car Shows in the Green Zone at COP28

At an event hosted by Chilean mining corporation SQM on “sustainable lithium mining,” an audience member, a mining executive from Nigeria, explicitly initiate a business deal mid-Q&A to expand mining operations together with SQM. Their explicit concerns about expanding profit with the transition towards renewables and disregard to rhetoric around sustainability could not differ more from the ones I heard from civil society.

 

Separate spaces for differing ‘solutions’

Coming from a social justice perspective, I was particularly interested in how indigenous leaders, youth groups, and Global South environmental justice advocates would position themselves at the conference, which was bound to focus mostly on the energy transition. I was curious as to what kinds of tension would emerge between the mainstream narratives and voices at the margins of the conference. According to Asad Rehman, Executive Director of War on Want, this was the first year in which civil society and climate justice organizers were able to secure an official pavilion. At past COPs, organizers would gather at the margins of the venues, hosting meetings on the lawn, benches, and cafes. Across interviews with civil society members, I heard that protests at COPs were increasingly prone to UN securitization and oversight. At the same time, formalized channels for CSO constituencies and youth representative negotiators are incrementally included in the formal COP negotiation process. Despite this progress, corporate and national interests glaringly dominate the COP process.

During the six days I spent at COP, I witnessed and participated in several protests in the UN-designated blue zone of the Expo City (the Green Zone lies within UAE’s jurisdiction and has a zero tolerance policy for protests). The protests called for everything from calling for negotiators to add the phrase “phase out of fossil fuels” to the final text, climate reparations through sovereign debt cancellation for African countries, ceasefire in Palestine, and centering indigenous voices. Among smaller daily protests, a large protest organized by the COP28 coalition of CSOs on December 9th made history; activists marched through the conference venue, demanding their voices to be heard.

Farooq Tariq, General Secretary Pakistan Kissan Rabita Committee (PKRC) and president Haqooq Khalq Party, speaking to protestors about climate justice

On December 11, the COP28 coalition organized another historic event, the “People’s Plenary”, in counter-response to the market-based, technocratic and Eurocentric approaches to climate change mitigation and adaptation.

Historic People’s Plenary on December 11th featuring climate justice speakers

Many activists I spoke with were particularly concerned about the location of COP28 in the authoritarian UAE as well as COP29 which will be held in Azerbaijan. Following UNFCCC regulations, all slogans, posters, and routes had to be planned with and approved days in advance by executive members of the UNFCCC secretariat, upon risk of being ‘debadged’ (having your access to the Conference taken away) and deported if the agreements were not upheld. Following the UN’s rules, organizers needed to refrain from phrases directly mentioning Israel or the US and avoid “Free Palestine” calls, though the more neutral “Ceasefire Now” was permitted.  I also heard multiple stories from interviewees of intimidation and debadging against climate activists from the UN security officers.

Final protest on the evening of December 12th as negotiators finalize the wording of the text

A final agreement written to serve corporate interests

As I write this now, the final COP28 document has passed, hailing “the beginning of the end to fossil fuel” due to the unanimous acknowledgment of the need to transition away from oil, coal, and gas. Yet, the final product of the non-binding agreement is full of frustratingly vague and softened language which will allow for many loopholes without clear targets or timing. Language such as “phasing-down unabated coal power” and “phasing out inefficient fossil fuel subsidies” clearly reflect the lack of scientists present at the conference (estimated at 0.5% of overall attendees) and high influence of fossil fuel lobbyists (with some 2,456 lobbyists present) and the political influence of OPEC. OPEC’s strategy was to have member states reject any language on phasing out fossil fuel production and rather push for language on reducing fossil fuel emissions, enabling further extraction and profit with promises of dubious carbon capture and storage technology.

Civil Society forms an unauthorized chain of solidarity, whispering “please support the phase out” to negotiators, in front of the entrance of the room in which final negotiations take place.

Though the outcome of COP28 has been a deep disappointment for many, it is a start: a beginning of the end to fossil fuels. I feel inspired by the fierce energy and tireless conviction with which civil society and activists, especially youth, have campaigned to build their coalition-based collective power. Without the pressure and demands of civil society, processes like COP would be even more susceptible to corporate and elite capture. I feel honored to have been present and witnessed history in action and know that the climate justice movement will only expand from here.[/vc_column_text][vc_separator color=”custom” accent_color=”#a80000″ css=”.vc_custom_1594895181078{margin-top: -15px !important;margin-bottom: 10px !important;}”][vc_column_text]Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.[/vc_column_text][vc_separator color=”custom” accent_color=”#a80000″ css=”.vc_custom_1594895181078{margin-top: -15px !important;margin-bottom: 10px !important;}”][vc_column_text css=”.vc_custom_1702979927530{margin-top: 0px !important;}”]About the author:

Manju von Rospatt is an MA student at ISS in the Social Policy for Development Major and producer for Eutopya, an international youth media group. She is also an intern at the African Diaspora Policy Center. Manju’s interests center on issues of climate justice, labor migration, transnational networks, gender equality, rural development, and social protection, especially within the South and Southeast Asian context. Manju attended COP28 this year with Eutopya, interviewing various stakeholders, from climate justice activists and civil society groups to politicians and COP negotiators.  Please follow along with the podcast on Spotify!

 

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The dangerously optimistic global climate finance agenda: why blended financing and domestic resource mobilization won’t help close the climate finance gap

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The global climate finance agenda in its current form is insufficient for tackling climate change and fostering a green transition across the globe. Calls to close the massive climate finance gap that prevents developing countries from accessing much-needed funds often rely on the expectation that domestic resource mobilization and blended finance can help close the gap. In this article, we demonstrate why this expectation seems wildly optimistic and argue that instead of relying on insecure trends, global policy makers should take action by developing policies that grant a bigger role for public money and innovative monetary solutions.

Source: Asian Development Bank is licensed under CC BY 2.0

Many emerging economies are having a tough time – they are still struggling to recover from the pandemic and simultaneously suffer from unprecedented debt levels and cost-of-living crises. What’s more, the climate crisis is manifesting itself more than ever, and international financial promises to enable a just energy transition across the globe continue to be broken. Meanwhile, the costs of climate mitigation, adaptation, and loss and damage are soaring, which makes it even less likely that these countries will get the climate funding needed to respond adequately to the crisis. As a result, the climate financing gap is widening.

In a response to these developments, the COP26 and COP27 presidencies some months before last year’s November COP27 summit launched an Independent High-Level Expert Group equipped with the task of “scaling up investment and finance to deliver on climate ambition and development goals”. This distinguished group of experts launched their report in November, calling for a “rapid and sustained investment push […] to drive a strong and sustainable recovery out of current and recent crises […] and to deliver on shared development and climate goals.”

The investment push that’s needed relies on domestic resource mobilization and blended finance that together with other financial levers form part of the so-called Grand Match financing strategy. This strategy was proposed by Amar Bhattacharya, Meagan Dooley, Homi Kharas, Charlotte Taylor and Nicholas Stern in a bid to foster a big investment push for emerging markets and developing economies. However, both the total amounts assumed for blended finance (USD 395 billion) and domestic resource mobilization (USD 653 billion) are unlikely to materialize and are unlikely to close the climate finance gap, as we will show.

 

Blended financing and domestic resource mobilization failing to deliver

As early as 2016, the rising popularity of blended finance as a way to close the global climate finance gap could be observed; in April that year, British weekly newspaper The Economist ran an article called “Trending: blending” that examined “[t]he fad for mixing public, charitable and private money”. In the past few years, the concept of blended finance has gained further traction; key global financial institutions such as the World Bank, IMF, and the G20 have pointed to blended finance as a solution to close the global climate investment gap. For example, during its last spring meeting, the IMF emphasized that its members should “recognize the importance of stepping up climate finance from all sources, including by mobilizing private investment”. Similarly, domestic resource mobilization (DRM), whereby governments channel their own resources towards public goods and services, such as by raising taxes or by improving auditing processes, is viewed as an important climate financing tool.

However, blended finance has not delivered on its promise. Back then, The Economist observed that “few data exist on the scale and success of blended finance”. Now, with more data available, it’s becoming clear that private investments made in low- and middle-income countries through blended finance actually have decreased from USD 150 billion to 100 billion, and between 2019 and 2021, only USD 14 billion was pledged  to poor countries through private channels. Similarly, the mobilization of domestic resources has not held up to its promises — its potential has been overestimated.

These tools are therefore unlikely to sufficiently help close the finance gap that has arisen. And with the current grim global economic outlook, an increasing number of low-income countries are already in debt distress and are increasingly impacted by the loss and damage of climate change itself, thus decreasing their ability to use these tools even more.

In fact, the reliance on these financing mechanisms is dangerously optimistic, as this prevents us from considering the additional sources of finance that are needed to provide climate investments at the scale and time needed. Here’s why:

 

1.    There is a huge climate finance gap, especially in low-income countries, and it’s becoming bigger, not smaller.

By 2025, if no measures to increase climate funds are taken, the amount of money needed by emerging economies (excluding China) to address the effects of climate change – generally referred to as the climate finance gap – would amount to USD 1 trillion (as estimated in 2022). Lower-income regions such as South Asia and Africa have the largest investment needs (7-14 times and 5-12 times more investment, respectively), but these are not being met. While most of the money needed to close the gap is supposed to be sourced through domestic resource mobilization (USD 653 billion) and private investment, supported by public funding through blended finance (USD 395 billion), in reality, this is not happening.

And the finance gap might be even bigger than we think. For example, in a recent report Oxfam estimates that the annual shortfall for necessary investments in health, education, social protection and tackling climate change in low- and middle-income countries could be as high as USD 3.9 trillion.

 

  1. Advanced economies are not keeping their promises

Meanwhile, public finance is not contributing sufficiently. In 2009, high-income countries pledged to help fund the energy transition in developing countries by promising to commit USD 100 billion annually. But in 2020, only USD 83 billion had been pledged. What’s worse, to get to this figure, existing development assistance (ODA) money was relabelled as climate finance for developing countries. And only one-third of the funds that have been committed are in the form of grants, which means that debts continue to accumulate due to loans.

 

  1. Blended finance should be helping funnel private funds to low-income countries, but it’s still mostly public money

 Blended finance[1] has gained the status of a silver bullet. The assumption underlying the belief in the effectiveness of this tool is that public capital investments would lever private investments according to a certain ratio of the ‘blend’. If done properly, investing by blending different financial sources indeed could result in a multiplied number of private investments that could be used to finance climate action.

However, the amount of private money available to match each public dollar is overestimated  – in reality, much less private money is invested, while public funds continue to form the largest share of the total amount. In one report, the IMF for instance expects the ratio of private to public money to be 9:1. In 2020 however, private finance constituted only around 50% of global climate finance, with the rest being public finance. And in low-income regions where climate investments need to increase most strongly, even a public-private ratio of 1:1 is often not tenable. In Sub-Saharan Africa, for example, around 90% of climate finance comes from public sources.

 

  1. Mobilizing domestic resources requires challenging reforms

The IMF anticipated that emerging economies could raise as much as USD 236 billion in additional taxes by 2025 through domestic resource mobilization. To do this, they would have to implement relevant tax and administrative reforms to tackle their sometimes very low tax rates and high levels of tax exemptions.[2] However, implementing and enforcing these kinds of reforms is challenging. Emerging economies are renowned for administrative capacity constraints that prevent them from addressing tax evasion and keeping avoidance under control. Studies on the projected development of tax-to-GDP ratios in emerging economies show that their tax revenues are expected to only slightly, but not significantly, increase.

Moreover, some international support initiatives have already been in place, such as the Tax Inspectors Without Borders (TIWB) assistance programmes between 2012 and 2020. This has helped raise the tax revenues of these countries by a mere USD 537 million – a figure far below the necessary additional USD 417 billion in domestic resource mobilization estimated in the IHLEG’s report.

 

  1. Countries are holding on to their money – tightly

Lastly, in response to the Russian invasion of Ukraine and the subsequent spike in inflation levels, a global monetary tightening cycle has begun. This has resulted in capital outflows by the private sector from emerging economies, which is bound to substantially hinder these countries’ economic growth. It has already been shown that the simultaneous monetary and fiscal tightening policies across the globe impact developing countries and emerging economies disproportionately.

This makes efforts to close the climate finance gap seem even more unrealistic, especially given the high value of the dollar and the outstanding dollar-denominated debt in the Global South. Of the low-income countries eligible for special IMF support, as of 2023, nine are currently in debt distress, while 27 are at a high risk, 26 countries at a moderate risk, and seven countries at low risk of debt distress.

 

More realism needed if we want to close the gap

The global climate finance gap (excluding China) currently amounts to a stunning 1 trillion until 2025 under the business-as-usual scenario. Promises of the past have not been lived up to while the climate crisis and green energy transition are becoming more urgent every day. Global policy makers seem to rely on domestic resource mobilization and blended finance to close the gap.

However, as this blog post has shown, the empirical success of blended finance remains very limited, while the challenges to boost domestic resource mobilization remain huge. Time is, however, very limited. Instead of relying on insecure trends, global policy makers should act by developing policies that grant a bigger role for public money and innovative monetary solutions.

References

Abdel-Kader, K. & De Mooij, R. (2020). Tax Policy and Inclusive Growth. IMF Working Paper. https://www.imf.org/en/Publications/WP/Issues/2020/12/04/Tax-Policy-and-Inclusive-Growth-49902

ADB (2022). African Economic Outlook 2022. African Development Bank Group. https://www.afdb.org/en/knowledge/publications/african-economic-outlook

Attridge, S. (2022). The potentials and limitations of blended finance. In D. Schoenmaker & U. Volz (Eds.), Scaling Up Sustainable Finance and Investment in the Global South. CEPR Press. https://cepr.org/system/files/publication-files/175477- scaling_up_sustainable_finance_and_investment_in_the_global_south.pdf

Benedek, D., Gemayel, E., Senhadji, A., Tieman, A. (2021). A Post-Pandemic Assessment of the Sustainable Development Goals. IMF Staff Discussion Note. https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2021/04/27/A-Post-Pandemic-Assessment-of-the-Sustainable-Development-Goals-460076

Bhattacharya, A., Dooley, M., & Kharas, H. (2022). Financing a Big Investment Push in Emerging Markets and Developing Countries for Sustainable, Resilient and Inclusive Recovery and Growth. London: Grantham Research Institute on Climate Change and the Environment, and Washington, DC: Brookings Institution. https://www.lse.ac.uk/granthaminstitute/publication/financing-a-big-investment-push-in-emerging-markets-and-developing-economies/

Fenocchietto, R. & Pessino, C. (2013). Understanding Countries’ Tax Effort. IMF Working Paper. https://www.imf.org/external/pubs/ft/wp/2013/wp13244.pdf

Gallagher, K. P., & Kozul-Wright, R. (2021). The case for a new Bretton-Woods. John Wiley & Sons.

Global Infrastructure Facility. (2023). Global Infrastructure Facility. https://www.globalinfrafacility.org/

G20 (2019). G20 Osaka Leaders’ Declaration. G20. https://www.mofa.go.jp/policy/economy/g20_summit/osaka19/en/documents/final_g20_osaka_leaders_declaration.html

Hill, S., Jinjarak, Y., Park, D. (2022). How do Tax Revenues Respond to GDP Growth? Evidence from Developing Asia, 1998–2020. Asian Development Bank. https://www.adb.org/sites/default/files/institutional-document/782851/ado2022bp-tax-revenues-gdp-growth.pdf

IFC (2023). Blended Concessional Finance. International Finance Corporation, World Bank Group. https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/bf

IMF (2023a). Chair’s Statement of Forty-Seventh Meeting of the IMFC. https://www.imf.org/en/News/Articles/2023/04/14/pr23120-chairs-statement-forty-seventh-meeting-of-the-imfc

IMF (2023b). Nigeria’s Tax Revenue Mobilization: Lessons from Successful Revenue Reform Episodes. IMF Country Report No. 23/94. https://www.imf.org/en/Publications/selected-issues-papers/Issues/2023/03/07/Nigerias-Tax-Revenue-Mobilization-Lessons-from-Successful-Revenue-Reform-Episodes-Nigeria-530628

IMF (2023c). List of LIC DSAs for PRGT-Eligible Countries As of February 28, 2023 https://www.imf.org/external/pubs/ft/dsa/dsalist.pdfhttps://www.imf.org/external/pubs/ft/dsa/dsalist.pdf

IMF (2022). Mobilizing Private Climate Financing in Emerging Market and Developing Economies. IMF Staff Climate Notes.

Neil McCulloch (2019). What Nigerians really think about tax. International Centre for Tax and Development – ICTD. https://www.ictd.ac/blog/what-nigerians-really-think-about-tax/

OECD (2018). OECD DAC Blended Finance Principles for Unlocking Commercial Finance for the Sustainable Development Goals. OECD. https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/OECD-Blended-Finance-Principles.pdf

OECD/UNDP (2020). Tax Inspectors Without Borders Annual Report 2020. OECD/UNDP. http://www.tiwb.org/resources/reports-case-studies/tax-inspectors-without-borders-annual-report-2020.pdf

OECD (2022). Statement by the OECD Secretary-General on climate finance trends to 2020. OECD. https://www.oecd.org/environment/statement-by-the-oecd-secretary-general-on-climate-finance-trends-to-2020.htm#:~:text=29%2F07%2F2022%20%2D%20Climate,increase%20from%202018%20to%202019.

Oxfam (2020). Climate Finance Shadow Report 2020. Assessing progress towards the $100 billion commitment. Oxfam. https://www.oxfam.org/en/research/climate-finance-shadow-report-2020

Oxfam (2023). False Economy: Financial wizardry won’t pay the bill for a fair and sustainable future. Oxfam. https://www.oxfam.org/en/press-releases/oxfam-warns-rich-country-financial-wizardry-puts-their-own-interests-ahead-worlds

Songwe, V., Stern, N., & Bhattacharya, A. (2022). Finance for climate action: Scaling up investment for climate and development. London: Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science. https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2022/11/IHLEG-Finance-for-Climate-Action.pdf

Tett, G. (2022). The flood of green finance must be diverted from the west. Financial Times. https://www.ft.com/content/95c28b9e-7844-4ab7-8401-42d1cca133a8

The Economist (2016). Trending: blending. The Economist. https://www-economist-com.proxy.library.uu.nl/finance-and-economics/2016/04/23/trending-blendingg

UNCTAD (2022). Trade and Development Report 2022. Development prospects in a fractured world. UNCTAD. https://unctad.org/tdr2022

World Bank (2023). Global Economic Prospects. The World Bank Group. https://openknowledge.worldbank.org/server/api/core/bitstreams/254aba87-dfeb-5b5c-b00a-727d04ade275/content

[1] According to the OECD, blended finance is “‘the strategic use of development finance for the mobilization of additional finance towards sustainable development in developing countries’, with ‘additional finance’ referring primarily to commercial finance’” (OECD 2018).

[2] In this context, the IHLEG recommends an incremental tax effort of at least 2.7% of EMDEs’ GDP, equal to USD 650 billion, so an additional USD 417 billion by 2025 on top of IMF projections (Bhattacharya et al., 2022).

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the authors:

 

Sara Murawski is a policy advisor and researcher in the field of international trade and investment, finance and European integration. She has worked in the world of journalism, think tanks, NGOs, the Dutch and European Parliament as well as with many activist groups. At Sustainable Finance Lab, Sara is project leader on the project “Changing ‘Fiscal Rules’ and reforming the EU fiscal framework” that tries to shift the debate in the Netherlands from frugal to forward looking. The continuous dialogue with experts, policy officials and local actors in developing her thoughts, output and activities is crucial for her.

 

Rens van Tilburg is director of the Sustainable Finance Lab at Utrecht University. Rens has experience working in the European and Dutch parliament and as an advisor on innovation policies for the Dutch government.  With the academic think tank the Sustainable Finance Lab Rens has worked extensively on banking, asset management, supervision, public finance and monetary policies. Focusing on financial stability issues and the impact of climate change and biodiversity loss. 

 

Anna Ghilardi is a research intern at Sustainable Finance Lab. She attained her bachelor’s degree in Economics and Business Economics at Utrecht University, where she wrote her thesis about the impact of previous monetary policy on European house price growth before and during the Covid-19 pandemic. She is now completing a double degree master’s programme in European Governance, a two-year curriculum attended both at University College Dublin, Ireland and Utrecht University. Therefore, she is currently writing her master’s thesis at Sustainable Finance Lab on Poland and Bulgaria’s capacity to single-handedly fund their climate finance gap in view of the European Union’s climate neutrality ambitions.

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