Prime Minister of Barbados Mia Mottley. UNCTAD/WikimediaCommonsTHE NEWS French President Emmanuel Macron and Barbados Prime Minister Mia Mottley will co-host a summit aimed at solving one of the biggest problems in climate policy: How to turn the trickle of international financial aid available for developing countries to cut emissions and adapt to climate impacts into a trillion-dollar torrent within the next decade. On the table will be proposals for the most comprehensive overhaul of the global development finance system since World War II. Heads of state, finance ministers, and the new World Bank president are expected at the event in Paris on Thursday and Friday. TIM’S VIEW The Summit for a New Global Financing Pact won’t clear all the bureaucratic obstacles that are clogging up the climate finance pipeline. But it marks the first time the U.S. and other rich, high-emissions countries will be under pressure to take a position on proposals that will be front and center at the meeting rather than percolating on the sidelines of climate geopolitics, as they normally are. These ideas include allowing developing countries to suspend payments on their sovereign debts in the wake of natural disasters; creating a new agency within the World Bank to insure private-sector investments in clean energy projects against fluctuations in the local currency exchange rate; and rewriting the lending protocols for development banks so that they are less risk-averse and prioritize projects with the greatest potential to cut emissions or blunt climate impacts. “The summit is not about ‘cough up more money now,’ it’s about getting more out of what currently exists,” said Michael Jacobs, a senior fellow at ODI, a U.K. think tank, and a former climate adviser to the U.K. government. “This is a moment where there could be an inflection point on some of these ideas.” One more tangible outcome of the summit, Jacobs said, is that Macron may announce a goal to collect $100 billion in “special drawing rights” — International Monetary Fund reserve assets that countries can exchange for cash — and redirect the funds to developing countries to help pay for climate projects. These rights were allocated to rich nations during the pandemic but went unused. ROOM FOR DISAGREEMENT The summit won’t magically conjure up trillions of dollars until the U.S. and other donors commit to raising their contributions to the World Bank. So far, the U.S. has ruled that out, at least until the World Bank gets better at investing the money it already has. So it will be important to watch whether Treasury Secretary Janet Yellen, who will be in Paris, sees any of the reforms under discussion there as the kind of ideas that would change her mind. On Wednesday, U.S. President Joe Biden and other world leaders published a letter that shifts responsibility for climate finance away from governments and more onto the private sector. To read more of this story, click here. |