A global climate agenda for Europe

COP27 delivers an opportunity for Europe and Africa to lead on global climate action, writes Frank Scheidig, global head of senior executive banking, ‎DZ BANK.

The impact of the Russian invasion of Ukraine has compounded a world beset with crises, and in the run-up to COP27, the world looks very different from that of COP26.

This November, around 200 countries will gather in Sharm El Sheikh, Egypt, for COP27 – after a summer of record-breaking weather events around the northern hemisphere, including the tragic flooding in Pakistan. But the talks on how to curb emissions, and perhaps more importantly how to fund those efforts, face an energy crisis that is draining state budgets and forcing some countries to burn cheap and easily accessible energy sources, such as coal.

Perhaps the energy crisis should have come as no surprise but rather a reminder of the pressing need to transition to a low-carbon economy. Crises however tend to offer opportunities and crystallise developments.

COP27 – the so-called ‘African Cop’ – certainly won’t neglect the rest of the world. Given Europe and Africa’s interconnectivity and interdependence, it delivers an opportunity for Europe to take a leading role in global climate action. Such an opportunity should be viewed as an attractive proposition from an economic, social and geopolitical standpoint: ensuring a post-pandemic economic recovery that also tackles climate change.

But why should the European Union take on this role?

With the announcement of the European Green Deal in 2019 and subsequent policy packages, the EU became the first global player to lay out concrete plans to reduce its net greenhouse gas emissions. However, the EU’s energy dependencies, which have so starkly come to light this year, have strained the fragile consensus between member states on the European Green Deal and could prevent it from fulfilling its ambitions for global climate leadership.

The EU and its member states are already the biggest providers of climate finance with €23.4bn provided in 2020.

Yet after a year of climate-linked extremes, the issue is now front of mind for all policy-makers in Europe. And with climate-related impacts on Europe’s economy accelerating, Europe’s response must accelerate too.

Today, the world has an urgent need for more ambitious climate action, financial support and energy that is reliable, affordable and low carbon. We cannot avoid the fact that high-income countries’ emissions are largely responsible for global warming, and the failure to deliver promised climate finance has raised tensions in previous global climate negotiations.

The EU and its member states are already the biggest providers of climate finance with €23.4bn provided in 2020, according to data from the Organisation for Economic Co-operation and Development. But the EU still needs to assure low- and middle-income countries that the green transition will not leave them behind.

As many high-income countries transition their economies, the EU now faces the task of making climate-first development an attractive option for low-emitting low-and middle-income countries.

This task is a key element of the EU’s arsenal for climate action, and the Global Gateway provides a strong framework for this. Unveiled on 1 December 2021, the Global Gateway is a plan to support sustainable infrastructure development around the world. It will strengthen Europe’s development financing and create sustainable partnerships to assist partner countries’ transitions.

Yet many low- and middle-income countries face pressing development challenges such as an overreliance on commodity-based growth, demographic pressures and access to basic services – all of which have been heightened by the pandemic.

Europe therefore must shift the focus of the global conversation away from energy security and towards investment opportunities, market reforms and incentives. Promoting the shift to net-zero economies as a development opportunity for low- and middle-income countries must be a priority.

The EU is perhaps not as brash as others and needs to increase the coherence of its external action. But it has been a reliable and predictable partner, who can commit for the long term. The Global Gateway will succeed by building links, not dependencies, moving away from an imbalanced donor/recipient relationship, with an emphasis on agreed rules, sustainability and local ownership.

Together the EU, member states and their financial and development institutions, such as the European Investment Bank and the European Bank for Reconstruction and Development, will be brought together by the Global Gateway through a Team Europe strategy to mobilise the private sector to leverage investments.

Unveiled on 1 December 2021, the Global Gateway is a plan to support sustainable infrastructure development around the world.

But there remains a need for increased financial support, and the international community has yet to live up to its commitment to mobilise $100bn annually in climate finance for low- and middle-income countries.

Countries require a significant increase in funding, particularly for adaptation, which is essential to constructing a future that will be more sustainable and resilient. And for the Global Gateway approach to achieve its aims, the EU will need to strengthen its financial commitments.

Boosting global sustainable and resilient links with the world will also require a greater focus on social developments and greater investment into projects in health and education. Equally important is promoting people-centred economic development, ensuring no one is left behind, and realising the United Nations’ sustainable development goals.

Nevertheless, the EU, which is the third-largest emitter of greenhouse gases in the world, will need to phase out coal use in member states, ensure its energy security through sustainable sources and support successful ‘just transition’ policies to become a stronger and more credible global presence on sustainable development.