I am returning to my native Scotland next week for the first time since the early days of the pandemic. My visit is of great personal importance, but also professional – as I am back to attend one of the most important international meetings in modern history, Cop26 – the best last chance in the world to bring climate change under control uncontrollable.
In my role as AIIB Vice President, I am here to represent the members of the bank, including some of the most vulnerable in the world to climate change. Countries like Bangladesh, India, Nepal – those who have been on the front lines of climate change, experiencing a deluge of monsoons and droughts throughout 2021 – which are among the least equipped to deal with the consequences of the climate crisis.
Over the past few weeks, friends and colleagues in Beijing have asked me if we should be optimistic about the summit and its ability to avert catastrophic climate change. My feelings are mixed. On the one hand, there are reasons to be positive. Unlike in previous years, there is no more fundamental debate – it is now clear that people want action and there is a sense of momentum in the conference. The Intergovernmental Panel on Climate Change, or IPCC, warns us in its latest scientific report that climate change is not just a challenge for the future, but a threat for the present.
But I am also careful. The risk is that we spend the fortnight talking about protest tactics and participants; and that the conference become a kind of beauty contest for the wealthier nations to show off their national green agendas.
To be successful, the conference must address the big picture: the challenge of how we are directing funding, urgently, to the communities that need it most.
We cannot allow this cop to be derailed by geopolitical debates that serve no one, and dominated by richer nations.
It is extremely important and welcome that so many developed countries have made ambitious commitments to reduce emissions and go net zero. But to say that these commitments “set an example” for other countries to rebuild greener misses half the point.
This is true, of course, for countries that can fiscally afford to encourage heat pumps and home insulation upgrade programs. This is less true for developing countries which feel it first and worst due to vulnerable geography and less ability to cope with damage from severe weather events and rising sea levels. sea.
For Cop26 to be constructive, it will need to answer fundamental questions about how we direct funding to these communities so that we can help them mitigate and adapt to climate change, in line with development priorities and strategies. long-term countries. These priorities vary by geographic area. Indeed, in the Asia-Pacific region, climate priorities are very different between developed and developing countries, and even between developing countries. To ensure that climate finance reaches those who need it most, we, the financial institutions, must design financial instruments and solutions tailored to the needs of each recipient country.
Multilateral development banks, like the AIIB, are already playing a crucial role and will need to quickly step up their efforts to support the transition. In our case, at least 50% of AIIB loans will go to climate finance by 2025. By 2030, that will total $ 50 billion (£ 36.3 billion) – a quadrupling of our funding. climate change 2019 when the AIIB began to make this figure public.
The developed world has greater resources and is responsible for the majority of historical contributions, so there is a moral imperative, but also a selfish one. However, public funding from the rest of the world to the countries of the South will not be sufficient on their own. In order to achieve the scale and pace of the change required, we must ensure that all trade, investment and private sector finance is aligned with the temperature and resilience goals of the Paris Agreement.
Urbanization, rapidly increasing economic and population growth will cause emissions to increase dramatically in emerging and developing Asia over the next decade, jeopardizing our ability to maintain the 1.5 ° C target, calling for urgent funding for mitigation. At the same time, many countries in the Asia-Pacific region are now suffering losses due to catastrophic climate change, and therefore need urgent funding for adaptation. At our annual meeting, the AIIB just made a commitment to align all of its new fundraising activities with the Paris targets by mid-2023. We believe that we can help our members to continue to enjoy the economic development benefits of our high quality projects while meeting their own obligations under the Paris Agreement.
By investing now in low-carbon, climate-resilient and sustainable infrastructure in these countries, and directing global financial flows to climate-vulnerable countries, we can mitigate today’s climate consequences, while targeting them. roots of future problems.
Sir Danny Alexander is Vice President of Policy and Strategy at AIIB Bank and former Chief Secretary to the Treasury