When it comes to dealing with it climate crisis, means that the world has reached a dangerous tipping point. However, as global finance and development officials gather in Washington for the spring meeting of World Bank and his International Monetary Fundmaybe it’s time to give it a new chance.
Today, the poorest nations pay the highest human costs due to the effects of climate change. They also pay the highest price to gain access to money and take advantage of it to prosper. For example, when talking about solar power in Ghana, we have to consider that borrowing costs may be up to five times higher than in Germany, putting the cheapest form of electricity out of reach for those who need it most.
To eliminate emissions by 2050 and limit global warming to 1.5 degrees Celsius, the poorest nations, responsible for much of the future increase in carbon dioxide, urgently need innovation and support. Developing countries outside of China need about 2 trillion. USD per year by 2030, according to the Climate Finance report. However, developed nations find it difficult to make a long-term commitment and finance them with $100 billion a year. Multilateral development banks, such as the World Bank, can help. However, the current arrangements regarding financing to deal with climate consequences from developed to developing countries are ineffective, insufficient and unfair.
There is a need for a new and radical approach. The best way would be through a new scheme, presented at the COP27 Climate Summit in November, called “1% for 1.5C”. The idea is for multilateral development banks to extend favorable financing terms to middle-income countries as well as low-income countries. These nations, such as Pakistan, Nigeria and Barbados, will be able to borrow at 1% interest to pay for renewable energy and basic infrastructure that can help them deal with the growing risks of climate change. with a 10-year grace period during which they would not have to repay anything, followed by a 20-year repayment phase.
* Senior UN official for Climate Change Action.