By Editor-June 23rd, 2023.
World leaders meeting in Paris to discuss climate change yesterday have been asked to give poorer nations like Barbados access to billions of dollars at much lower interest rates to tackle climate change with infrastructure projects like building flood defenses.
Mia Mottley, Barbados’ first female PM, is leading the global fight for this money and told BBC News that her tiny island nation urgently needs help.
Poorer nations want more money because they did little to cause climate change but face its worst effects.
They also struggle to afford expensive projects like renewable energy.
Climate finance, including funding for flood defences or solar plants, has long been one of the biggest sticking points in climate negotiations.
But Ms Mottley has built a global coalition to support her demand that the international financial system be fundamentally reformed.
“We are all in this together”, Ms Mottley told BBC News in Paris. “If we don’t realise that, we will not act with the urgency that’s necessary to save the planet and save lives.”
The Barbadian prime minister is jointly hosting the Paris conference with President Emmanuel Macron of France.
Ms Mottley is determined the meeting deliver results.
She describes the threat of climate change as “a death sentence” on the world. “If it is a death sentence, then we need to move with urgency,” she explains.
Insiders at the summit are expecting an announcement that a target for $100bn worth of a kind of international currency called Special Drawing Rights (SDRs) has been met.
These assets will be transferred to low-income countries to be used for climate programmes.
But Ms Mottley has an even bigger prize in her sights, a plan dubbed the “Bridgetown Agenda” after the Barbadian capital.
It wants to generate more finance for the countries that need it most through a wholesale modernisation of the international monetary system.
The current institutions – including the World Bank and the International Monetary Fund (IMF) – were set up by the victorious nations towards the end of the Second World War at a conference in a ski resort called Bretton Woods in New Hampshire, US
The so-called “Bretton Woods system” will celebrate its 80th anniversary next year.
Ms Mottley says she wants to make it fit for the challenges of the modern world by moving the focus away from richer nations and towards delivering outcomes that benefit the entire world, like helping developing countries tackle climate change.
One proposal is that institutions like the World Bank offer cheaper loans for climate action projects.
It is much more expensive to build flood defences, wind farms, or solar energy plants in Barbados or Angola than it is in the Netherlands or the UK, Ms Mottley points out.
The same goes for erecting wind turbines or installing solar farms.
That is because low-income countries are charged high interest rates – often two or even three times the rates developed nations face.
Yet the risks of individual projects don’t vary anywhere near as much as that.
Another suggestion is that institutions like the World Bank should agree to guarantee loans for climate action in developing nations. That would encourage the private sector to lend at lower interest rates.
Experts say these initiatives could generate hundreds of billions of dollars’ worth of loans for climate projects in low-income countries.
Another proposal involves the creation of an auction in which developing nations would bid for cheap finance for climate projects.
This “Climate Mitigation Trust Fund” would be funded by tens of billions of dollars’ worth of SDRs and overseen by the IMF and the UN.
The winners would be the projects that reduce global warming fastest.
It is not expected that a final decision will be made on these proposals, but Ms Mottley is confident that progress will be made.
Source: BBC News.
