A Live-streamed International Climate Summit Is Coming Up!

This is a year of climate milestones. From Secretary John Kerry’s South Asian climate tour, to the first ever live-streamed Climate Summit (bringing together Presidents or Prime Ministers of 40 countries), to the mega-meeting “COP26,” scientists and policymakers are getting serious about tackling climate change head-on.  

This April, US President Biden is reviving a group of 17 countries that are responsible for 80% of world GDP and also 80% of the world’s emissions. This group is known as the Major Economies Forum on Energy and Climate. The Summit is also inviting 23 additional heads of state, to showcase their climate leadership initiatives.  

So what can we expect them to talk about? Well for one, green job creation and a “just transition” to the new climate-safe economy. They’ll be discussing new technologies and building industries of the future, protecting lives and livelihoods from the impacts of climate change, as well as engaging all levels of government and civil society in the effort.

Climate leaders of the 17 Major Economies will present, in two stages, what they are doing to keep the world within the 1.5 degree warming limit. First, they will disclose the timeline for “peaking” their emissions (meaning the year in which their overall emissions will stop rising and finally start to come down). Second, they will indicate when they intend to “reach net zero” (meaning the year in which they will have transformed their economies to put out so few residual emissions, that they can sequester (absorb) these, through forests and soil). Most countries have set 2030 as their peaking and 2050 as their net zero year.

Massive investments will be required for this journey to net zero in the major economies: a full makeover of the electricity system, the transportation system, the way buildings are managed, the way agriculture and fisheries are practised, oceans are protected, heavy industry is carried out… all of this will need to be transformed through new investments, new jobs, new skills and new behaviors. That is the commitment being made by the international community in order to protect the planet’s future. It is nothing short of a deliberate and coordinated revolution!

It is nothing short of a deliberate and coordinated revolution!

President Biden’s Climate Envoy John Kerry is currently in India on a three-day visit, on his global tour in preparation for the Summit. India has set some massive climate goals as part of its Paris Commitments. (More details are in this article)  The US-India Energy Partnership that was on the back burner for four years, is now being revived on three tracks: strategic partnership; climate investment and clean technology.

Trillions of dollars in climate-friendly, commercial investments will be needed (for over 100 countries) to fund their privately owned solar and wind farms, along with enormous transmission lines to carry the clean electricity to every corner of the country. There will also be a need to fund a vast network of electric vehicle charging infrastructure, intelligent buildings that are energy efficient, etc. And where exactly are all these funds supposed to come from? Is anyone sitting on this kind of money and looking for investment opportunities? YES, as a matter of fact! Institutional investors manage large pools of money from pension funds, insurance companies and others. They are supposed to multiply the premiums flowing in from members every month (so that when someone submits a large, approved insurance claim for example, there is enough money to honour it). 

Today institutional investors in Europe and the US are sitting on tens of trillions of dollars in cash, scouring the world for good investment opportunities. They often seek to place a percentage of their funds into “green assets” to please their climate-conscious shareholders. If they invest in a solar farm in India for example, they expect to earn a high rate of return from a well-built and competently managed project to which they either lend money (debt finance) and expect to be repaid on time, or they buy shares (equity finance) which they expect to sell for many multiples of what they paid to get in

India has been very successful so far in attracting large numbers of domestic and foreign investors to its renewable energy sector. Almost 90,000 Megawatts of solar and wind generation facilities have materialized in record time––a little over five years––along with the associated transmission lines required. However, there is still a long way to go for India, and massive amounts of new domestic and foreign funding will be needed in order to reach the very ambitious 2030 renewable energy goals of 450,000 MW. 

John Kerry has stated ahead of this visit, that he is coming to discuss how he can help India to mobilize investor interest from US institutional investors, among others, in commercially funding Indian “green projects”.  

India’s success at attracting investors is rare, though. Today, over three quarters of climate finance investments do not cross borders—that is, they stay in the country of origin of the institutional investor, where the investor is most comfortable with the risks, legal frameworks etc. This is a burning issue that needs urgent attention: what new instruments or guarantees are needed to promote the flow of climate finance to the over 150 countries that need it the most? Without a financing solution, there is no way that most developing countries (which rely on foreign investors, because they have weak domestic financial markets) can ever attract enough funding to meet their climate investment goals. This is likely to be a major area of discussion raised by developing countries in the series of 2021 climate meetings. We don’t have any perfect answers to that question yet, but it is high time that it became a top-of-mind, front-burner issue! How exactly are so many middle and low income countries going to fulfil their climate pledges without any resources?

Technology is another area of mutual interest for India and the US. India, with its massive market size and diversity presents a unique “test-bed” for any technological innovation to be tried in real world conditions. The idea is to study and develop clean technology solutions that respond to the unique challenges faced by large numbers of vulnerable populations in low to moderate income settings. “If it works in India”, with the country’s strong track record and market demand for frugal and robust innovation, then the chances are that it can be rolled out across the developing world, with appropriate local tweaks. India can help other developing countries to leapfrog to solving development problems using clean technologies, and it is uniquely positioned to provide the scale to push down development and manufacturing costs.

I hope you are looking forward to tuning in to the upcoming 40-country Climate Summit, which is a rare chance to get a look in, because it will be live-streamed! Please encourage your friends to pay attention to the Climate Summit and get a sense of how the revolution is coming along! 

Till next time, Mohua