Development Finance – Debating Development Research

22/10/202422/10/2024

EU Sustainable Finance Strategy: Proposals for Reform and Extension

By Sören Hilbrich and Kathrin Berensmann / Part of the European Development Policy Outlook Series

The EU has set itself the goal of reducing greenhouse gas emissions by at least 55% from 1990 levels by 2030 and becoming climate-neutral by 2050. Currently, financial markets are clearly not aligned with this goal as investments in environmentally harmful economic activities are still taking place at a large scale. For instance, according to a recent report of th e International Energy Agency, the global energy investments in fossil fuels still amounted to more than USD 1 trillion in 2023 and have even significantly increased since 2020 after a dip during the pandemic.

06/06/2024

Unravelling the Geographies of the Green Transition: Understanding the Finance-Extraction-Transitions Nexus

By Tobias Franz and Angus McNelly

The transition from fossil fuels to green energy in the 21st century – driven by the urgent need to address anthropogenic climate change – represents a monumental shift in not just global energy systems but generally within global capitalism. This transition mirrors historical transformations in energy systems, such as the emergence of fossil capital in northern England or the shift from coal to oil in the 20th century, which have had profound impacts on the world economy. The ongoing green transition presents similar unique challenges and opportunities, requiring a fundamental reconfiguration of energy production and consumption patterns to avoid catastrophic climate collapse.

27/06/202304/07/2023

Managerialism versus Climate Justice in financing Loss and Damage

By David Rossati Debt and Green Transition blog series

Several commentaries on the latest climate negotiations at the UN hailed the creation of a new international climate fund as a historic breakthrough. Unlike other climate funds, this entity will manage a new stream of funding dedicated to ‘loss and damage’ faced by vulnerable countries. Within the realm of the Paris Agreement and the UN Framework Convention on Climate Change (UNFCCC), ‘loss and damage’ loosely refers to the economic and non-economic losses faced by vulnerable countries due to extreme and slow onset events triggered by climate change, such as heatwaves or sea level rise. In other words, loss and damage is a multilateral stream of law and policy, in addition to mitigation, adaptation, and finance which deals with some crucial and unsolved tensions of the so called ‘green transition’: those between industrialized countries and historical polluters on one side, and, on the other, the most vulnerable countries suffering the most from destructive climatic events to which they have contributed little or nothing.

15/06/202304/07/2023

Who benefits from mobilising private sector investment for climate transition?

By Giedre Jokubauskaite / Debt and Green Transition blog series

The private sector has arguably caught up with an urgency of climate transition. This is visible from various climate initiatives that feature banks, insurers, consultancies, multinational corporations, and many others. The idea of ‘mobilising private investment’ for climate transition has also been an essential part of an increasingly popular policy discourse about how to finance green transition. The framing of private investments as key to the transition happens in two steps: firstly, articulating ‘a gap’ of finance needed to achieve climate objectives, and secondly, concluding that only the private sector, with support of the public sector in de-risking and incentive provision, can fill such a gap. Daniela Gabor aptly calls the systemic logic of this narrative the ‘Wall Street Consensus’. However, the privatization of a sector with the key support of public funds is not new: it has originally been applied to funding sustainable development, and now been revamped for policies on ‘green’ transition.

08/06/202304/07/2023

Green Finance under the Escazu Agreement

By Héctor Herrera / Debt and Green Transition blog series

Over the last few years, two parallel processes have unfolded in Latin America and the Caribbean (LAC). They are seldom considered together, but must be analyzed as intersecting: the drafting and implementation of the Escazú Agreement on environmental participation, and the expansion of the green bond market. I argue that green bonds, debt securities labeled as climate-environment-related and issued to borrow money from the financial market, need to be analyzed in combination with the Escazú Agreement, and with adequate policy action. Likewise, before any other climate finance instruments are tested, a legal and financial infrastructure should be set up to guarantee the basic protections reiterated by the Escazú Agreement: respect for the life and integrity of environmental defenders, access to environmental information, effective environmental participation, and access to justice in environmental matters.