UN: Financial Sector Must Align with Paris
With countries due to update emissions targets at COP30 next year, a UN official urges them to implement policies that match goals.
Financial institutions should be legally required to align their activities with the goals of the Paris Agreement ahead of next year’s COP30, a senior UN figure said during London’s Climate Action Week.
Selwin Hart, Special Adviser on Climate Action and Just Transition to UN Secretary-General António Guterres, said such a rule should be included when countries update their nationally determined contributions (NDCs) next year.
Under the Paris Agreement, countries must ratchet up their emissions reduction targets, known as NDCs, every five years. The deadline for the next increase is set during COP30, due to take place in Belém, Brazil.
Speaking during the E3G-hosted State of Politics Forum, Hart said countries were “simply not moving fast enough” on climate, and COP30 would present an opportunity to match targets “with credible policies and regulation”.
“We need the NDCs from the G20 to be extremely clear in terms of not only having a number, but also in terms of what are the necessary policies and regulations that will be attached to implementing those goals,” he said.
Central to this would be ending the hypocrisy of wealthier nations, which tend to that adopt ambitious targets while continuing to allow financial institutions to fund the extraction of fossil fuels.
“All of the G7 countries have committed to net zero by 2050, yet virtually every one of them is still approving new oil and gas licenses, which the International Energy Agency [IEA] has said is incompatible with 1.5°C,” Hart said.
“When one looks at who is financing new fossil fuel infrastructure, most of these financial institutions are in the advanced economies, and there is no requirement for them to have transition plans in line with the net zero commitments of NDCs.”
Oil production growth
If global warming is to stay below 1.5ºC, no new oil and gas projects should be allowed to be built, according to the IEA’s net zero scenario. But since that document was published in 2021, expansion has continued at pace.
Also speaking during the E3G event, IEA Chief Energy Economist Tim Gould said a steady shift towards clean technologies would gradually reduce oil demand for oil – but that this was not set to happen this decade.
“We are not yet in a world that is transitioning away from oil and gas – oil demand is probably going to increase by about 1 million barrels a day this year,” he said. “By the time we reach 2030, we [will] have reached a plateau of about 106 million barrels of oil a day.”
He said new oil and gas projects were being opened in Guyana, Brazil, US, and Canada, boosting supply. “And whereas we have 106 barrels a day of demand [by 2030], we are on track to have something like 114 million barrels a day of supply capacity, and that poses important dilemmas for incumbent [oil producers],” Gould said.
If the world were to get on track for 1.5°C, global oil production would be around 25 million barrels per year by 2050 – almost all of which would be for non-combustion use, such as petrochemicals.
“But that is not the current trajectory,” Gould added.
Adaptation plans and finance key
Along with providing the opportunity to crack down on fossil-fuel financing, Hart said COP30 would also give developing countries the chance to “clearly identify their transition pathways”.
This would include detailing investment needs both on the energy transition and for adaptation and resilience. He described the latter as “the overriding [cost] for most of these countries.”
Hart’s comments follow the annual mid-year UN climate conference in Bonn, Germany, where national adaption plans and climate finance were among the key focuses.
Under the Paris Agreement, least-developed countries (LDCs) are meant to devise National Adaptation Plans (NAP) that provide a clear pathway to protecting against the effects of climate change. But only 58 developing countries have so far submitted a NAP, according to the UN.
“The secretariat has asked more countries to have a plan by 2025 and make progress on implementing them by 2030,” the UN Climate Change said at the end of the conference on June 13. “Over the coming months, [we] will work directly with countries to accelerate the formulation of NAPs, including through regional collaboration centres.”
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