Can polluter taxes fund loss and damage?

The finger pointing at who pays climate victims continues. John Kerry of the US suggested that China, now the (far) second largest historical emitter in the world, should step in.

China’s Xie Zhenhua told a press briefing that Kerry did not ask him directly in their informal meetings. (Relations have been frozen ever since US House Speaker Nancy Pelosi’s visit to Taiwan “hurt the feelings of the Chinese people”.)

Warning against reopening the Paris Agreement, Xie said that China has made voluntary contributions through south-south cooperation and is under no obligation to do more.

“We hope…. that we can set up this new mechanism and then we will discuss how to solve it in a deeper way,” said Xie.

Meanwhile a few million dollars trickling down from the likes of New Zealand and Scotland is not far off.

This stalemate has weak countries looking for so-called “innovative finance”. That could mean anything from air passenger taxes to debt cancellation.

Barbados prime minister Mia Mottley is pushing for a tax on fossil fuels – including in a phone call to John Kerry.

“It’s time for the private sector to stand up and we need to hold them accountable”, said Michai Robertson, the negotiator of the small island (Aosis) on loss and damage, on Wednesday.

Developed countries seem to be more open to this idea than to other needs in their public finances. Asked about this at a Cop27 press conference, after stopping for an airplane to pass overhead, the EU’s Jacob Werksman said “we are all looking for new finance”.

But it is not easy. Robertson said it was only in the “exploratory phase”. Procurement from petrostates is an obvious obstacle.

Kerry’s offset plan is ‘raw cookie dough’

UN climate special envoy John Kerry came to Cop27 determined to have a say in how to finance the transition from coal to clean energy.

Perhaps he knows that the US$1 billion loan for South Africa’s sensible energy transfer deal didn’t cut the mustard. As he prepares for Cop27 the midterms do not promise that the climate-friendly majority will pass more support through Congress.

On Wednesday, Kerry outlined a plan to use carbon credits to finance the retirement of coal and spread solar, wind and geothermal energy in developing countries.

Philanthropic groups Rockefeller Foundation and Bezos Earth Fund are interested in the idea and are working with the US State Department to put flesh on the bones. It is called the Energy Transition Accelerator.

Kerry’s team “worked on it like crazy for a while,” he said. We first reported the idea at the beginning of November.

But the result is “not so much half-baked as it is raw cookie dough,” said Leo Roberts, of E3G’s coal transition team. Almost no details.

This makes it difficult to judge against the recommendations of UN chief António Guterres’ greenwashing taskforce, which set high standards for the use of offsets to achieve net zero pledges.

Kerry promised “strong safeguards” and no repeat of past mistakes, which allowed dodgy carbon credits to flourish.

A campaigner against the East Africa Crude Oil Pipeline confronts an adviser to Japan’s MUFG bank at Cop27. According to 350.org, the campaigners asked the bank to say that they do not support the pipeline and the bankers replied that they cannot comment on individual cases. (Image: 350.org)

In short…

away – Sustainable Energy for All (SE4All) has left Team Energy Africa, a UN-backed initiative to mobilize the private sector to invest in energy across Africa. The move comes after we reported the involvement of NJ Ayuk, an oil and gas lobbyist and convicted fraudster.

Should China pay? – After reports that the small islands (Aosis) want China to pay for the loss and damage, the prime minister of Antigua and Barbuda and the leader of Aosis Gaston Browne told Climate Home: “All pollution, especially the adults, must contribute to the fund.” He added that the “differentiated assessment” should include “historical emissions and the current level of development”.

Scramble for green hydrogen – Egypt and Norway signed an agreement to build a 100 MW green hydrogen plant 100 MW in Ain Sokhna on the Red Sea. Egypt and Belgium have also announced a green hydrogen project, reports Egypt Today.

Methane action – China has developed a draft national methane strategy, climate envoy Xie Zhenhua said at Cop27. The strategy will focus on three main sources of emissions – energy, agriculture and waste. They will set preliminary targets only because China has “potentially weak statistical capabilities in this area”. He said that public leveraged finance is key.

Congress is balanced – Democrats fared better than expected in the mid-term elections, winning Senate seats in Pennsylvania. At the time of writing, who will control the two chambers of Congress – the House and Senate – is unclear. Democratic control can improve the prospects for climate finance.

Nature earns money – The Climate Investment Fund announced that it will deploy more than $350m for environmentally-based solutions, worldwide, starting in Egypt, Dominican Republic, Fiji, Kenya. COP27 host Egypt is set to invest in adaptation in the Nile Delta area, which will lose 30% of its food production by 2030 due to climate change.

Latin America is united – The Community of Latin American and Caribbean States (CELAC in Spanish) released a joint call for new climate finance through sovereign funds and debt swaps for the environment. Colombia’s Environment Minister, Susana Muhamad, said the debt swaps would help unite the region in climate talks, which are often divided into two groups: the left-leaning Alba countries and the right-leaning Ailac.

Petroleum finance – The African Development Bank (AfDB) signed an agreement with the OPEC Fund “to expand their partnership in support of sustainable economic and social development”. OPEC has contributed more than $1 billion to projects co-financed by the AfDB.

The UK adaptation – The UK will provide £200 million ($228m) to the African Development Bank Group’s climate action window, a new mechanism set up for adaptation finance.

Looking at the weather – Spain announced that it will fund the Systematic Observations Financing Facility, which aims to bring early warning systems to many countries. Norway increased its donation. The beneficiaries of the facility are mostly African countries or small islands.