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COP27 draft decision indicates progress, conflict on climate action priorities

COP27, the UN Conference of the Parties (COP), completed its last thematic day on November 17, 2022, focusing on ‘solutions.’ As the conference entered the penultimate day of negotiations, the release of a draft agreement emphasized both progress to date and the enormity of the task ahead. 

Key Statements & Discussions 

Keeping with the day’s theme of actionable commitments to decarbonization and reducing global warming, Australia’s bid to host COP31 was met with mixed reception from world leaders. While many applauded the new government’s renewed commitment to climate change, they also suggested that the government would need to stop investing in fossil fuels before a bid would be approved. 

As COP27 negotiations neared their scheduled end, a group of representatives from Canada, the EU, and the UK emphasized the need for concrete conference outcomes to the Egyptian Presidency. Delegates stressed that COP27 negotiations would need to produce coherent, actionable outcomes to be perceived as successful, and highlighted a variety of flaws and conflicts remaining in the current draft. 

The draft decision in question was 20 pages long as of Thursday, containing many placeholders as negotiations on key issues continued. Tracking from Carbon Brief indicated that the length of the document, as well as the number of remaining issues, would lead to negotiations continuing beyond COP27’s scheduled end on November 18, 2022. While the G20’s support for the 1.5 degree Celsius target somewhat preempted negotiations on the topic at COP, there has been no resolution on major points such as funding for loss and damage and reforming climate finance architecture. 

Key financial commitments 

Pledges on ‘Solutions’ day primarily focused on sustainable transportation. The UK COP26 Presidency announced several new initiatives aimed at increasing the production and use of zero-emissions vehicles (ZEV), including a ‘Global Commitment,’ backed by the US, Germany, Japan, the Netherlands, South Korea, Sweden, and the UK, which will provide finance for ZEV transitions in low- and middle-income countries. Specific details on funding flows and amounts were not provided. 

Several other pledges from earlier in COP27 were also highlighted, including: 

  • €1 billion (US$1 billion) from the EU, France, Germany, the Netherlands, and Denmark to support initiatives led by the African Union (AU) focusing on climate risk data, early warning systems, mobilizing finance, and disaster risk finance on November 16, 2022; 
  • €60 million (US$62 million) from the EU to support loss and damages on November 16, 2022; 
  • €40 million (US$41 million) from Germany to support the African Development Bank’s (AfDB) Climate Action Window on November 16, 2022; 
  • US$20 million for the World Food Program (WFP) through the World Bank from Germany and the UK on November 16, 2022; and 
  • NOK 100 million (US$10 million) from Norway to support the  UN’s International Fund for Agricultural Development (IFAD), on November 9, 2022. 

Agenda 

COP27 is scheduled to conclude on Friday, November 18, 2022, but negotiations may extend into the following week.  

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COP27 enters second week; Germany, G7 unveil ‘Global Shield’ initiative

COP27, the UN Conference of the Parties (COP), moved into its second week on November 14, 2022. While the day marked Germany’s announcement as the President of the G7of the ‘Global Shield’ climate insurance initiative, the mood surrounding the conference appeared somewhat downcast. 

Key Statements & Discussions 

Over the weekend of November 12, 2022, climate activists protested outside the Sharm el-Sheikh venue for COP27 venue, demanding that world leaders commit to reparations for loss and damage and maintaining the 1.5-degree Celsius target for adaptation efforts.  

The future of the 1.5-degree Celsius target appeared uncertain on Monday, as negotiators debated replacing the target with older language that would limit warming to ‘well below 2 degrees Celsius.’ In light of recent research illustrating the inadequacy of current initiatives to limit warming to 1.5 degrees, attempts to walk back the stricter target appeared troubling.  

Likewise, on the point of reparations, onlookers remained skeptical as the EU and US remained lukewarm on the subject of loss and damages. European Commission Vice President Franz Timmerman’s attendance at meetings on November 14, 2022, indicated the EU’s hesitance rush into funding for reparations. Timmerman emphasized that discussions on such measures would be finalized at the next COP, in Abu Dhabi, and argued that countries like China and Russia should also contribute to loss and damage funds. This stance has been voiced also by US climate envoy John Kerry ahead of the conference. 

The sentiment that wealthy countries actions are not enough overshadowed Germany and the G7’s announcement of the ‘Global Shield’ initiative on November 14, 2022, a program intended to improve insurance for countries that face damages from climate disasters. Germany announced seed funding of €170 million ($172 million) on Tuesday, November 8, 2022, and several other countries pledged a total of €40 million (US$41 million) to the initiative, including Canada, Ireland, and Denmark. However, the plan had a mixed reception as a step forward on loss and damage, to which some ‘Global Shield' funds will be allocated. However critics expressed concern regarding the plan’s feasibility. Some argued that tries especially vulnerable to climate change would pose a challenge for an insurance scheme, while others questioned the vagueness of the initiative’s design. 

In line with the day's theme of 'Water' the COP Egyptian Presidency released action plans for the Action on Water Adaptation and Resilience Initiative (AWARe) and recommendations for non-state entities to mobilize finance for loss and damages related to climate change. The day also had an additional theme of 'Gender;' however, the Presidency did not publish additional action plans or press releases on the topic.

Tomorrow’s Agenda  

November 14, 2022, was a quiet day for financial commitments, but finance architecture and restructuring are expected to feature during proceedings on Tuesday, November 15, 2022. After keeping a low profile through the start of COP27, the Australian delegation, Climate Minister Chris Bowen in particular, is expected to criticize the World Bank’s crisis response to the climate crisis and call for an overhaul of development finance infrastructure. 

Specifically, the minister is expected to call for increased spending on climate, sustainable financing to avoid increasing the debt of partner countries, and cooperation to reduce emissions globally. 

Looking ahead , the Egyptian Presidency’s themes for the day are ‘Civil Society’ and ‘Energy.’ Key sessions include a presentation on CSOs’s impact on water, energy, and food security initiatives, Just Energy Transition, and a closing session on financing energy transition, which is expected to result in commitments and actionable pledges from donor countries. 

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Australia invests US$4 million for women's economic empowerment initiatives

On November 14, 2022, Minister for Overseas Development and the Pacific Pat Conroy announced that the Australian government would invest A$6 million (US$4 million) through its 'Emerging Markets Impact Investment Fund.'

This fund aims to mobilize private finance for medium and small-sized enterprises, unlock millions of dollars through private impact investment, and support women by investing in businesses that empower girls and women.

The commitment was channeled through the Southeast Asian Women’s Economic Empowerment Fund, a women-led fund active in Vietnam, the Philippines, and Indonesia.

Press release – Minister for Overseas Development and the Pacific

Australia pledges US$34 million to World Bank Pandemic Preparedness Fund

On November 13, 2022, Prime Minister Anthony Albanese has announced that Australia would contribute funding of A$50 million (US$34 million) to the World Bank's Financial Intermediary Fund for Pandemic Prevention, Preparedness and Response (FIF).

The FIF is housed by the World Bank and advised by the World Health Organisation, and aims to improve preparedness and the speed of response to future pandemics. 

The Prime Minister made the announcement during the meeting of G20 leaders in Indonesia.

Press release – Prime Minister of Australia

Australia's bid to co-host COP31 receives mixed responses

On November 10, 2022, Australia launched a campaign to co-host the annual UN climate conference in 2026 with its Pacific Island neighbors.  

Climate Change Minister Chris Bowen promoted  Australia’s changed stance on climate change action at COP27, the UN Conference of the Parties (COP), in Egypt. The meeting was also attended by Australian Minister for International Development and the Pacific Pat Conroy.

Some Pacific countries commented to the media that Australia needed to demonstrate its commitment by re-joining the Green Climate Fund (GCF) which it exited in 2019. Other Pacific countries expressed preference for current bilateral approaches to Australian climate financing. The Australian government indicated it was still considering whether to rejoin the GCF.

In its October 2022 budget, Australia announced an additional A$900 million (US600 million) to support climate resilience and development in the Pacific.

News article – Guardian Australia

Press release – Minister for Overseas Development and the Pacific

COP27 begins with notable absences, finance gaps, modest pledges

As world leaders gathered in Sharm el-Sheikh, Egypt on November 6-7, 2022, for COP27, the UN Conference of the Parties (COP), talk of absences and finance gaps took center stage. 

While UK Prime Minister Rishi Sunak walked back his initial statement that he would not be attending the conference, attendees and observers alike commented on the absence of large-scale producers of carbon emissions, namely China, India, and Russia, which have not confirmed plans to attend the event. Spain’s Ecological Transition Minister Teresa Ribera commented on the absence, expressing regret that geopolitical tensions might hinder cooperative adaptation in the face of climate change. US President Biden was also not present at the World Leaders Summit, but will attend the latter half of the first week, following the US midterm elections. 

In addition to physical absences, gaps in climate finance were a major point of discussion leading up to COP27. Ahead of the event, an October 2022 report by Oxfam Canada found that donor countries inflated their reported climate finance contributions by approximately US$40 billion in 2020, and called on donor countries to commit to providing grant-based ODA and reform their accounting practices. 

Similarly, on the second day of the conference, a report by Carbon Brief, a UK think-tank focusing on environmental and climate issues, found the US, Canada, and UK to be US$32.2 billion, US$3.3 billion, and US$1.4 billion, respectively, of their ‘fair-share’ of the US$100 billion annual climate finance commitment, an amount calculated relative to the countries’ historic CO2 emissions.  

However, the first days of COP27 yielded modest results both in terms of commitments and the direction of the event’s agenda. Despite historic resistance by some donors, such as the US and EU, government leaders committed to discussing finance for loss and damage, with deputy chair of the Alliance of Small Island States (AOSIS) Conrod Hunte calling for the creation of a ‘Loss and Damage Response Fund’ to be mobilized by 2024. 

More concrete actions were also announced during the summit. 

EU Commission President Ursula von der Leyen announced the signing of a memorandum of understanding (MOU) between the EU and Kazakhstan for cooperation on developing sustainable supply chains of raw materials for hydrogen, batteries, and digital transition under the aegis of the EU’s Global Gateway development finance initiative.

UK Foreign Secretary James Cleverly announced funding of £108 million (US$124 million), including £95 million (US$109 million) for climate-resilient agriculture and gender equality in Nigeria and £13 million (US$15 million) to support climate adaptation in vulnerable countries through the United Nations Framework Convention on Climate Change’s (UNFCCC) Santiago Network. Cleverly also announced the allocation of £21 million (US$24 million) of a 2021 pledge to support countries experiencing climate disasters and additionally shared the UK’s plans to triple climate finance to £1.5 billion (US$1.7 billion) from 2019 levels (£500 million; US$572 million). 

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Australia bids to co-host COP31 in 2026

On November 5, 2022, Climate Change Minister Chris Bowen announced that the Australian Government will bid to co-host the UN climate summit in 2026 in cooperation with Pacific Island nations.

Bowen will attend COP27, the UN Conference of the Parties (COP), in Egypt. He indicated Australia had initially planned to bid for COP29 in 2024 but had determined that the global situation and short time frame made hosting the COP31 in 2026 a more practical ambition.

Spectators observed that hosting the conference would be an opportunity for Australia to kickstart climate action efforts domestically and abroad.

News article – SBS

Lowy Institute releases annual 'Pacific Aid Map' update

In October 2022, the Lowy Institute released its annual 'Pacific Aid Map' for 2020. The map is a project which visualizes both ODA and other official flows (OOF) annually in the region.

The map showed a significant increase in global assistance to the Pacific, particularly through multilateral institutions. Donations focused primarily on responding to the effects of the COVID-19 pandemic.

According to analysis from Australian news outlet ABC, donors provided almost A$6.2 billion (US$3.9 billion) in ODA and OOF in 2020, with Australia being the largest bilateral donor at A$1.3 billion (US$810 million). However, for the first time, more assistance was provided by the Asian Development Bank (ADB), at A$1.6 billion (US$970 million). The largest donors to the Pacific were the ADB, Australia, Japan, the United States, and New Zealand. 

Beyond major donors, the map provided details on assistance by smaller donors and multilateral funds, including Gavi, the Vaccine Alliance (Gavi), the International Fund for Agricultural Development (IFAD), and the Climate Investment Fund. 

News article - ABC

Report - The Lowy Institute

Australia’s revised budget offers modest ODA increase

On October 25, 2022, the Australian government released a revised federal budget, which indicated an  ODA would rise to A$4.7 billion (US$3.0 billion) in 2022-23, up from A$4.5 billion (US$2.9 billion).

Substantial ODA increases were also announced for the years following 2022-23. Planned ODA budget increase average of A$0.44 billion (US$0.28 billion) in each of the following three financial years. While the increases reduced the aid cuts made by the previous government, Australia's ODA and ODA/GNI ratio are expected to continue to decline, given expected inflation. The ODA/GNI ratio will likely fall from 0.2% to 0.19%, rather than to 0.17%, as expected under the previous government.

Major sectors for assistance included gender, climate security, and infrastructure spending. The revised budget provided a major boost in ODA to the Pacific. Health spending is estimated to make up 20% of the total aid budget, while education is expected to account for 11%.

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Australia commits initial funding for new Center for Disease Control

In a draft budget released on October 25, 2022, the Australian government financed the first step to set up a Centre for Disease Control for Australia.

Initial funding of A$3.2 million (US$2 million) was provided in the fiscal year (FY) 2022/23 federal budget to hold consultations and develop the proposal further. Minister for Health Mark Butler reconfirmed the government's election commitment to establish the Centre within its current 3-year electoral term.

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Australia to increase ODA budget by US$880 million from 2023 to 2026

On October 21, 2022, Foreign Affairs Minister Penny Wong announced in a speech in French Polynesia that Australia would increase its ODA budget by A$1.4 billion (US$880 million) from 2023 to 2026.

A$900 million (US$567 million) of the increase will be provided to the partner countries in the Pacific. The additional funding would be provided over 4 years and support climate resilience initiatives, such as transitions to renewable energy and adaptation. 

Wong also announced that the government would reintroduce its 80% target for overseas development assistance addressing gender issues. She also noted that Infrastructure assistance to the Pacific and Timor-Leste will be increased through the existing Australian Infrastructure Financing Facility for the Pacific (AIFFP). Total AIFFP funding will grow from A$3.5 billion to A$4 billion (US$2.2 billion to US$2.5 billion) to provide support for loan and grant packages. Additional funds will be allocated to improve risk management and project capabilities.
 
Speech - Minister for Foreign Affairs

Oxfam study finds near US$40 billion discrepancy between reported, actual climate finance

An October 2022 Oxfam report found that many high-income countries use dishonest and misleading accounting to inflate – by as much as 225% in 2020 – their climate finance contributions to low-income countries. 

Oxfam estimated that the 'true value' of climate finance provided by donor countries in 2020 fell between US$21 billion and US$24.5 billion, against a reported figure of US$68.3 billion and a pledged amount of US$100 billion.

Oxfam suggested the discrepancy resulted from loans being reported at face value, ignoring repayment, interest, and other factors. Loans currently make up 70% of public climate finance, which exacerbates the debt crisis across low-income countries, which are the least responsible for the climate crisis. 

The report cited donor countries including Australia, Canada, the EU, Germany, Japan, Netherlands, Norway, Spain, Sweden, the US, and others, and called on the countries to use the upcoming COP27 climate talks to urgently commit to scaling up grant-based support for vulnerable countries and reform reporting practices. 

Report - Oxfam Canada

World leaders pledge US$2.6 billion to Global Polio Eradication Initiative

On October 18, 2022, world leaders pledged US$2.6 billion to the Global Polio Eradication Initiative’s (GPEI)  'Polio Eradication Strategy 2022-2026.'

Key donors made the following commitments: 

Australia:  A$44 million (US$27 million)

France: €50 million (US$50 million)

Germany: €72 million (US$71 million)

Japan: US$11 million

South Korea: KRW 4.5 billion (US$3 million)

Spain: €100,000 (US$98,000)

United States: US$14 million

The donations will support global efforts to eradicate polio, provide vaccines to 370 million children a year, and promote disease surveillance across 50 jurisdictions. While polio is endemic in only two countries, outbreaks have been detected in parts of Africa, Asia, Europe, and more recently, the United States, Israel, and the United Kingdom. The resurgence of polio in these countries highlights the necessity of global cooperation to eradicate polio globally.

In order to be fully implemented, the cost of the strategy is estimated at US$4.8 billion and could result in US$33.1 billion in health cost savings.

Press release – World Health Organization

Australian Foreign Affairs Minister calls for submissions on new development policy

On October 14, 2022, Australian Foreign Affairs Minister Penny Wong announced that Australia would prepare a new aid policy particularly focused on the Pacific and Southeast Asia.

Wong emphasized the challenges being faced in the Asia-Pacific region, including climate change and national recovery from COVID-19. She expressed concern about increasing inequality for women and girls following the COVID-19 pandemic and likewise noted the disproportionate effects of the COVID-19 pandemic on marginalized and disadvantaged groups.

The new development policy will focus on building effective and accountable nations, enhancing resilience to external shocks and pressures, and connecting partners with regional architecture. It would also aim to assist collective action in meeting global challenges. The outcomes of the Development Finance Review, currently underway, would be incorporated into the new aid policy.

Public written submissions for the new policy were invited with a deadline of November 30, 2022. The call for submissions listed a range of challenges and trends to consider, including lessons from past Australian development efforts, efforts to promote accountability and transparency, and novel funding mechanisms for development.

The new aid policy will be released ahead of the federal budget, which is due to be delivered in early May 2023. 

Press release - Minister for Foreign Affairs

Press release - Department of Foreign Affairs and Trade

Australian National Medical Health and Research Council announces US$10 million for global health research

Under its 'Investigator Grants Scheme,' the Australian Health and Medical Research Council (NHMRC) announced over A$16 million (US$10 million) in new funding for research into global health issues on October 12, 2022.

Issues receiving funding included improved midwifery in the Asia-Pacific region, tools to reduce drug resistance to malaria, and approaches for eliminating malaria in the Asia-Pacific region.

Additional funding was provided for the development of innovative strategies for eliminating lymphatic filariasis. The NHMRC also announced support for improving strategies for controlling neglected tropical diseases and innovative approaches for global lung health.

The 'Investigator Grants Scheme' is the largest funding scheme under the NHMRC. To improve gender equality in research funding, Minister for Health, Mark Butler indicated that the NHMRC would set targets to award equal numbers of grants to men and women beginning in 2023.

Press release – Minister for Health and Aged Care

Lowy Institute report highlights redundancy of Australian ODA review

In a report released on October 8, 2022, the Lowy Institute suggested Australian Foreign Minister Penny Wong's September 2022 announcement of research into ODA restructuring is simply a repeat of the past two administrations.

The Lowy Institute's report outlined efforts by the previous government to research options for a major expansion of non-grant-based development finance. The previous government’s 'Eyers Report' in 2019 outlined a range of possible organizational arrangements for such financing. These possibilities included allocating funds to the Department of Foreign Affairs and Trade (DFAT), creating an entirely new body, or distributing non-ODA financing responsibilities across a number of agencies.

The previous government subsequently established the Australian Infrastructure Financing Facility for the Pacific (AIFFP), managed within DFAT. The facility combined market loan financing of up to A$3 billion (US$2.9 billion) with ODA grant finance of up to AU$500 million (US$348 million). The ODA component was drawn from other areas in the existing Australian development assistance program. Australian NGOs were critical of the potential diversion of funds from social sectors to infrastructure.

A different proposal, in the separate 2021 'Sedgwick Report,' proposed improved coordination between export finance agency projects and grant aid projects. This simpler approach would aim to demonstrate a long-term and well-considered Australian development partnership approach.

The current government plans to complete its own review of innovative financial arrangements by the end of 2022. 

Report – The Lowy Institute

Australia pledges assistance to 12 Pacific Island countries for HFC phase-out

On September 28, 2022, Australian Minister for Overseas Development and the Pacific Pat Conroy announced additional support to countries in Australia’s region to reduce the use of hydrofluorocarbons (HFCs). 

The Minister did not quantify the value of the assistance, which will be patterned after previous assistance from Australia to 12 Pacific island countries on phasing out ozone-depleting chemicals, particularly hydrochlorofluorocarbons (HCFCs).

Reducing HFC emissions is required under the Montreal Protocol. The government will work with industry in Australia to share information with Pacific Island countries on licensing, legislation, and quota systems. It would also provide technical training and advice on the transition to new equipment and gases.

The government also introduced the 'Ozone Protection and Synthetic Greenhouse Gas Management Reform (Closing the Hole in the Ozone Layer) Bill 2022' to update domestic laws on synthetic greenhouse gases and ozone-depleting substances.

Press release – Minister for International Development and the Pacific

Australia announces development policy redesign

On September 23, 2022, Foreign Minister Penny Wong announced that Australia will design a new overseas development policy in the coming months.

During her address to the United Nations General Assembly (UNGA) in New York, Wong indicated the new policy would shape Australia's approach to humanitarian issues and international development.  

Wong emphasized Australia’s need to contribute to global crisis response sustainably, without leaving partner countries in debt.

Australia’s current policy, 'Partnerships for Recovery: Australia’s COVID-19 Development Response,' was produced in 2020 as an interim measure to respond to the pandemic.

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Australia pledges US$178 million for 7th Global Fund Replenishment

On September 21, 2022, Foreign Affairs Minister Penny Wong announced Australia would contribute A$266 million (US$178 million) from 2022 - 2025 to the Global Fund to fight AIDS, Tuberculosis and Malaria (Global Fund).

The pledge comprises a 10% increase on Australia’s pledge of A$242 million (US$170 million) at the Global Fund replenishment in 2019. Advocates had been hoping to achieve at least a 30% increase.

Wong noted the ongoing burden of HIV/AIDS and tuberculosis (TB) in the Indo-Pacific region, as well as the particular threat to children posed by malaria.

Australia’s Global Fund pledge supports global efforts to end TB, HIV, and malaria by 2030. Australia continues to support countries in Southeast Asia and the Pacific through its bilateral programs addressing disease prevention, control, and treatment.

Press release- Minister for Foreign Affairs
News article- Global Citizen

 

Think tank calls for new Australian development finance institution

On September 19, 2022, the Sydney-based Lowy Institute put forward the case for an Australian development finance institution (DFI) in response to the Australian government's announcement of a Development Finance Review.

The Lowy Institute outlined five reasons for the establishment of an Australian DFI, namely that a DFI would:

  • Allow Australia to increase overseas development finance by mobilizing resources from the private sector;
  • Provide guarantees and loans at a greater scale than Australia’s normal ODA grant financing;
  • Improve development effectiveness in assisting emerging economies, particularly where projects could expect financial returns;
  • Increase domestic support for ODA spending, partly because it might return a financial profit; and
  • Signal Australia's intent to become a more substantial partner while extending its regional influence.

Report – The Lowy Institute