Mainstay climate finance scheme struggles to raise funds

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A ground-breaking climate finance framework championed by world leaders as a way to finance the green transition of poor countries is struggling to raise funds, resulting in a reduction in pollutant emissions, according to a report. Coal-fired power plants that emit CO2 emissions remain in operation.

The US, EU and UK are among the donors who have pledged to mobilize huge sums of money for the green transition under the auspices of the so-called Just Energy Transition Partnership. The pledge includes a $20 billion package for Indonesia to help coal-dependent countries transition to renewable energy, and similar projects in South Africa, Vietnam and Senegal.

Leaders including US President Joe Biden, former British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will address the funding gap holding back developing countries' green transitions at the 2021 Glasgow Climate Change Conference. We proposed this model as a mechanism to fill this gap.

But the charitable foundation's report, based on conversations with donors and other stakeholders, said there was growing frustration that the deal had yet to raise the promised capital. This forces low-income countries to keep coal and other power plants open.

The Rockefeller Foundation said in a report Thursday that the JETP model remains in its current form due to a lack of consistent support from multilateral development banks and premature agreement announcements by political leaders before funding was secured. “It may not be possible to expand,” he warned.

The current model “has been promised for a long time, but it's not progress,” said Rajiv Shah, the company's president.

The foundation has announced a funding plan of up to $165 billion through 2050 as an improved JETP-style funding pitch, led by the Philippines' own institutions, with the aim of promoting renewable power and grid capacity in the Philippines. We are providing support on a trial basis.

Ashvin Dayal, head of Rockefeller's Power and Climate Change initiative, said a new approach was needed to “bring new real money to the table.” “The moment the numbers are distorted in a way that doesn’t really add up to what was originally announced, political will is lost.”

One of the problems is the perception that rich countries are pushing to close coal-fired power plants in South Africa and Indonesia before clear plans for job and wealth creation can be agreed. “We need to center around the vision of energy abundance,” Dayal says.

Outgoing Indonesian President Joko Widodo told the FT late last year that he was “very” concerned that the money would not materialize.

The Asian Development Bank, which is providing technical support for Indonesia's financing package, stressed that “planning, designing, preparing and constructing large-scale energy infrastructure is a major undertaking.” The bank added that it is committed to helping its members achieve a “fair, affordable and reliable energy transition.”

Leo Roberts, head of fossil fuel transition at climate change-focused think tank E3G, said the “tiny” amount raised meant world leaders had “unrealistic” expectations for JETP. He said that this indicates that he was holding a

“Without the shiny celebrity checks, there wouldn't have been enough momentum to get them off the ground in the first place,” he said, adding that “even though there were billions of dollars promised to countries for specific purposes, , it seems like there is no money for that,” he added. It will be moved from the Global North to the Global South. ”

The Glasgow Financial Alliance for Net Zero, a group of financial institutions that has sought to mobilize private sector capital in Indonesia and Vietnam, said the “work is done”. [on JETPS] It helped all stakeholders better understand the challenges ahead and how change can be facilitated through further cooperation, necessary policy adjustments, and public-private financial solutions. ”

The US State Department said it will take time to rethink “decades-old development models” and “reform markets to foster investment.” “The test of success is not whether a particular project gets off the ground in the short term, but whether there is sustained political will and active, sustained efforts to make the envisioned reforms a reality. '' he added.