Countries will gather in Bonn, Germany June 5-15, for the United Nations’s mid-year climate conference (SB58), a precursor to this year’s main climate summit in December — COP28, which will be held in Dubai, United Arab Emirates (UAE).

Mitigation — the act of reducing greenhouse gas emissions so as to prevent further global warming — is a crucial pillar of climate action, covering entire economic sectors from power, industry, and transport, to even forests and land.

Mitigation at COP27

At the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2022, India proposed language on the “phasedown of all fossil fuels”, calling for attention on oil and gas, in addition to coal. And while the European Union and United States seemed onboard with this, major oil and gas producers like Saudi Arabia, Iran, and Russia were not.

The COP27 outcome document instead reiterated previous calls “towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies” and also called for a just transition to renewable energy.

Outside the negotiations, the First Movers Coalition — a voluntary alliance of companies “using their purchasing power to create early markets for innovative clean technologies across eight hard to abate sectors” and governments — showed progress, growing from 25 to 65 members within a year.

They announced the joining of the cement and concrete sectors to the coalition. The group pledged to purchase at least 10 per cent of near-zero carbon cement and concrete by 2030 and also committed $12 billion to scale up green technologies and cut emissions.

The issue of a “just energy transition” gained traction at COP27 as well, since Indonesia announced at the parallel G20 summit, that it would be a recipient of about $20 billion in starter funding through a Just Energy Partnership (JET-P) deal to reduce its coal dependence.

Everyone’s talking about the (just) energy transition

Since the UK COP Presidency made “coal, cash, cars, and trees” their crude slogan for COP26 in 2021, the discourse has shifted globally.

Developed countries are still calling for higher mitigation ambition from developing countries (which one could argue requires their climate finance commitment to be met). Meanwhile, the focus has shifted to encompass “all fossil fuels” and a just energy transition, rather than phasing out just coal.

This has certainly brought the oil and gas sector into the spotlight. Decarbonising the oil and gas industry is on the agenda of the UAE COP28 Presidency, although Scope 3 emissions — accounting for 78 per cent of emissions from the oil and gas sector — are not ambitiously addressed. A May 2023 report by the International Energy Agency (IEA) put forth a pathway that could lead to 60 per cent reduction in oil and gas emissions by 2030.

On the energy transition, renewable energy is flourishing in many parts of the world, helping the European Union reduce its dependence on Russian piped gas, for example. Clean energy investment has risen faster than fossil fuel investment in recent years, says the IEA.

About $2.8 trillion is set to be invested globally in the energy sector this year, of which more than $1.7 trillion is expected to go to clean technologies — including renewables, electric vehicles, low emission fuels, grids, storage, they add.

Yet this is not distributed equally across the world, with most of the increase in clean energy investment between 2019 and 2023 taking place in China, the US and the EU — amounting to an increase of $435 billion.

Poor and vulnerable countries are not seeing a clean energy boom in line with their needs.

About 97 per cent of South Africa’s $8.5 billion JET-P package comprised of loans. So, the energy transition is underway. But its nature is not exactly “just”. It will take time for progress on this front. These are issues that the UNFCCC mitigation negotiations must spotlight.

The Mitigation Work Programme

At UNFCCC forums, the prominent space to negotiate on mitigation is the ‘work programme for urgently scaling up mitigation ambition and implementation’ (also known as the Mitigation Work Programme or MWP). Established in 2021, it was proposed to address the insufficiency of Nationally Determined Contributions (NDC), and bridge the gap by increasing ambition in pledges to cut emissions.

At COP27 in 2022, developing countries emphasised that the programme should not be a replication of the Global Stocktake, and should not set new targets and obligations for developing countries.

It should also be guided by the UNFCCC’s principles of CBDR (common but differentiated responsibility) and equity. Over the past year however, the MWP has shifted from a space viewed with hesitation by developing countries, to one where they can possibly lay out constructive demands for international financing and technology support to accelerate domestic mitigation ambition.

In Bonn this month, the MWP’s co-chairs have announced that “accelerating just energy transition” will be the topic of focus in 2023. Centre for Science and Environment (CSE) and Down To Earth (DTE) spoke to Lola Vallejo, a co-chair of the MWP.

Deliberations will begin with a Global Dialogue, followed by an Investment-Focused Event. The Intergovernmental Panel on Climate Change is clearly setting out what needs to happen at a collective level, but the MWP ought to advance multilateral discussions on the “how” and  dive in deeper into countries’ experiences — the good and the bad, Vallejo specified.

“These first events aim to provide a new setup, broadening the participation beyond traditional negotiation circles to make space for the practitioners in charge of the domestic energy transition, civil society experts and financiers,” she said. “They also innovate in terms of facilitating matchmaking to help countries get their projects off the ground or providing space for regional discussions.”

But developing countries face specific barriers which must be brought to the fore. Discussions around the falling costs of renewable energy around the world often neglect the high cost of capital, for example, that makes it unaffordable in many developing countries.

For example, one estimate suggests that unsubsidised solar power costs ~140 per cent more in Ghana than in the US solely because of differentials in cost of capital. According to the IEA, financing costs can be up to seven times higher in emerging and developing economies compared with the US and Europe.

“Financial barriers to the energy transition, including cost of capital, will be discussed in specific breakout groups on the second day of the Global Dialogue, to allow more interaction between participants,” Vallejo said.

“These discussions will be reflected in reports under the MWP, but there is nothing preventing us from connecting the dots with efforts led in other fora — for instance highlighting the IRENA-led work on cost of capital for clean energy for India’s G20 Presidency, or other ideas discussed in the run-up to Summit on a New Global Financial Pact taking place in Paris in June”. 

Vallejo outlined three markers of success for the MWP discussions: A shared understanding of the energy transition challenge rooted in the best available science, bringing country practitioners on board to engage more deeply, and demonstrating to developing countries that the MWP can support tangible outcomes in terms of investment.

Road to COP28

While the focus on a just energy transition is a good start to the year’s first major climate negotiation, there is scope for agreements to deviate away from equity considerations once we start discussing pathways, financing packages, and collective goals.

First and foremost, the energy transition itself must be equitable. Many rich countries, who are also historical polluters, have transitioned from coal to natural gas — which is cleaner but is still a fossil fuel. Developed countries must rapidly reduce their use of coal, oil, and natural gas, and also reduce energy demand through efficiency measures and appropriate behaviour change.

Large developing countries like India, South Africa, Vietnam, and Indonesia derive more than 75 per cent of their primary energy from fossil fuels today. It is not easy to transition away from them, especially when energy demand is still growing.

Moreover, these countries have lower per capita energy use than the developed world and must balance their need for economic development with their commitment to reducing emissions.

The challenge is to find a way to accommodate energy needs without compromising development goals or exacerbating climate change. For this, they must domestically create sectoral pathways for decarbonisation, for not just the power sector, but also for hard-to abate industrial sectors and transport. This will enable the creation of clear ‘asks’ or projects where international financing can be demanded and directed.

CSE-DTE support the setting of a global renewable energy target. The developed world needs to take the lead and add vast amounts of RE capacity while simultaneously phasing out fossil fuels.

The developing world cannot sit back — it needs to scale up RE as well, but to make that possible adequate finance and technology support is required from developed countries.

Concessional financing — with as little dependence on debt-creating instruments as possible — is needed to accelerate the transition in developing countries. This will help developing countries reduce fossil dependence, and also cushion their economies from taxation regimes like carbon border taxes that can reduce the competitiveness of commodities made from dirty power.

Thus, rather than primarily placing demands or “sticks” on phasing out coal, JET-P deals must become the “carrot” to grow clean energy infrastructure in the developing world.

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Access to financial services such as bank accounts can help Indian rural households cope better with climate risks, a new study has found. 

Financial inclusion through banks and other financial solutions reduces the need to keep liquid assets — commodities such as gold, livestock that can be converted into cash quickly — as a buffer to respond to climate risk, the study published in the journal Scientific Reports stated.

“Almost all rural households have limited access to liquidity. The way to improve liquidity is through financial inclusion. Access to formal financial institutions like banks releases resources for productive investments, which would otherwise need to be kept in liquid forms,” Ashwini Chhatre, executive director at the Indian School of Business, told Down To Earth.

Without access to liquid assets, rural households take high-interest loans from informal sources.

Chhatre and his colleagues analysed data from the International Crop Research Institute for the Semi-Arid Tropics-Village Dynamics in South Asia.

The dataset covered 1,082 rural households from 30 villages in the semi-arid tropics in India from 2010-2014.

Their analysis showed that 59 per cent of the households experienced climate shocks in at least one of the five years and 13 per cent faced them in more than two years.

As many as 353 (57 per cent) out of the 633 households that faced climate shocks reportedly used their own savings to cope with the issue.  

The survey also found households rely on financial assistance from kin and relatives followed by friends, village communities, money lenders, banks, in this order. 

Households, on average, hold 15.6 per cent of their assets in liquid form. But those that use banks hold 1–13 percentage points fewer assets in liquid form when exposed to higher climate risks, compared to those who do not have bank accounts.

With higher rainfall and temperature risks, the financially excluded households are predicted to hold nearly 50 per cent in liquid assets, compared to 20 per cent held by banked counterparts.

“In regions facing high climate risk, financial inclusion will reduce the resources that households need to keep in liquid form and therefore make them available for productive investments to address climate risk,” the researchers wrote in their study.

Further, the researchers also highlighted issues with centralised planning of adaptation. “There is no way a central planner will be able to create a plan that benefits everyone equally,” Chhatre explained.

Climate adaptation, he added, requires putting resources in the hands of people because they are best placed to understand climate impacts and also the most suitable strategy at the household level, he highlighted.

“It is best to create systems that allow these households to exercise their judgement on what is the best course of action,” the expert noted.

The researchers plan to study how frequently people go back to banks and if the trust in the banking system has improved over time.

There are a number of traditional conservationists who dismiss the works covered under the broader sustainability/nature-based solutions framing as a bit of baloney. On the other hand, there are hardcore business folks who almost always feel a false sense of piety towards the sustainability agenda. 

As controversial as it sounds, for many decades, the conflation between both these opinions has remained synonymous with the idea of ‘greenwashing’ the existing human impact on the environment. 

It is imperative to interpret the distinction between the words. Sustainability in the context of the “E” in Environment, Social and Governance (ESG) risk discussions typically includes managing and avoiding the depletion of natural resources to maintain global ecological balance (nature and people together as opposed to people vs nature).

Also read: The deception of greenwashing in fast fashion

Whereas, greenwashing is typically corporate action to be perceived as environmentally conscious for marketing purposes without any notable sustainability efforts (content vs intent).

Good intentions do not guarantee environmental sustainability, but they are not equivalent to greenwashing. The development sector is rife with examples of local non-profits working in the field and not getting adequate credit for it as well as civil society organisations (CSO) and consumers losing faith in corporate claims around sustainability owing to years of greenwashing. 

Traditional conservationists often argue that the conflict between human lives today and the environment (people vs nature) is exemplified by work in the sustainability domain. But business needs to be managed in the context of the planet and a utopic interpretation thereof.

While both schools of thought must be acknowledged, this conflation is a cause for dissent (and exclusion) within the sector itself and runs the greater risk of dismissing significant efforts being made to do better.

At its core, sustainability is the ability to maintain or support a process over time. What is required is perhaps the strengthening of a better understanding and a space for deeper engagement and collaboration.

While conservation is more action-focused on specific areas (landscape, theme, species), sustainability remains a bit more overarching. It is a strategic process of convening multiple stakeholders around a policy objective and programme strategies that would augment the work being done through conservation approaches.

Supporters of sustainability are far too often at loggerheads on how conservationist approaches expect the proverbial silver bullet and that the single-minded focus on protection and reduction alone would not percolate to human behaviour. There is merit in working at the intersection of people and nature rather than on only one or the other. Moreover, the radical transformation required by conservationists may necessarily come at an uneven cost. 

At this stage of CSO action, decoupling sustainability and greenwashing is imperative. Most sustainability practitioners use the pivot that sustainability is really building a case for protection, prevention and inclusion.

Also read: India’s evolving carbon market: Eye on policies for uniform emissions trading, Net Zero

As this understanding grows and new workstreams and jobs open (ESG in the finance sector is currently booming), wildlife biologists are being onboarded in consulting companies, including the Big4. And almost every consumer-facing brand has sustainability jobs opening up in the procurement/supply chain verticals.

There is no way around taking sustainability seriously. Even as it may be dismissed as a do-gooder approach, companies confuse doing good with tree-hugging or radical idealistic behaviour. These are mutually exclusive but not necessarily the same. 

Given the world’s established market dynamics and value chains playing out against ever-evolving geopolitics, any real market transformation would disproportionately impact the world order. While the developed countries (and erstwhile colonisers) may have the economic outlay to make the fast-moving changes, the developing world may not necessarily be able to keep up.

An example is the recent European Deforestation Regulation (EUDR) — an initiative to limit deforestation caused by forestry and agricultural activities all over the world. Climate advocacy groups are celebrating the law as a landmark in targeting deforestation risk related to cattle, cocoa, coffee, palm oil, rubber, soy and wood, as well as commodities that have been fed by or made using those products, such as leather, chocolate, printed paper and furniture.

While governments lead the regulation and hope to ensure that companies verify the origins of the products to ensure that these are not sourced from an area that was subject to deforestation or forest degradation after 2020, there are concerns. An important and emerging criticism of the law is that it might not be enough to stop deforestation as it misses regulations on biomass imports, such as the burning of wood pellets, which the EU considers carbon neutral despite contributing to significant forest loss.

The law also does not include at-risk ecosystems that are not rainforests. How the EUDR plays out and impacts global agricultural trade and continued soft power while simultaneously addressing climate and poverty risks in developing nations will be important. 

Read more: Emissions Gap Report 2022: Pledges to cut greenhouse gas emissions way off track

In the case of deforestation, commodity chains like soyabeans, coffee or palm oil, traditional conservationists had also initially missed that consumers, as well as smallholders producers (especially from Asia, Latin America and Africa — much of the formerly colonised and now developing world), are stakeholders in the conversation.

As long as consumers exist, production, large and small, will produce at the cost of the forests. Many years of interpretations have been brought into the narrative to address the need to dovetail corporate and consumer responsibility into the conservation agenda — which is exactly the point that sustainability makes.

Perhaps this is the stepwise approach that the EUDR will also need to work through to improve itself. And while long-term behaviour or policy change and the general movement via sustainability might not be leaps and bounds in a short period of time, these would be paced steps that do not need to be retracted. 

One of the many ambitions hosted within the sustainability narrative is the harmonisation of protecting both nature and people juxtaposed against the current political and economic world order.

As the United Nations Framework Convention on Climate Change’s common but differentiated responsibilities says: The aim is minimum disruption and destruction — not to destroy the planet, the environment and the existing human life and ensure that this life remains available to future generations in its totality. With this understanding, countries and companies are building sustainability reporting into everyday action and attempting to turn theoretical issues into concrete actions.

A large part of this also aims to help organisations set priorities to reach environmental and social impact goals by exposing both positive or negative impacts on the planet, society and the economy.

Fundamentally human beings are willing to do better. In India, we segregate waste. Recycling is part of Indian household systems through the customary practice of ‘raddi wallas’. The conversation on conservation often misses these local, sustainable practices because the focus of the policy is both narrow and exclusive. Empowering each consumer is the responsibility that countries and companies must start striving for.

Sustainability makes corporate production responsible and the average consumer more aware of every action — it recognises the least disruptive, most effective transformation towards living.

The world is, in fact, tangibly better if our actions are pivoted on sustainability. It isn’t the bad guy. What is perhaps required still is reinventing the narrative used around it. So far, it is a bit of an exclusive space.

Sustainability practice is beginning to take the same route as traditional conservation. There may be an opportunity for improvement in raising the level of understanding around long-term environmental sustainability rather than taking the ceiling up.

Nay saying reduces the value of any long-term positive impact that countries and companies may otherwise get — with the only other option being the subpar “business as usual”. A new normal needs to be created. The answer to unstainable practices is not a boycott but definitely a demand for more responsible sourcing.

Simply put, unless we speak to the laggards (countries and companies), only early adopters won’t be able to turn this around. Because if they had to, they would have managed.

It is not a sprint — every action counts in this marathon and every step takes everyone a bit further in addressing critical climate risks. 

Neha currently leads SPRF India, a think tank based in Delhi, working on a range of critical themes to bridge academic research and public policy. She is also the Head of Market Development  (Asia-Pacific) for the Forest  Stewardship Council and works with global teams and intersectional engagements across five countries and specialises in natural capital management, deforestation risk management and environmental sustainability.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth