Barbados PM advocates for reform in “global climate finance.”
Global leaders convening in Paris on Thursday may provide access to significant funds, reaching hundreds of billions of dollars, to address climate change in poorer nations. Mia Mottley, the first female Prime Minister of Barbados, is leading the charge for this financial support and emphasises the urgent need for assistance in her small country. Developing nations, having contributed less to climate change, bear the brunt of its severe impacts and struggle to afford costly endeavour such as renewable energy projects. Climate finance, including funding for initiatives like flood defences and solar facilities, has long been a contentious issue in climate negotiations.
As a co-host of the Paris conference alongside French President Emmanuel Macron, Prime Minister Mottley welcomes numerous world leaders to the Summit for a New Global Financing Pact. Attendees include the German Chancellor, the Brazilian President, the new World Bank President, the Chinese Prime Minister, and the US Treasury Secretary.
The existing institutions, such as the World Bank and the International Monetary Fund (IMF), were established by victorious nations towards the end of World War II during the Bretton Woods conference in New Hampshire, USA. With the 80th anniversary approaching, Mottley aims to modernise the Bretton Woods system, shifting the focus away from wealthier nations and towards global benefits, particularly in assisting developing countries in tackling climate change.
According to the International Energy Agency, annual investments in clean energy in developing nations must triple from $770 billion in 2022 to around $2.8 trillion by the early 2030s to avert the most severe consequences of climate change. One proposal suggests that institutions like the World Bank offer more affordable loans for climate action projects, as low-income countries currently face disproportionately high interest rates compared to developed nations.
These initiatives have the potential to generate loans worth hundreds of billions of dollars for climate projects in low-income countries through a “Climate Mitigation Trust Fund,” supported by tens of billions of dollars’ worth of Special Drawing Rights (SDRs) overseen by the IMF and the UN. Projects that effectively reduce global warming would be the beneficiaries of this fund.
While a final decision is not expected at this stage, Prime Minister Mottley remains optimistic about the progress that can be achieved in advancing these proposals.
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