We'll adapt (?)
A brief look at COP27, the new US natsec strategy and a preview of how climate finance may find security as a co-benefit
Welcome back! The inexorable march of the seasons means that in London the leaves have gone from green to yellow to red to brown to muck (Bear Grylls knows all about that) as the days shorten. The kittens are growing rapidly in size and ambition - one fancies herself the Tenzing Norgay of blinds, while the other aspires to be the feline embodiment of a tar pit. Joy all around.
With the flurry of activity in the climate x security nexus, rather than focusing on one topic this month I will aim to do mild justice to the upcoming climate summit in Egypt and the Biden administration national security strategy paper, while getting the discussion started on financing climate for security, which will set the scene for the next several editions.
COP27 Season
OK so security is going to be tight everywhere and there are four places to get McNuggets . But what else to pay attention to:
Report season: it is a proper fly-tipping of papers to read and through and digest ahead of COP27 (yours truly is not about to self-harm by attempting to do so), which starts this coming Sunday through 18 November. Missing from this list is the UNEP Adaptation Gap Report, out later this week, but probably is not the bearer of good news. Letβs pick a few of these:
The IEA World Energy Outlook highlights some mixed signals when it comes to net zero, the energy transition, and the decisionmakers who can make or break it:
On the one hand, the consumption of coal and gas is forecasted to peak by the end of the decade before gradually tailing off from the 2030s. However, by mid-century the hydrocarbon presence in the energy mix is still estimated to be around 60% in its base case
The Russian invasion of Ukraine has triggered a massive transfer in wealth from consumers to producers of hydrocarbons - Russia, Qatar and KSA are among the big winners. I would posit that geopolitics, not market dynamics, will be a greater driver in the outcome of the conflict in the long term and thus opportunistic players in the market - the inner circles of Putin, Sheikh Tamim and MBS - will have little incentive to invest meaningfully in cleantech and play ball with the COP process - let alone decarbonise - as long as the environment is advantageous for them.
In conversations with industry colleagues the risk of power disruption this winter is top of mind for many. This report highlights the challenges to electricity security given the evolving energy mix towards electricity as final consumption of energy: system flexibility = system resilience, which today is largely reliant on coal, gas and hydropower. Going forward, utility-scale batteries, software which automates responses to dynamic changes in supply and demand, ammonia storage and transport, and perhaps carbon capture and storage - will need to be available by almost 4x by 2050 in the most aggressive forecast for net zero by the IEA. The Ukraine warβs impact on European concerns over grid stability this coming winter - and the associated concerns around sabotage - should become a case study of βresilience by designβ of future electrification projects to protect consumers from climate hazard and security-driven disruptions. To borrow a cyber term, the attack surface for energy and power becomes bigger, more dispersed, and accessible. Maybe hold off on those LAN parties, mate.
The World Resource Instituteβs Climate progress report is also a mixed bag of π
Australia upped its pledges from 2015 by aiming to cut emissions by 43% of 2005 levels by 2030. However, Brazil didnβt strengthen its 2016 emissions plan (perhaps thereβs belated hope after Lulaβs win this weekend over Bolsonaro). Other areas around adaptation finance, deforestation and cities were ambivalent or falling quite short.
UNFCC (UN Climate Change) also published a βsynthesisβ report which aimed to assess information from the 166 latest available nationally determined contributions (NDCs) against Paris commitments. Comparing the IPCCβs baseline estimates, the NDCs theoretical contribution to emissions reductions by 2030 fall woefully short: an estimated 3.6% reduction by 2030 compared with 2019, compared to an estimated 43% in a 1.5C limit scenario and a 27% reduction in a 2.0C scenario.
So what am I looking out for at COP27? Things where pledges and funding mechanisms improve resilience and make communities more adaptive to future extreme climate impacts:
Progress on loss and damages, or the βreparationsβ narrative": the G77 (most emerging and some frontier markets) and China will make this a defacto agenda item even if not officially on the schedule. This would cover things disaster risk reduction, early warning systems and disaster recovery, and would be distinct from adaptation or development types of aid. If some level of commitment is hashed out between the US/EU on this, that would present a significant shift in institutional momentum to coordinate further on hitting as many of the Paris targets. A further token of goodwill would be funding the Santiago Network, which was created during COP26 to provide technical assistance to address loss and damage.
Source: OECD, Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020
More $$ for adaptation finance: not to be entirely conflated with projects which reduce emissions, these are projects which help communities and countries. Adaptation finance is really worth highlighting: weβre almost certainly going to miss the 1.5C world, and we are aiming to try to keep it within 2 if not 2.5C, and impacts e.g. multiple crop failures, Amazon becoming a savannah etc. in those scenarios would be severe for our livelihoods and the security of our societies. We cannot wait to invest in adaptation until those impacts emerge in the full. An OECD report in July highlighted that in 2020 only about $28.6 billion, or roughly a third, out of over $83 billion of climate finance from all sources went to adaptation versus $48.6 billion for mitigation e.g. emissions reductions. Things will have to get really going if the $40 billion / year by 2025 target (or double of 2019 levels, as committed during COP26) is met. More importantly, itβll be important that a much greater portion of this financing goes to lower income and small island nation states, because there is more than a bit of overlap between those receiving the least funding and with the greatest conflict risk metrics. Past research suggests that a) governance issues are driving funding towards wealthier nations with better rule of law and institutions and b) research on adaptation co-benefits, including peace, stability and security, was not well studied and communicated. More on this in future editions.
Resilient investment: the Pakistan floods (as covered in the last newsletter) highlights the urgent need to find more innovative ways to invest in a wide range of projects - especially in places most vulnerable and least capable of raising funds on their own - to boost communitiesβ abilities to βbounce backβ quickly and better from future climate impacts: flood defences, aquifer management, distributed grid, early warning and crisis response tools, to name a few. One 2015 UK study estimated that $100 billion annually is needed by 2035 to address potentially $1 trillion in climate impact-related losses, and the World Bank estimated in 2019 there may be over $4.2 trillion in βbenefitsβ from resilient infrastructure investments via social co-benefits and cost avoidance. I would be keen to see commitments to do just that out of COP27, alongside robust funding for the Santiago Network, from groups like the Global Climate Fund, the IMFβs Resilience and Sustainability Fund, the Climate Finance Leadership Initiative and the Coalition for Climate Resilient Investment.
Water and biodiversity: Sometimes losing out on the limelight amidst the emissions-related discussion is how the right to safe water and a healthy ecosystem are so vital for community health - there is now growing awareness of how these link back to climate targets and national economies. While there are parallel βCOPsβ for both water and biodiversity, commitments to more strongly integrate emissions targets and the tracking of national plans with standardisation of water and biodiversity best practices and metrics - perhaps in alignment with UN Sustainable Development Goals - would be a positive outcome. Also more on water in future editions.
US and China: will they hold hands? After US Speaker of the House Nancy Pelosiβs Taiwan visit, China retaliated by breaking off a wide range of bilateral talks, including climate. That places the dialogue between US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua in something of a limbo ahead of Sharm. While both countries see opportunities to take global leadership on reducing emissions, climate politics for both remain a largely domestic game, incentivised by the βchoose your own adventureβ nature of the Paris NDCs. China is likely to stick to its guns - touting its technological progress and investments in renewables, drawing attention away from its investment in new coal plants. The US can tout the Inflation Reduction Act, although it is somewhat hamstrung by its supply chain rules and the looming legislative risk after its midterm elections. With the two greatest emitters nearing a nadir in bilateral ties and not really in a mood for strategic, groundbreaking dialogue, the summit will likely see two primary sources of political momentum fall short on pushing international momentum.
The new US national strategy
The Biden administration (finally) came out with its national security strategy a couple of weeks ago, almost certainly too late for it to push policy forward for this term. However there were some interesting bits around climate:
Climate change as a risk is largely viewed through the national security context. For those who have read reports like the National Intelligence Estimate on Climate Change in 2021 you can see those writersβ fingerprints all over. There is no mention of working closely with China, the other large emitter on climate policy issues, likely because it is front and centre as the USβ greatest strategic threat in the paper.
Much of the concrete policy action is domestically-focused, centred around the impact of the Inflation Reduction Act and how that will spur and scale the energy transition and climatetech, especially in deploying private capital. However, not acknowledged is the negative impact this may have on US supply chains overseas as countries which donβt have a free trade agreement already in hand may lose out. A mention of the USβ steel agreement with the EU may signal that more of these bilateral deals are forthcoming to improve supply chain security across an archipelago of allies.
The climate risk to the Arctic is acknowledged, but much of policy focus Canada and revolves around working with the Scandinavian countries to counter Russian and Chinese activities, including through the Arctic Council.
Thereβs only a passing reference to climate adaptation, which is unfortunate given the likelihood weβll be in a 2C world later this century, and crises like the megadrought in the US southwest should be ringing alarm bells about preparing societies to survive and thrive within more unstable settings.
So what may we take away from this? A few early thoughts:
Climate change is natural but what is done in response is inherently political. The βgeopoliticisationβ of climate, a global challenge, risks turning the fears of a climate catastrophe into a reality wherein some countries adapt while others - in geopolitical opposition or left out in a fragmenting international order - do not, or do so in a way that cannot be interpreted as collaborative. Sustained international political leadership is critical, and I would argue that weβre simply not seeing that. As most economic partnerships since World War II have not fulfilled their stated promises without deeper political or security / military underpinnings, it will not be surprising if climate policy collaboration / competition also followed this path.
New technologies wonβt benefit all, and almost certainly not equitably given current flows of capital and the emergence of economic supply chains driven more explicitly by security and political conveniences.
There is probably a great opportunity to leverage US entities which straddle the development and commercial worlds like the Development Finance Corporation (a combo of the old USAID and OPIC) to implement policy; would have liked to see more mention of this.
Climate and energy security are inherently intertwined for the US, wrapped within broader economic and political narratives around domestic resilience. This narrative is likely attractive to not just Democrats but at least some Republicans as a policy bulwark against many of the other key strategic hotspots: Taiwan, Ukraine, the Arctic.
What caught my eye:
Bringing security closer to climate finance: if youβre like me and thinking on how to bridge that gap between climate and security when it comes to providing funding where itβs most needed, I encourage you to follow Catherine Wong at the UNDP, who recently published a study exploring institutional climate finance and the potential co-benefits for peace.
Erin Sikorsky and her colleagues at the Centre for Strategic Risks in Washington recently wrote on the nexus of the Pakistan floods and political instability:
Enjoying Disaster by Choice by Ilan Kelman of University College London. Itβs been my foray into understanding natural disasters and how thatβs a misnomer: peopleβs choices (or inaction) leaving us vulnerable to natureβs impacts have a much bigger impact on outcomes than the flood or drought itself - itβs not a disaster if people arenβt around! If youβve read it, let me know what you think.
Climate change memes are still meh. We can do better, folks: