An implementation plan agreed at COP27 UN climate change summit in Sharm El-Sheikh, Egypt has shown that a global transition to a low-carbon economy will require investments of at least US$4 trillion annually (£3.4 trillion).
According to a UN bulletin, providing this cash will necessitate a quick and thorough overhaul of the financial system.
At the start of the conference, the prime minister of Barbados, Mia Mottley, proposed a way to kickstart this process by reforming two of the largest financial institutions: the World Bank Group and the International Monetary Fund (IMF).
According to reports, her plan, known as the Bridgetown initiative, would mobilise more than US$1 trillion from the World Bank among other development lenders and US$500 million from the IMF.
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Mottley’s proposed strategy is three-pronged. First, increase the volume of finance available to low and middle-income countries to address climate change. Second, hasten the disbursement of this money and make lenders offer more long-term financing, which is critical in maintaining investment. Third, allow countries recovering from disasters to pause their debt payments.
Her initiative follows claims that the World Bank and other major lenders are institutionally risk-averse, paralysing efforts to raise money to build the solar and wind farms which can replace fossil fuels and the defences which can help countries adapt to extreme weather and sea-level rise.
Story was adapted from the Conversation.
