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EU renews commitment to green energy as business calls for stabilising regulation

Summit delegates in Brussels heard the EU is resolved on clean energy, while speakers discussed how business needs clarity as it drives ahead with climate finance. Philippa Nuttall reports.
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EU renews commitment to green energy as business calls for stabilising regulationImage: Getty Images

Bringing global financial flows in line with the goals of the Paris Agreement should be a priority at COP27 in Egypt next month, said politicians and business leaders at a climate summit held in Brussels on Monday and hosted by the University of Cambridge Institute for Sustainability Leadership and CLG Europe, a UK-based organisation that represents businesses aiming for net zero.

Global warming continues apace, yet hopes of accelerating climate action at the upcoming international climate conference in Sharm el-Sheikh are looking increasingly faint in the face of heightened geopolitical tensions.

Advances at previous COPs have relied in no small measure on bilateral talks between China and the US. Beijing is, however, refusing to discuss climate action with Washington because of continued US support for Taiwan. Meanwhile, voices in both China and the US are starting to question whether Europe is more focused on weaning itself off Russian gas rather than leading on climate ambition.

None of this is helpful when one of the biggest challenges at COP27 will be trying to rebuild the trust deficit between the global north and the global south. After years of failing to come forward with the long-promised $100bn a year for climate action in poorer countries, Western leaders need to show they are serious about cutting emissions and financing the loss and damage already being caused by climate change in the most vulnerable nations.

EU commitment

At the meeting, national ministers, members of the European Parliament and corporate leaders insisted the clean energy transition remained a priority for Europe. “I want to counter the narrative from China and other countries that the EU could backtrack on its climate objectives,” said French centrist MEP Pascal Canfin. “It is in their interest to make the rest of the planet think we won’t meet our targets.” 

In the short term, the EU had little alternative but to find new gas supplies, added Mr Canfin, before highlighting Europe’s renewed commitment to renewables and energy efficiency since Russia invaded Ukraine. The European Commission and Parliament have agreed to increase the EU renewable target to 45% of the bloc’s energy mix by 2030 from a previous proposal of 40%, though member states are still to vote on a final deal. 

Terhi Lehtonen, state secretary at the Finnish environment ministry, said in the face of wider geopolitical tensions, it was important to focus on financial flows to keep the energy transition moving forward. “All finance should be aligned to the Paris goals,” she said, adding that progress should be made on the issue at COP27, with the aim of an agreement covering public and private finance. 

Ms Lehtonen also expressed concern that the difficult global backdrop could lead to 2030 global climate goals being pushed back to 2035.

Swedish Green MEP Pär Holmgren said while policy-makers were “stuck in a blame game” with “no-one really stepping up”, the business world offered “totally different dynamics”. “Companies around the world realise you can make a profit out of the transition and create jobs,” Mr Holmgren added. 

Progress on climate was often thanks to “the confidence of businesses in the direction of travel,” agreed Elina Bardram, director of adaptation and resilience in the European Commission’s climate directorate.

Lili Karbassi from the UN Global Compact said that at New York Climate Week last month, businesses had made clear their desire for regulation to help them implement climate action. Companies wanted “clarity” and “stability”, with the premise that being out of line with the 1.5C temperature goal posed a “financial risk” for them and the markets, she said. 

As the driver of the global regulatory agenda, the EU should show it was not working to create “a socialist society” but that climate regulation “makes commercial sense”, said Anthony Abbots, public affairs and sustainability director at Rockwool, an insulation company.

Maximise assistance

With regard to loss and damage, “the real needs of developing countries” should be examined at COP27, said Ms Bardram. She questioned the logic of creating a new fund, which developing countries most exposed to the impact of climate change have proposed, and suggested it could be better to “look within our existing systems to maximise assistance without too much bureaucracy”.

Finding a solution that gave the poorest countries better access to more targeted finance more quickly was the priority: “Instead of trying to reinvent the wheel, we should work with the mechanisms we have, scale up insurance, early warning systems and human assistance as and when required,” she said.

Ms Bardram cited the “global shield” concept being developed by Germany with support from the G7 as a potential way forward. Under this system, poorer countries would be helped to improve insurance and social security schemes to allow support to be delivered faster and more systematically in cases of extreme weather. The full details should be announced at COP27, but some climate campaigners are concerned that the idea could be a way for richer nations to avoid paying for historic emissions. 

Ms Bardram also mentioned the call from UN secretary-general António Guterres for everyone on Earth to be protected by early warning systems against extreme weather within the next five years. The World Meteorological Organization is expected to present an action plan to achieve this goal at COP27 in Egypt.

This article first appeared in Sustainable Views, the Financial Times Group’s platform on ESG policy and regulation. 

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