Funding Net-Zero Emissions

November 15, 2021
3
 Min Read

The last few months have heightened awareness of the Climate Movement. Between the COP26, the Infrastructure Investment and Jobs Act, the Build Back Better Act, and the 2021 IPCC report there has been a lot of talk on what's needed to combat the climate crisis, as well as the gap between what has been allocated and what is actually needed to achieve climate stability.  

Because the Climate Crisis is intersectional and involves ALL sectors of society, it's difficult to estimate the full dollar amount needed from all industries, including social programs, that elevate and promote planetary health. Additionally, Net-Zero efforts don't actually reduce pollution and in many cases don't require any change in practice for major polluters, but it's what the stakeholders have decided to focus on, and for the purposes of this article, we'll entertain it.

COP 26

COP26 is the 26th annual "Convention of Parties" and is the UN's annual summit on climate change. As the COP26 Conference concludes, we are left with more questions than answers. But the hottest topic on climate will always be financial (19).  Let's start by reviewing the goals of the COP26:

  1. Secure global net zero by mid-century and keep 1.5 degrees within reach
  2. Adapt to protect communities and natural habitats
  3. Mobilise finance
  4. Work together to deliver

But what does mobilizing finance actually mean? Per the leaders of the COP26, developed countries need to allocate 100 billion dollars per year, however, the 100 billion is made up of all the developed countries (19). The U.S. has only committed to 11.4 billion which is largely criticized due to the resources available. Countries currently leading in investments in the climate crisis are Germany, Japan, and France (7) who rank significantly lower than the US in GDP per capita (16).

The request on countries as a collective to contribute 100 billion per year isn't new. This request has been around since the UN Convention on Climate Change in 2009 (17), and there has been an incredible lack of commitment to deliver the funds.

The COP 26 isn't just focused on mobilizing government, they are also leveraging the private sector and financial management companies. Assessing the current pledge value of the private sector is difficult and so far unimpressive (2,6,8).

Also of note, the "principle partners" for COP26 are the epitome of greenwashing (19).

Infrastructure Investment and Jobs Act:

As the historic Infrastructure Investment and Jobs Act passes Congress with 1.2 trillion dollars to be allocated to the modernization of infrastructure in the U.S.with some intention of counteracting climate change let's take a look at where these climate related funds are going (1,2,12,14).

  • 39 billion to improve public transport
  • 66 billion to improve passenger freight and rail
  • 42 billion to ports and airports
  • 15 billion to electric transport
  • 65 billion to a renewable energy grid
  • 55 billion to clean drinking water
  • 50 billion to power and water resilience
  • 21 billion to environmental remediation

Total: 353 billion for climate

For more details on exactly where and how this money will be spent, check out the full bill and learn more about what it means for climate activists.

Build Back Better Act:

Also in recent news, Congress  is in a stalemate on the Build Back Better Act. Originally this legislation would provide 555 billion to climate action over 10 years including other social services that would make the financial action of living in America more accessible for all (13). This is constantly unfolding yet the passage is looking bleak.

Those in opposition to the Build Back Better Act are concerned about the long-term financial costs and are waiting for the analysis from the Congressional Budget Office (CBO). This highlights a larger problem, the CBO only estimates costs for legislation for 10 years which is problematic for legislation that focuses on prevention and likely need more than 10 years to show a net gain, think policy like preventive health care, climate mitigation strategies, affordable housing, etc.

Regardless of the the CBO projections, the Build Back Better act would provide 55.5 billion dollars per year (555 billion over 10 years) that would contribute to climate resilience efforts, in addition to programs like free 2 year college, cybersecurity, and child care. Although these are necessary programs, not all of the funds will be allocated to net-zero efforts (20). For context, the US currently subsidizes the Fossil fuel industry at least 20 billion per year, and globally, fossil fuels are subsidized at $554 billion (5,9). Fossil fuels currently make up 74.1% of greenhouse gas emissions in the U.S. (4).

US Department of Defense

The US Department of Defense (DoD) has noted and prioritized Climate Change as a threat to national security and has requested funds to both prepare for the effects of climate change and to mitigate their contribution to climate change in their FY2022 budget. Hopefully this helps reluctant Americans change their view on climate change, but ultimately it's unclear of how these funds will be used, but they are requesting 617 million to invest across all sectors and initiative for climate resilience (10,18).

The Intergovernmental Panel on Climate Change:

Outside of the fact that the IPCC has been releasing reports that analyze research and provide insights on climate policy since 1990 with scant implementation, they estimate that the early cost of counteracting climate change is between 1.6-3.8 trillion dollars per year (11, 21). Although it's difficult to conceptualize trillions, imagine having only $500 in your wallet when you need over a million to survive. Even when combining the $100 billion from COP26 pledges, the Infrastructure Investment and Jobs Act, the Build Back Better Act, and a portion of the defense budget we are nowhere near what is needed annually.

Check out this Nature article for more info on climate finance.

So the question is, will we reach net-zero emissions with the current funding expectations? Absolutely not. Is it a good start? Also no. There is no question of what needs to happen reach our climate goals, but the focus seems to only be on raising money for net-zero emission rather that the execution, probably because net-zero eliminates any actual accountability.

REFERENCES:

  1. CNN, Drew Kann and Ella Nilsen. 2021. “25% of All Critical Infrastructure in the US Is at Risk of Failure due to Flooding, New Report Finds.” CNN. October 11, 2021. https://www.cnn.com/2021/10/11/weather/infrastructure-flood-risk-climate-first-street/index.html.
  2. CNN, Katie Lobosco and Tami Luhby. 2021. “Here’s What’s in the Bipartisan Infrastructure Bill.” CNN. November 5, 2021. https://www.cnn.com/2021/07/28/politics/infrastructure-bill-explained/index.html.
  3. “COP26: The Biggest Announcements Coming out of the UN Climate Conference.” n.d. Global Citizen. Accessed November 15, 2021. https://www.globalcitizen.org/en/content/cop26-glasgow-climate-announcements/.
  4. EIA. 2020. “Where Greenhouse Gases Come from - U.S. Energy Information Administration (EIA).” Eia.gov. August 11, 2020. https://www.eia.gov/energyexplained/energy-and-the-environment/where-greenhouse-gases-come-from.php.
  5. “Fact Sheet | Fossil Fuel Subsidies: A Closer Look at Tax Breaks and Societal Costs | White Papers | EESI.” 2019. Www.eesi.org. July 29, 2019. https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subsidies-a-closer-look-at-tax-breaks-and-societal-costs#1.
  6. Jessop, Simon, and Andrea Shalal. 2021. “COP26 Coalition Worth $130 Trillion Vows to Put Climate at Heart of Finance.” Reuters, November 3, 2021, sec. COP26. https://www.reuters.com/business/cop/wrapup-politicians-exit-cop26-130tn-worth-financiers-take-stage-2021-11-03/.
  7. Morris, Chris. 2021. “COP 26: How Much Is the Developing World Getting to Fight Climate Change?” BBC News, July 27, 2021, sec. Reality Check. https://www.bbc.com/news/57975275.
  8. Murray, James. 2020. “How the 6 Major Oil Companies Have Invested in Renewable Energy Projects.” NS Energy. January 16, 2020. https://www.nsenergybusiness.com/features/oil-companies-renewable-energy/.
  9. News, Sara Schonhardt, E&E. 2021. “U.S. Agrees to End Fossil Fuel Financing Abroad.” Scientific American. November 4, 2021. https://www.scientificamerican.com/article/u-s-agrees-to-end-fossil-fuel-financing-abroad/.
  10. “Official Testifies on DOD Budget Request for Construction, Energy, Environmental Programs.” n.d. U.S. Department of Defense. Accessed November 15, 2021. https://www.defense.gov/News/News-Stories/Article/Article/2696448/official-testifies-on-dod-budget-request-for-construction-energy-environmental/.
  11. Oliver, Padraig, Alex Clark, and Chavi Meattle. 2018. “Global Climate Finance: An Updated View 2018.” CPI. November 27, 2018. https://www.climatepolicyinitiative.org/publication/global-climate-finance-an-updated-view-2018/.
  12. Pramuk, Jacob. 2021. “House Passes $1 Trillion Bipartisan Infrastructure Bill That Includes Transport, Broadband and Utility Funding, Sends It to Biden.” CNBC. November 6, 2021. https://www.cnbc.com/2021/11/05/house-passes-bipartisan-infrastructure-bill-sends-it-to-biden.html.
  13. “President Biden Announces the Build Back Better Framework.” 2021. The White House. October 28, 2021. https://www.whitehouse.gov/briefing-room/statements-releases/2021/10/28/president-biden-announces-the-build-back-better-framework/.
  14. Shepherd, Marshall. 2021. “What a Historic $1 Trillion Infrastructure Bill Means for Climate Change.” Forbes. November 6, 2021. https://www.forbes.com/sites/marshallshepherd/2021/11/06/what-a-historic-1-trillion-infrastructure-bill-means-for-climate-change/?sh=3e19ab052b82.
  15. Specia, Megan, Stephen Castle, Somini Sengupta, and Aina J. Khan. 2021. “Here’s What Happened at the COP26 Climate Summit on Saturday.” The New York Times, November 6, 2021, sec. World. https://www.nytimes.com/live/2021/11/06/world/cop26-glasgow-climate-summit-protests.
  16. “The Richest Countries in the World.” 2016. WorldAtlas. March 4, 2016. https://www.worldatlas.com/articles/the-richest-countries-in-the-world.html.
  17. Timperley, Jocelyn. 2021. “The Broken $100-Billion Promise of Climate Finance — and How to Fix It.” Nature 598 (7881): 400–402. https://doi.org/10.1038/d41586-021-02846-3.
  18. US Department of Defense. 2021. Defense Budget Overview. US Department of Defense. https://comptroller.defense.gov/Portals/45/Documents/defbudget/FY2022/FY2022_Budget_Request_Overview_Book.pdf.
  19. “What Is a COP?” n.d. UN Climate Change Conference (COP26) at the SEC – Glasgow 2021. https://ukcop26.org/uk-presidency/what-is-a-cop/.
  20. Yarmuth, John A. 2021. “H.R.5376 - 117th Congress (2021-2022): Build Back Better Act.” Www.congress.gov. November 6, 2021. https://www.congress.gov/bill/117th-congress/house-bill/5376?q=%7B%22search%22%3A%5B%22build+back+better%22%2C%22build%22%2C%22back%22%2C%22better%22%5D%7D&s=8&r=1https://www.congress.gov/bill/117th-congress/house-bill/3684?.
  21. Yeo, Sophie. 2019. “Where Climate Cash Is Flowing and Why It’s Not Enough.” Nature 573 (7774): 328–31. https://doi.org/10.1038/d41586-019-02712-3.