By looking at the situation between Russia and Ukraine, Russia apparently weaponized energy by invading Ukraine. The country cut off 40% of the European Union’s gas supply via its natural gas pipeline. Consequently, this led to a 41.5% increase in power prices throughout the months of September and October in 2022. To combat this cut in natural gas, the European Union responded by investing more in coal and nuclear power sources, thus increasing its investments in fossil fuels. Experts believe that this rise in fossil fuels may bring challenges to the efforts of the 2050 Paris climate agreement, or it may encourage countries to largely shift towards renewables. Throughout 2022, the European Union had already increased its renewable energy targets from 40% to 45%, by 2030 through the RE-Power EU plan. However, Scientists still believe that this may be the cause for a rise in fossil fuels and thus, an increase in GHGs, despite polls showing that 83% of Europeans think that the invasion is cause for more investments in renewables.
In 2020, there was a total of $600 million in climate financing. Now by 2030, experts estimate that we will need $5.2 trillion in climate financing to be able to maintain a low carbon transition. All in all, an increase of around 10x in investments is what’s pictured to be able to meet low carbon emissions and stabilize global warming. A new initiative is being brought into the light now, the Bridgetown Initiative. The initiative was recently launched in early 2022, supported by Mia Mottley, Barbados prime minister. What the plan entailed was a new and established global financial system which would direct low carbon investments and finance countries which needed it the most. Ergo, those most vulnerable to climate change. The Bridgetown initiative would also bring in the involvement of Multilateral Development Banks for debt restructuring and funding for adaptation and mitigation. French president Emmanuel Macron was seen praising the initiative, and the IMF director Kristalina Georgieva also responded positively to this new and innovative idea. The question that arises from the Bridgetown initiative is whether it will actually be implemented. From what has been reported, plans for the implementation of the initiative will be brought up in G7 and G20 meetings in May of 2023, the IMF and World Bank spring meetings in April of 2023 and COP28.
Leaning onto the question of US climate action in 2022 and 2023. In 2022, congress enacted 3 climate legislations, a breakthrough in US climate action. The CHIPS and Science Act, the Inflation Reduction Act and the Bipartisan Infrastructure Law were enacted. These three initiatives brought together an array of climate friendly investments that totaled $79 billion. Besides combatting climate change, these laws were also implemented to improve living standards through the Bipartisan Infrastructure Law and the Inflation Reduction Act, possibly creating up to 3.1 million additional jobs. With these incentives, it is expected that other countries also adopt similar ambitions to these US policies and also accelerate renewable energy deployment. Now, will these initiatives be impactful in this transition to low carbon emissions, or will these be managed incorrectly?