Rich countries fight to conclude a coal transition agreement before COP27

As they prepare for the next global climate negotiations in November, developed country officials said a series of billions of dollar packages to help poor countries phase out coal. I’m trying to put together.

However, the negotiations have been hampered by the war between state affairs and Russia in Ukraine, and according to those familiar with the negotiations who sought not to be identified because the discussion was private, the dirtiest fossil fuels Made it a product that is advantageous for mining and exporting.

Negotiations stem from a groundbreaking $ 8.5 billion pledge made by the United Kingdom, the United States, and the European Union prior to last year’s COP26 Summit to help South Africa break away from fossil fuels. It is emitting. The deal has become a model for decarbonizing other countries, including India, Indonesia and Vietnam. People can reach an agreement with these countries before COP27 and hope that the details of the South Africa agreement will be finalized by then.

Much of the focus is on Indonesia. Indonesia will host a meeting in its 20s this year and will have a major impact on COP27. Closing a deal will give some goodwill to rich countries in Egypt, which failed to meet its 10-year-old goal of providing $ 100 billion in climate funding annually to poor countries. However, developed countries also categorically argue that funds can only flow if the beneficiary governments come up with detailed economic-wide plans to end the use of coal.

Three donor country officials who visited Indonesia this year personally raised concerns that President Joko Widodo’s cabinet remained divided over the need to stop using coal. It was exacerbated by the war that increased the demand for coal exports. The government has not made a coherent plan to move away from coal. This is an obstacle to this year’s breakthrough and calls for not being named so as not to jeopardize negotiations.

“The Indonesian government has about 20 different visions of what we are actually talking about,” said Jake Schmidt, Senior Strategic Director of the International Climate Program of the Natural Resources Defense Council. “There are still factions within the Indonesian government wondering why coal production should not be increased and why it should be transitioned.”

The Indonesian ministry contacted by Bloomberg did not immediately respond to questions sent before the one-week holiday. In October last year, the government announced plans to reduce emissions to net zero by 2060, including the abolition of all coal-fired power plants by 2060.

Indonesia’s finance minister, Sri Mulyani Indrawati, said one of the biggest challenges was to persuade private owners of coal power plants to switch off coal power plants. She also said on the sidelines of the IMF Spring Meeting in Washington in April that inflation and rising borrowing costs have made it difficult to close deals.

“If I ask Indonesia to bankrupt my budget and move from this energy that bankrupts PLN, it won’t fly,” she said, referring to state power company PT Perusahaan Listrik Negara.

Still, progress has been made recently as the debate has become more detailed, according to US Treasury officials who are familiar with the issue, as officials engage in difficult questions about the speed of energy conversion in Indonesia. US officials met with ministers and PLN representatives in Washington last week.

Meanwhile, negotiations between India and the United States and Germany (representing the EU) have not made significant progress, according to those familiar with the debate. The two people said that any promise could be a bilateral agreement rather than a multilateral agreement. One said the coal shortage that led to a power outage was a hurdle. According to another, the Indian government is also suffering from being “spoken” by Western countries that provide more research than concrete solutions. The Indian Ministry of Foreign Affairs did not answer the question.

For transactions with South Africa, six months after the agreement was signed, the key elements of the financial package are still under development. More details on how the money will be spent are on how much to go to the heavily debted utility Eskom Holdings SOC Ltd., how the community will be compensated, and how the loan will be structured. It has not been confirmed yet.

According to U.S. Treasury officials, technical details are currently being considered to determine the contours and size of funding, helping the government escape the long-term pressures associated with Escom’s debt. The goal is to do. When the agreement was announced last year, South Africa did not appoint a chief negotiator, and Escomm’s participation was unclear in the many steps needed to turn the declaration into a final plan, officials said. rice field.

The country then appointed former South African central banker Daniel Mminele to lead the negotiations. “Work is on track,” he said, and will focus on “assessing the details of funding factors related to South Africa’s needs and priorities” in the coming weeks.

While it is still possible to reach a broader agreement on Indonesia in principle before the G20 meeting in Bali in November, some activists and insiders are more than happy with the outlook for the agreement with Vietnam at this time. Be optimistic. According to one, the country’s coal industry is small and likely to be wind energy. Officials from Vietnam’s Ministry of Industry and Trade were not asked to comment.

The European Commission has confirmed that it is seeking energy conversion partnerships with Vietnam, India and Indonesia. “The first progress review will take place before the summer, at a good time before COP27,” said a spokesman.

US Climate Change Special Envoy John Kerry said work is underway in Indonesia and negotiations with South Africa are underway. “We have mobilized some money to deal with Escom — we can bail out the Escomm problem in South Africa and help their transition,” he hosted by the Edison Electric Institute on April 25. Said at the Global Electrification Forum. , They don’t have Eskom problems, but they do have some status quo challenges, “he said.

Negotiations are underway at a high level. US Treasury Secretary Janet Yellen met with South African and Indonesian Finance Ministers. This is a sign of the seriousness of the efforts that may be in the area of ​​the Minister of Energy and the Minister of the Environment.

The outcome of the consultation will have a significant impact on the success of COP27. Impressive deals with larger developing countries can lead to similar arrangements to help smaller, more vulnerable countries.

Brendan Guy, lead strategist at NRDC’s International Climate Program, said South Africa’s plans “provide a good model to build here.” Will Vietnam and others really help them accelerate their movement through coal? “

© 2022 Bloomberg LP Rich countries fight to conclude a coal transition agreement before COP27

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