The transition to a “green” energy model, decarbonized and with zero emissions will only be successful if it is accompanied by investments in emerging countries that traditionally produce polluting energy, while penalizing the price of coal.
In a debate on the need to accelerate the energy transition, the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, has been forceful in stating that “at the next climate summit (COP) we will have to commit to financing the countries that need it”, but “not in climate projects, but in development”.
Otherwise, the inequality gap will grow even wider, he added, because investments “are not going to go to emerging markets if they are too risky” and there are no guarantees.
We are all in the same boat, Georgieva has said, “if someone succeeds and another fails, we all lose out, and we seem to be on the Titanic”.
In the same sense, the Colombian Minister of Mines and Energy, Irene Vélez, has defended a “fair” transition for those countries whose economies depend on these materials”; it is necessary to “transform the national energy matrix and generate other economies at a local scale”.
The challenge, explained Vélez, “goes beyond energy, since to achieve the global energy transition we need local and regional transitions, all of which require investment not only in renewables but in many other sectors.”
As the CEO of Repsol, Josu Ion Imaz, has pointed out in a parallel debate on the different ways to address the energy transition, the focus must be broadened, and while working towards decarbonisation, it is necessary to “maintain jobs industries and give opportunities to all sectors”.
In this area, multilateral development banks such as the IMF itself, or national entities with the same purpose “should play a leading role in catalyzing private financing for adaptation to climate change”, indicated the executive director of the Southern African Development Bank, Patrick Khulekani.
THE PRICE OF COAL
Georgieva recalled in her speech that “emissions must be cut between 30% and 50%, and there is plenty of money but it does not go where it should”; In addition, she has stated: “We resist understanding that coal should be taxed and its price should go up.”
Public resistance to a carbon tax has prevented many nations from taxing a price, but “taxes are not the only way to deter emissions,” Georgieva has said.
The investments necessary to sustain this transition and to promote development encounter many difficulties, including the lack of common standards and data on emission reductions, as the CEO of Standard Chartered Bank, Bill Winters, has pointed out.
After nearly three decades of COP summits, the banker has pointed out, common metrics on many environmental goals are still lacking. “We are terrified of being accused of greenwashing, even if we are doing the right thing,” he has said.
In Europe, “which is a leader in the fight against climate change”, in the words of the managing director of the IMF, but its energy matters, what is needed are “policies that accelerate the transition”, as explained by the president of the Belgian chemical company Solway, Ilham Kadri.
The “Inflation Reduction Act” (IRA) or US inflation reduction law, which offers funds and incentives to accelerate the transition to clean energy “has generated fears in Europe about a possible flight of investments”, so it should promote their competitiveness to avoid de-industrialization, Kadri has said.