Climate Change: 5 Actions to Turn the Tide in the next 3 Years

On the heels of Earth Day, one scientific observation gives new hope: according to the Intergovernmental Panel on Climate Change, it is still possible to limit global warming to 1.5 °C - provided we reduce global greenhouse gas emissions no later than three years from now. A challenge that calls for a host of actions on all fronts: here are five of them.

REDUCE FOSSIL FUEL FINANCE

In their sixth report, completed on 4 April 2022, IPCC scientists call for a "substantial" reduction in fossil fuel consumption. In the firing line: financing for the gas, oil and coal sectors, which reached some $742 billion (€684 billion) in 2021 via more than 60 of the largest international banks, according to the Banking on Climate Chaos report published by 7 NGOs.

AFD has made a growing number of commitments to stop this financing. In November 2021, at COP26 in Glasgow, AFD Group committed to no longer finance fossil fuels (coal, oil, gas) as of 2022. This was already the case for all projects for coal-based power generation (since 2013), oil-fired and diesel power plants (excluding hybridization), as well as exploration, generation and transmission projects for the three main fossil fuels.

BOOST INVESTMENT IN RENEWABLE ENERGIES

Turning away from fossil fuels requires scaling up low-carbon energy sources: renewable energies, such as solar and wind energy. The IPCC experts note that these technologies have made huge strides in recent years and are becoming "increasingly viable," to the extent that they now even compete economically with coal, gas and oil in a number of regions.

Through its financing (loans, grants, guarantees), AFD Group has been supporting the development of renewable energies in developing countries for many years. For example, its subsidiary Proparco has supported d.light, a company that works to make domestic solar systems accessible to low-income clients in Kenya, Nigeria, Tanzania and Uganda. In the Dominican Republic, it has contributed to financing a 52 MW wind farm, which has reduced emissions by 142,000 tons CO2 equivalent per year since 2019.

Further reading: [Feature Report] Forests: As Vital as they are Vulnerable

LIMIT THE CONSUMPTION OF ENERGY AND RESOURCES

Another major challenge identified by the IPCC is the adaptation of lifestyles to the climate crisis, in other words, the management of energy demand, natural resources and food products. Various drivers can be used, such as improving the energy efficiency of buildings and equipment, developing low-carbon modes of transport, reducing our consumption through new habits and reducing food waste.

"The greatest potential for mitigation [of the impact on the climate] in new buildings is to be found in developing countries," says the IPCC in its report. AFD Group's financing strategy is along these lines, in particular through the financial support to the Program for Energy Efficiency in Buildings (PEEB) implemented in several countries in the Maghreb and Middle East.

In Addis Ababa (Ethiopia), Agence Française de Développement has helped the municipality improve its public transport services, with the construction of the first Bus Rapid Transit line (dedicated lanes, bus shelters, traffic management system) with a capacity to carry 5,400 passengers per hour per direction. In Turkey, the Golden Horn tramway construction site, in the historical center of Istanbul, has benefited from €93 million of financing.

PROTECT ECOSYSTEMS

Forests, oceans, agricultural land, wetlands and other ecosystems play a crucial role in climate regulation, by absorbing a significant proportion of our CO2 emissions. Unfortunately, these natural areas suffer serious damage, which reduces their capacity to store carbon and protect people from extreme climate events. Their alarming level of degradation today makes them fragile allies in the fight against climate change.

Their protection has thus become a priority. Especially as the achievement of the Paris Agreement objectives of limiting the increase in average temperatures to 2 °C, or even 1.5 °C, by 2100 is also essential for the preservation of the biological diversity of these ecosystems and their functions.

Further reading: 5 Reasons to (Finally) Take Care of the Oceans

To limit the degradation of nature and restore ecosystems, AFD Group has committed to ensure that by 2025 at least 30% of its climate finance also has benefits for biodiversity. This objective was achieved in 2021 with €2 billion of climate finance with benefits for nature, i.e. 33%.

For example, the Ghabati Hayati program, approved in 2021 with €103 million, is supporting the sustainable management of forests and national parks in Morocco. It is contributing to the country's low-carbon, resilient and inclusive transition, as well as to the protection and preservation of its biodiversity.

PLANNING THE TRANSITION

Achieving the transition towards low-carbon societies requires organizing action at various levels and bringing them together in a coherent strategy. This is what AFD Group is doing in a number of countries.

Several financial tools are being used. The 2050 Facility is assisting some 30 partner countries (such as Algeria, Brazil and Cambodia) with the preparation and implementation of their long-term strategies for low-carbon and resilient development. For example, through a technical cooperation program led by Expertise France, the Facility has assisted Colombia with the formulation of its climate strategy and its submission to the United Nations Framework Convention on Climate Change (UNFCCC) in 2021. It has also financed the Gemmes macro-economic modelling project which has already measured the socio-economic impacts of climate change in Vietnam.

Further reading: Impact of Climate Change on Lives and Livelihoods in Vietnam

Policy-based loans are another essential tool to support the formulation and implementation of public action targeting low-carbon development trajectories. They comprise three components: budget support, a policy dialogue backed by a matrix of indicators and technical cooperation. This type of loan allowed extensive cooperation between Turkey and France on the issue of forest adaptation to the climate challenges between 2019 and 2021. Last year, AFD allocated €1.6 billion to budget funding for public policies for the climate.