HE Arifin Tasrif, Minister for Energy & Mineral Resources of Republic of Indonesia
Excellencies, guests
Money talks, they say. Well, right now, money is whispering when it comes to climate action. Yes, global climate finance flows – public and private, domestic and international – have been growing in volume. They reached USD 632 billion per year for 2019–2020. But we need an increase of at least 590 per cent in annual climate finance to get on track for the goals of the Paris Agreement.
Climate financing for developing countries also fell short of the goal of USD 100 billion per year by 2020. While we are getting closer to the goal, we need to get to the USD 100 billion as soon as possible. Financing for adaptation – which developing nations need desperately given the climate impacts already locked in – is particularly weak.
The picture is just as miserly for nature, which we need to back to end the triple planetary crisis of climate change, nature and biodiversity loss, and pollution and waste. Global investments that degrade nature exceed conservation efforts by USD 600-852 billion annually.
We need to turn this equation on its head. In fact, we need to turn the financial system on its head, shake its pockets and get the money to where it needs to go. Let’s consider the four key areas in which we can shake things up.
One, public investments must get bigger and more efficient.
We all know that public purses opened far wider when COVID-19 descended. Trillions of dollars poured out of these purses to deal with and recover from the pandemic. Funding for the climate crisis must hit similar levels.
Yet today, when the world is in an energy crisis caused by gas supply issues, the response is to secure replacement gas instead of switching to clean sources of energy that are not vulnerable to geo-political shocks. At the same time, governments are spending around half a trillion each year subsidizing fossil fuels.
Switching fossil fuel subsidies to renewable energy and energy efficiency is the way forward. Taking the transformation opportunities offered by global crises is the way forward. A well-designed carbon price to incentivize decarbonization and increase financing is the way forward.
Two, private finance must step up.
The public sector alone cannot finance transformation. Mobilizing the USD 3-6 trillion needed each year to transition to net-zero-emissions and climate-resilient economies by 2050 will need private finance to align with these efforts.
The UNEP Finance Initiative, which is celebrating its 30th anniversary, works with members to develop frameworks and partnerships that allow financial institutions to strategically align financial flows with sustainable, prosperous growth.
The finance initiative does this through three finance sector alliances on net-zero. The Net-Zero Asset Owners Alliance, whose membership spans over 75 institutional asset owners with over USD 11 trillion in assets. The Net Zero Banking Alliance, with 116 banks and USD 70 trillion in assets. And the Net-Zero Insurance Alliance, which has convened over 29 leading global and regional insurers from across the world.
Members of the three alliances follow established positions on phasing out portfolio exposure to coal, oil and gas assets. Members are expected to adopt such positions as their own or explain why they cannot. Basically, they are there to commit, not greenwash.
Three, the public and private sectors must work together on creating an enabling environment.
Close collaboration between policymakers, development banks, real economy and financial institutions would enable financial sectors to invest in segments that they would not be able to invest in otherwise.
For example, the Net-Zero Asset Owners Alliance is spearheading a push for blended finance, which uses public and philanthropic capital to improve the risk/return profiles of investment opportunities for the private sector. Through its September 2022 Call on Policymakers to support Scaling Blended Finance, the alliance provided suggestions on how public capital could be utilized more to ramp-up investments in emerging economies or innovative green technologies.
There are many other approaches that could work. The main barrier to large-scale private capital flows in emerging markets is typically a high level of country risk. For public resources to be effective in mobilizing private capital, they need to include significant de-risking and provision of finance at a facility level, rather than on a project-by-project basis.
Public investments can also go beyond government support of research and development and expand into the manufacturing and deployment of new technology.
Four, trade can and should support the decarbonization of economies.
International trade accounts for over 50 per cent of global GDP, so trade can play a crucial role in decarbonizing key sectors of our economy and building resilience to future shocks. According to the International Resource Panel, one-third of material resources extracted is linked to production for trade. Resource extraction and processing is a major contributor to emissions. So, a circular economy model where materials and commodities are reused and repurposed can slash emissions. Trade policy can promote the circular economy transition through standards in trade-related production and processing, with the support of digital technology on supply chains.
We can also look at reducing barriers to trade in low-carbon technologies, which are more prevalent than barriers to trade in fossil fuels. The rise of Regional Trade Agreements offers new opportunities for countries to cooperate and coordinate trade policies in support of environmentally sound and energy-efficient technologies.
Improving alignment and compatibility between climate finance and Aid for Trade can also help. Most Aid for Trade to least developed economies is targeted at the transportation, agriculture and energy sectors, which are big emitters. At the same time, many of the donors that provide mitigation and adaptation finance are also involved in trade-related assistance. This gives us room to manoeuvre.
We are initiatives in trade. Costa Rica, Fiji, New Zealand, Norway and Switzerland launched the concept of an Agreement on Climate Change, Trade and Sustainability at the WTO. In addition, around 20 WTO members are exploring a coalition of trade ministers on climate.
But greater cooperation on trade will be vital to meeting the Paris climate goals.
So, I said at the beginning, climate finance is still whispering. We need to make it roar. Through public and private means. Through trade. Through the UN system and multilateral development banks. Through every means necessary. This is how we turn around our societies and economies. How we hit net-zero. How we finally get humanity back to living in harmony with nature so that we can all live healthy, equitable and prosperous lives.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
