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GFANZ Fails to Deliver at COP26



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Carbon Tracker, the London Financial Analytics shop, told us about this in 2019. Maybe because Covid-19 intervened, we didn’t fully absorb it.

What does it mean that we have already financed 1.5֯ C of warming? In short, that the cumulative impact of the fossil fuel projects banks and investors have financed will be 1.5֯ C degrees of planetary warming. Said another way, we will have financed our way through our remaining 1.5֯ C carbon budget, if all of those projects are completed and operate through their expected lifetimes.

In fact, according to Carbon Tracker, somewhat more than 1.5֯ C of warming has been financed already. We’re already on the way to 2֯ C and beyond.

This means that if we are serious about keeping planetary warming to 1.5֯ C, we’ll need to close down some of these already-financed projects before their projected operational lifetimes are complete.

It also means we need to stop financing — right away — any additional new oil and gas projects because every bit of it will need to be rolled back too, which obviously becomes harder and harder to do in the real world.

Private sector financial players with assets totaling $130 trillion, who are beginning to acknowledge they are part of the problem and have a role in crafting a solution, came to COP26 en mass to sign a pledge that the former Governor of the Bank of England, Mark Carney, facilitated, called the Glasgow Financial Alliance for Net Zero (GFANZ). It commits banks and investors to decarbonize their portfolios by 2050.

Unfortunately, there are no near-term plans, deadlines or commitments to do anything real that were announced by the Alliance or any of its banker or investor members.

It seemed to cynical observers that this was an empty vessel designed to take pressure off private financial industry players, and delay any real action to some indeterminate future. Each signatory has two to three years to come up with a plan and there is no requirement that any members reduce the carbon embodied in their portfolios of loans and investments before 2050.

We know from a report called Banking On Climate Chaos that the world’s 60 largest commercial banks financed $3.8 trillion of fossil fuel development since the Paris Accords were agreed to at the end of 2015. This is about $750 billion of fossil fuel finance a year.

Another recent, related report says private equity has financed another $1.1 trillion of fossil fuels since 2010.

All of this suggests that an incredible amount of private finance has been racing to build out a massive pile of future carbon emissions with absolutely no attention to the brake pedal.

These are astonishing numbers, given the profile and importance of the Paris agreement to most economic sectors. It points up one of the major flaws of our planetary effort to stabilise atmospheric emissions: finance is not a party to the Paris Accords. (Neither is the fossil fuel sector.) They are fully outside the UNFCCC Convention and the Paris Accord, and apparently haven’t taken any of the climate science or the imperative to preserve the planet seriously. It’s a spectacular, tragic gap in the global climate governance system.

At COP this year, Wednesday 3 November was labeled Finance Day and the GFANZ Alliance was the featured item of the day.

Given the buildup, you’d have thought it was going to be the most far-reaching international finance agreement since Breton Woods. Before, during, and in the days following, headlines blazed with the message: ‘$130 Trillion of Private Finance Assets Agree to Fix Climate Change’.

In Glasgow, I wasn’t alone as I struggled to see anything at all in the fine print that looked like a contribution to stopping fossil fuel projects from being developed — the very thing the International Energy Agency said last March must happen if we’re to limit warming to 1.5֯ C.

Yet the trend line of bank finance for fossil fuels is rising not declining, and not a single big commercial bank has released a plan to stop financing new fossil fuels.

It’s striking that unlike any of other sectors implicated in speeding global warming, there is not a single one of the 60 major commercial banks that has staked out a leadership position on decarbonising.

On the other labelled days of COP, there were all kinds of interesting mash-ups of governments, private sector actors, and think tanks offering a web of creative announcements about their determination to set ambition on one thing or another. By contrast, on Private Finance Day, the one and only announcement was relating to GFANZ. Banks and investors didn’t even try to push out additional good ideas. Everyone covered themselves in the GFANZ penumbra and then went quiet.

It’s reported by insiders that Mark Carney expected specific institutions to announce credible plans in advance of Glasgow and that he was banking on a wave of additional specific plan announcements by banks and investors that would start a cascade of serious commitments in the sector. He didn’t get a single meaningful one.

Some in Glasgow speculated that GFANZ is actually a psychological deterrent to bank leadership because these banks and large investors are all safely tucked inside the supportive GFANZ cocoon, having ongoing really interesting conversations about a variety of very technical issues related to difficult-to-abate economic sectors like steel, cement, shipping, and aviation, and that it’s actually making it harder for any individual institution to break away in a leadership role. How ironic.

One observer in Glasgow likened it to a giant mob of bankers in the ballroom of the titanic, cocktails in hand, band playing, having fascinating conversations, but doing nothing to get up the urgency to get to the life rafts.

More interesting to anyone interested in actually finding ways to cut off financing for fossil fuels were several other commitments that occurred at or just before COP, including China’s decision to stop all overseas public finance for coal; the G20 announcement the weekend before COP that its members would similarly forego public overseas coal finance; the agreement by more than 20 nations at COP to stop all overseas development finance for all fossil fuel projects; and a commitment by 12 governments including Denmark, Costa Rica, France, Sweden, California, Quebec, Ireland, Greenland, Wales, Portugal, New Zealand, and Italy that they will phase out fossil fuels altogether.

These announcements were preceded by the 26 October report that 1,500 investment institutions overseeing a combined $39 trillion of managed assets had undertaken some form of fossil fuel divestment decision for their portfolios.

To their credit, multiple banks participated in a very laudable set of forest conservation commitments by committing to stop financing deforestation. It was unclear how that would happen, but it was striking that these banks agreed to stop doing something specifically bad.

The GFANZ announcement contained none of that. There was general agreement to be available for increased clean energy finance, and yes there is growing important support for clean energy finance worldwide, but it won’t matter much if these banks continue to extravagantly finance new fossil fuel development that takes us all farther and farther past the 1.5֯ C threshold.

Banks and investors have to do better. The stark separation between their chest beating but surprisingly empty GFANZ announcement and the reality of continuing to pour oceans of new dollars into new carbon budget-busting fossil fuels is immoral and unacceptable.

Just think what it would mean if financial institutions committed to ending finance for new fossil fuel development. It would be one of the most powerful levers anyone on the planet could pull to fix the climate problem.

Finance is uniquely positioned to save the planet. Choosing planet over profits though has not yet become a priority despite the science and the everyday reality showing itself that the climate is already changing in terrifying ways.

As one senior banker said to me not long ago: “it’s not our role to fix climate change; it’s the role of government.”

To the children and grandchildren of bankers and investors, please immediately insist that your fathers and grandfathers — and they are mostly men — immediately take responsibility for their actions and pull out of new fossil fuel exploration and development.

They should do it for you — their children and grandchildren — and for everyone else too.

Michael Northrop is director of the Sustainable Development Program at the Rockefeller Brothers Fund.

Courtesy: Environmental Finance

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Here’s what Russia can offer Africa




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By  Ivan Timofeev

What kind of world do we live in today? We are currently in transition between the unipolar system that existed for a brief moment after the end of the Cold War and the new multipolar reality on the horizon. Russia’s diplomatic service is among the main proponents of this course.

If we take a closer look at what is happening around us, we will see that the multipolar world in many ways is already taking shape. And the key to explaining how it is manifesting itself is to look at the concept from the perspective of different spheres, such as general life and the functioning of states and societies.

It is not just a question of security. There are also economic, demographic and investment issues. In discussions with our foreign colleagues, especially Westerners, I often hear skeptical voices telling me that Africa cannot be considered a pole of the world order, even in the long term.

After all, we are accustomed to associating this status with nuclear powers and large economies.  However, Africa is rapidly becoming such a pole. If we look at it from the perspective of the multidimensionality and diversity of the region, we see huge demographic potential and enormous prospects for economic growth. This is visible to experienced observers: Africanists know and study the region’s trends. But what has gone unnoticed by the general public is that African countries are slowly but surely addressing quality of life issues and building sustainable and highly functional state institutions.

In terms of economic growth, demography and stability, there is no doubt that the African continent and individual countries are rapidly moving towards claiming their own significant place in the new multipolar world.

It is no secret that relations between Russia and the West are currently in a deep crisis. When we discuss our relations with the countries of the African continent, this issue inevitably comes up. Africans often learn about us through Western intermediaries. And, of course, this narrative has deteriorated considerably over the past year and a half.

Yes, there are also the problems of economic sanctions, which frighten entrepreneurs and  make financial transactions more difficult. But we see another paradox. When Russia’s relations with the West were improving, our presence in Africa and our interest in the region were declining. In the 1990s and early 2000s, objectively speaking, we lost much of the advantages we had in our relations with the countries of the African continent.

Conversely, as our relations with the West declined, our interest in the continent increased. I wouldn’t say there’s any hard and fast correlation here, it’s just the way things are. Nevertheless, the crisis in relations with the West stimulates our movement to the South and to the East. The development of Russia’s relations with the countries of the African continent is becoming one of the priorities of the government. This means it will also attract the activity of civil society and business.

What can we offer Africa? Let us think of foreign policy as part of an investment portfolio. In an investment portfolio we can have stocks, bonds, currency. But every investment portfolio has some kind of insurance asset. It can be gold, it can be real estate, it can be a very reliable non-combustible asset. So Russia for African countries in their foreign policy investment portfolio is exactly that insurance asset. True, such an asset usually does not occupy a dominant position in the portfolio, but in the event of a crisis, it’s the asset that can save the investor.

This is the answer in a word: Russia can offer Africa sovereignty. I am talking about independent capabilities in the field of information security, artificial intelligence, military-technical cooperation and in the field of green technologies.

Russia is not asking for anything in return for this sovereignty. If we take the American discourse on democracy, we see that this has its own price. The democratic facade promoted by our Western partners becomes an object of “political hacking.” In other words, Russia is just sharing what it has learned with its friends on the African continent.

Of course, we have a lot of homework to do ourselves. This includes raising the standard of our African studies. We have brilliant schools such as RUDN University (Patrice Lumumba Peoples’ Friendship University of Russia), the Institute of African Studies, MGIMO, and the St Petersburg School of African Studies. But in the conditions of our turn to the South, there should be dozens of such schools, not just a few.

There is also work to be done in terms of the investment climate, comfortable education in Russia for students from Africa, and more flexible business opportunities.

Ivan Timofeev is RIAC Director of Programs, RIAC Member, Head of “Contemporary State” program at Valdai Discussion Club, RIAC member.

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Libya: What does the Future Hold?




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The future of Libya is one of economic renewal and diversification. With political stability comes the promise of investment and intra-African trade.

Internal conflict has dogged Libya’s economy since the first civil war in 2011, triggered by the Arab Spring. And while recent years have seen the cultivation of hard-fought stability, no final settlement has been achieved. There are still multiple factions still vying to govern Libya. Yet, all seem interested in establishing peace and reinvesting in infrastructure as well as recovering from the Coronavirus pandemic.

Furthermore, as elections approach, all parties are willing to accept democracy, ratified by an external source. Certainly, the recent conflicts that have arisen in Libya have been comparatively minor and are usually solved in hours and days instead of months, with government officials arriving on the scene to facilitate open communication. Despite the difference in viewpoints, all parties are therefore committed to fostering a period of growth and prosperity, founded on democracy and peace.

Responding to global challenges

But Libya has also had to contend with evolving global challenges, such as the current war in Ukraine. The sanctions placed on Russia have impacted Libya’s agricultural sectors, resulting in a 10 to 20% shortfall in wheat and seed imports. This has been somewhat mitigated by both replacement imports of grain, minimising disruption, and by an increase in oil revenue. While Libya’s oil export capabilities remain below their peak, oil export prices have almost doubled since the beginning of the conflict, boosting revenue. This has allowed Libya to bridge the revenue gap it was experiencing within the oil sector. Meanwhile, the relative fiscal freedom afforded by the additional income has allowed necessary investments to be made into the country’s infrastructure, which is further aiding recovery.

Can Libya afford to rely on oil alone?

However, some headwinds are approaching. Europe is focusing on sustainable development and using renewable energy sources, in a bid to decrease carbon emissions and fossil fuel reliance, slowly reducing its use of hydrocarbons in favour of green energy. Given that the oil sector currently accounts for around 98% of Libyan Government revenues , decreasing European reliance on fossil fuels in the coming decades could pose a significant threat to Libya’s recovery.

Libya as a conduit for trade

Europe is not the only market for Libya’s oil, however. The country’s geographic and political links to a rapidly developing Africa mean that there will be demand for oil from the emerging and industrialising economies to the south. This trade with Africa is built on historically positive relationships, helped in part by Libya’s previous commitment to promoting African unity.

 Libya also has the potential to forge a key role in Arab-African trade, due to its membership to the Greater Arab Free Trade Area (GAFTA). Although the country is not a member of the African Continental Free Trade Area (AfCFTA), it offers a promising link between Africa and the Middle East. By maintaining positive relationships with both African and Middle Eastern nations, Libya can support and benefit from AfCFTA initiatives.

One such initiative is the drive to formalise undocumented cross-border trade, which is estimated by the African Import Export Bank at between 15% to 40% of all African trade . By formalising intracontinental trade, Libya can then support African nations in their bid to be viewed as viable trading partners with the rest of the globe, as well as reducing smuggling and stabilising trade routes. And by improving trade links between Africa and the Middle East, Libya can also act as a conduit for African and European trade, in part due to its entrepôt location.

Looking ahead

That said, a key focus for Libya’s future will be diversifying away from fossil fuels. Of course, oil will remain a staple for years to come. But the future cannot be ignored, and Libya needs to diversify. One sector on the rise is tourism, utilising its extensive coastline and rich cultural history. Further diversification is also possible via both agriculture and solar power. Infrastructure development will be important for both, with an urgent need to upgrade roads, railways, and ports.

As peace and stability become embedded, however, Libya can attract investment, particularly from Europe. These investments will need to be facilitated by specialist banks who will continue to support the Libyan economy as it develops. Indeed, FDI and diversification are the route to prolonged and sustainable growth in Libya. And in this respect, the prospects are promising.

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Europe’s Largest Gelatin Factory Opened




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Industry and Technology Minister Mustafa Varank inaugurated the facility of “Halavet Gida”, the largest gelatin production capacity of Europe, in Gerede OSB. Minister Varank noted that with the new facility of Halavet Gida, Turkey will have a much larger share of world exports, and stated that they expect the factory’s 2021 turnover to exceed 80 million dollars and its total employment to over 180. Read more>>

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