The year 2022 was a difficult one for the growing number of people living in food insecurity and energy poverty around the world, and the start of 2023 looks bleak.
Russia’s war against Ukraine, one of the world’s largest suppliers of grain and fertilizer raw materials, hardened food and energy supplywhich in turn helped stimulate inflation.
The drought, exacerbated in some places by warring groups blocking food aid, pushed parts of the Horn of Africa towards famine. Extreme weather disasters they have left trails of destruction with increasing costs on almost every continent. More countries found in debt trouble.
But beneath the surface of almost weekly bad news, significant changes are taking place that have the potential to create a more sustainable world, one in which humanity can tackle climate change, species extinction, and food and energy insecurity.
I’ve been involved in international sustainable development for most of my career and now I teach climate diplomacy. Here’s how two key systems driving the global economy, energy and finance, are starting to shift towards sustainability and what to expect in 2023.
Driving the growth of renewable energy
Russian President Vladimir Putin’s war on Ukraine has reverberated across Europe and spread to other countries that have long relied on the region’s natural gas. But while oil-producing countries and gas lobbyists advocate more drilling, investments in energy reflect an acceleration transition to cleaner energy.
Call it the Putin effect: Russia’s war is accelerate the global move away from fossil fuels.
In December, the International Energy Agency published two important reports that point to the future of renewable energy.
First, the IEA revised upwards its growth forecast for renewables by 30%. Now wait for the world install as much solar and wind power energy in the next five years as installed in the last 50 years.
The second report showed that energy use is more and more efficient worldwide, with an increase in efficiency of approximately 2% per year. As noted by energy analyst Kingsmill Bond from energy research group RMI, the two reports together suggest that fossil fuels demand may have peaked. While some low-income countries have been eager for deals to tap into their fossil fuel resources, the IEA warns that new fossil fuel production risks stagnating or becoming wasteful in the next 20 years.
The main obstacles to exponential growth in renewable energy, the IEA notes, are outdated energy policy frameworks, regulations and subsidies written at a time when energy systems, prices and public services were oriented towards fossil fuels.
The year 2023 will also see a greater focus on developing talent for building clean energy infrastructure. In the US, the recently approved Inflation Reduction Act and Bipartisan Infrastructure Act invest hundreds of billions of dollars in clean energy and technology. of Europe REPowerEU commitments it will also boost investment. However, Concerns About “Buy American” Rules within new US climate laws and an EU plan to launch a carbon border adjustment tax they are raising fears that nationalism in trade policy could harm the speed of green growth.
Fix international climate finance
The second system to pay attention to for reform in 2023 is that of international finance. It is also crucial to how low-income countries develop their energy systems, build resilience, and recover from climate disasters.
Rich nations have not moved the energy transition fast enough or provided enough support for emerging markets and developing countries to overcome inefficient fossil fuel power systems. The debt skyrockets in low-income countries, and climate change and disasters like the devastating floods in pakistan remove growth and add cost.
Barbados Prime Minister Mia Mottley brought together international financial institutions with think tanks and philanthropists push changes.
Countries like Mottley’s have been frustrated that the current international financial system, primarily the International Monetary Fund and multilateral development banks, including the World Bank, have not adapted to growing climate challenges.
Mottley’s Bridgetown Initiative proposes a new approach. It calls for countries’ vulnerability to be measured by climate impact and for funds to be made available on that basis. instead of income. It also urges development banks to take more risk to boost private investment in vulnerable countries, including climate debt swaps.
The Bridgetown Initiative also calls on countries ebb his IMF special drawing rights – a reserve available to IMF members – in a proposed fund that vulnerable countries could use to build resilience to climate change. a working group established by the G-20 he points out that the “easiest” trillion dollars to access for an urgent climate response is the one already in the system.
In early 2023, Mottley and French President Emmanuel Macron, along with others, will launch a process to examine the possible measures to improve the current system before the annual meetings of the World Bank and the IMF in April, and then at a June summit called by France.
Look to 2023 to see if this is the year the G-7 and G-20 rekindle their roles of global economic leadership. Its members are the largest owners of international financial institutions, and also the largest emitters of carbon dioxide on the planet. India will lead the G-20 in 2023, followed by Brazil in 2024. His leadership will be essential.
See the leadership of small nations in 2023
In 2023, expect to see small nations push more and more for global transformation, led by the V-20 – the finance ministers of the countries most vulnerable to climate change.
In addition to the Bridgetown Initiative, Barbados has suggested a way to raise new funds that works on the model of an oil spill damage fund at the International Maritime Organization. In the IMO fund, large oil importers pay and the fund pays in the event of a spill. Barbados supports create a similar background to help countries when a weather event costs more than 5% of a country’s GDP.
This model is potentially a way to pool money from a windfall tax on energy companies that saw their profits skyrocket in 2022 while billions of people around the world suffered from energy price inflation.
Finally, the revolutionary agreement on biodiversity reached in December 2022 offers further promise for 2023. Countries agreed to conserve 30% of the world’s biodiversity and restore 30% of the world’s degraded land. Funding, a $30 billion fund for 2030, has yet to be found, but the plan clarifies the task ahead and nature’s place in it. And we can expect 2023 to be a year in which signs of peace break out in our war against nature.
This article is republished from The conversation, an independent non-profit news site dedicated to sharing insights from academic experts. Written by: Rachel Kyte, Tufts University. If you found it interesting, you could Subscribe to our weekly newsletter.
Rachel Kyte does not work for, consult with, own shares in, or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond her academic position.