NOVEMBER 30, 2022

Good morning! Welcome back after last week’s break as we recognized Thanksgiving here in the U.S.

Drawing on her on-the-ground reporting from COP27 in Egypt, Anca gives us the lay of the land on a topic we’ll be covering more in addition to our overarching focus on climate mitigation: Adapting to our warming world.

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Send your energy photos, story tips and more to news@ciphernews.com or reach me directly at amy@ciphernews.com.

As the world bakes, developing world scrambles to adapt

BY: ANCA GURZU

The world is not cutting emissions fast enough to slow climate change, leaving everyone—but especially developing nations—scrambling to adapt to a hotter planet and its extreme-weather consequences.

Low-income countries are the most vulnerable to the effects of a changing climate, yet they have far less funding and far fewer tools to adapt to extreme weather compared to higher income nations. 

Efforts on climate adaptation—the process of adjusting to the effects of current and future warming—are gaining momentum as increasing catastrophic floods and wildfires underscore the urgency of climate-proofing entire economies. But adaptation still does not receive nearly as much attention as mitigation efforts, experts say.

Climate adaptation faces three unique challenges: progress is hard to measure, public and private investments alike are limited and ensuring projects are locally led can be tricky. 

“Adaptation is not like mitigation where we need to reduce emissions and we have a target,” said Rachel Simon, international climate finance policy expert at Climate Action Network Europe, a coalition of climate-oriented nonprofits. “Adaptation is difficult to quantify. It’s about building resilience.” 

Climate-fueled extreme weather got top billing at this year’s annual United Nations conference, which concluded earlier this month in Sharm el-Sheikh, Egypt. World leaders agreed to create the first-ever loss and damage fund wherein richer countries pay developing countries to respond to extreme weather events they’re unable to adapt to.

While the announcement shows the increasing awareness of the effects of climate change, such a fund does not replace the financing developing countries need to continuously adapt to future warming impacts, leaders from developing countries and experts say. 

Negotiators at the UN conference, known as COP27, inched forward on other adaptation efforts, including establishing the contours of an adaptation goal that was announced under the 2015 Paris Agreement. 

Last year at COP26 in Glasgow, Scotland, developed countries agreed to double adaptation finance from 2019 levels to reach $40 billion by 2025. The pledge is part of high-income countries’ wider (and yet unmet) promise to channel $100 billion in climate finance per year to developing countries to help them tackle the effects of climate change.

In 2020, developed countries mobilized only $83.3 billion out of the promised $100 billion and only $28.6 billion went towards adaptation.

Climate adaptation in developing nations alone will cost between $160 billion and $340 billion each year by 2030, the UN estimated in a report published this month. 

“The adaptation finance that is available today is nowhere near the adaptation finance needs—and that gap is growing,” Mikko Ollikainen, the head of the Adaptation Fund, told Cipher in an interview on the sidelines of COP27.   

The Adaptation Fund is a UN-backed investment fund that since 2010 has committed $998 million for climate change adaptation and resilience through 139 projects in developing countries. It received additional pledges worth $230 million in Egypt, including from the United States, which plans to double its contribution from $50 to $100 million.  

The Fund only awards a maximum of $10 million per project in the form of grants. Yet it stands out for pioneering the “direct access” method, giving countries full ownership of adaptation projects from planning through implementation, with an external monitoring system.

“We are supporting the most vulnerable communities in developing countries, typically in situations where it's not possible to easily mobilize private sector investment or even loan-based funding,” Ollikainen said. 

In addition to Ollikainen’s group, adaptation funding flows through the U.N. Green Climate Fund, multilateral development banks, bilateral channels, or other funds. These all contribute to the overall climate finance goal of $100 billion.

The public sector provided nearly all adaptation funding in 2019 and 2020 (98%), while “data on adaptation finance from the private sector is still largely missing,” according to the Climate Policy Initiative, a nonprofit research group in California. 

Profits are less obvious when it comes to adaptation projects, making them less appealing for private investors. 

“It’s much easier to get the private sector to invest in [a] wind or solar energy farm than it is into flood-proofing a bridge,” Simon said. 

What’s more, adaptation projects are not one-size-fits-all solutions. 

“In mitigation, you can pretty much replicate functioning solutions across the globe,” Ollikainen said. In adaptation, climate impacts, socioeconomic and cultures are all different: “It doesn’t work if it’s not really fit for that local setting.”

Large institutional investors and other capital providers still need to start factoring in future climate risks, but companies with operations in developing countries are beginning to understand the financial importance of investing in climate adaptation, Nisha Krishnan, climate resilience director with the World Research Institute, Africa, told Cipher in Sharm el-Sheikh. 

“If they don’t invest in the resilience of their smallholder farmer where they source their cacao or water, they’re not going to have a business,” she said.

Lunchtime Reads and Hot Takes

Junk Carbon Offsets Are What Make These Big Companies ‘Carbon Neutral’ — Bloomberg (paywall) 

Amy’s take: Must-read reporting on carbon offsets. Plus, remember when I said in our last Lunchtime Reads the Delta CEO dodged my questions on this topic in 2020? Here’s why! Click to see how big a circle Delta has for its junk offsets.

Beyond Meat’s Very Real Problems: Slumping Sausages, Mounting Losses — The Wall Street Journal (paywall)

Amy’s take: Important story here. Challenges in these kinds of consumer-facing climate tech companies are likelier easier to see than in those less so. 

Europe's south offers a warm welcome to energy migrants — Reuters

Anca’s take: Fascinating story! Work off a sunny Spanish island and avoid winter and high energy bills at home? Where’s my bag?

Energy transition and crisis drive growth in specialist courses — Financial Times

Anca’s take: This is also very cool—and exactly what needs to happen!

Can Big Tech’s layoffs help mitigate climate change? — The Washington Post

Amy’s take: I wonder if climate tech firms will ever become known for having big paychecks and good benefits in the same way traditional tech firms. 

Big Oil joins farmers, biofuel groups to tout more ethanol in U.S. fuel — Reuters

Amy’s take: Big Oil probably likes internal combustion engines with oil and ethanol more than electric cars with no oil. 

From nuclear power to bamboo: The climate solutions at COP27 — The Washington Post

Amy’s take: Nuclear power used to be shunned at the annual UN climate conference. Now it’s mentioned in articles as just another climate solution discussed at COP27. 

Arizona approves massive transmission line — E&E News (paywall) 

Amy’s take: A rare example where I want the story to be longer. What was the secret sauce that got this project approved while others have languished? Though this still took more than a decade.

Race to Secure Gas for Europe’s Future Winters Has Already Begun — Wall Street Journal (paywall) 

Anca’s take: This story comes with a cool explanatory video and nice images, which can be useful to better understand the tight LNG market.

Meet the ‘Closer’ Who Finds the Right Words When Climate Talks Hit a Wall — The New York Times

Amy’s take: I love the kicker quote, and the Holocaust survivor story is powerful.  

Why famine-hit Somalia didn’t get climate aid: It has no coal — E&E News (paywall)

Amy’s take: This is a maddeningly frustrating story. 

EU plans subsidy war chest as industry faces ‘existential’ threat from US —POLITICO

Anca’s take: As celebrated as the Inflation Reduction Act was in the U.S., the law risks alienating one of America’s main trading partners, which is rushing to keep up with all the subsidies.

No one knows what “nature-based solutions” are — Vox

Amy’s take: It’s impressive to write something that is both highly technical and vague. 

Biden Has ‘Almost Guaranteed’ Hydrogen’s Future, Macquarie Says — Bloomberg (paywall)

Amy's take: Unlike wind and solar, whose future is being expanded and accelerated because of new U.S. laws, clean hydrogen's future is being literally created. 

More of what we’re reading:

• Egypt closes $1.1 bln renewable power deals with AMEA Power - cabinet — Reuters

• EU’s proposed carbon removal rules open to greenwashing, say experts — Financial Times

• Startups Look for Ways to Bring Down the Cost of Green Hydrogen — The Wall Street Journal (paywall)

• GOP’s House Majority Complicates Podesta’s Climate Spending Role — Bloomberg

• 2 companies plan to build massive U.S. solar factories — E&E News (paywall) 

Climate goals rising in countries that use the most coal

Source: International Energy Agency. 

BY: ANCA GURZU

The overwhelming majority of global coal consumption occurs in countries that have, in some way or another, pledged to limit or phase out their reliance on the fuel, according to a report out this month from the International Energy Agency.

The finding is both a reflection of how challenging it will be to ditch this polluting fuel and a tentative sign of hope.

“If nothing is done, emissions from existing coal assets would, by themselves, tip the world across the 1.5°C limit,” the report states, referring to an increasingly difficult goal among world leaders to limit Earth’s temperature rise within this century.

An increasing number of countries have made net-zero emissions pledges or adopted policies to reduce coal use in the power sector over the last decade.

As of July 2022, 75 countries had agreed to phase out coal or to not develop new unabated coal power plants that don’t have technology installed to capture the emitted carbon dioxide, which is costly and not widely commercially available. Collectively, these 75 countries account for 20% of current coal‐fired generation, the report states.

Another 16 countries have announced net-zero emissions targets without any coal-specific targets. To meet those targets, many will need to phase out unabated coal.

Together, these 91 countries account for almost 100% of coal-fired generation today, including the top-five coal users in the world: China, India, the United States, Japan and South Africa.

AND FINALLY...

Windy Spain

Cipher reader and London-based climate journalist Xiaoying You took this picture of wind turbines in the Spanish countryside from the window of a high-speed train traveling from Barcelona to Madrid in September. Last year, wind was the country’s leading source of electricity.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.