Norwegian Committee Proposes Guarantee Scheme to Boost Climate Investments in Developing Countries

It will cost (almost) nothing, the committee believes. – It is absolutely crucial, says one of the world’s leading climate scientists, Johan Rockström.

– It would have been different if this was just a cost for Norway, because why should Norway take the heavy load? But this is actually something completely different, says Johan Rockström.

Today, an expert committee presents a report on how Norway can take the lead in the fight against climate change. The key is to create a guarantee scheme that makes it easier to put money into climate projects, according to the committee.

One of the world’s most renowned climate scientists hopes Norway will give it a try.

– I think it will be absolutely decisive, says Rockström.

Global greenhouse gas emissions continue to rise. We have the solutions to turn them around, says Rockström.

– There is no doubt that we are moving away from oil. We are going to reach a fossil-free economy, we are already on our way there today. The challenge is that it happens too late. We lose the match.

He heads the Potsdam Institute for Climate Impact Research in Germany and has given many lectures on why global warming must be stabilized 1,5 grader.

To reach that goal, we must cut emissions globally by six to seven percent every single yearsays Rockström.

It is beyond much. More than the dramatic drop in emissions during the corona pandemic, the financial crisis in 2008 and the dissolution of the Soviet Union.

The whole world must switch from fossil energy to green electricity to make it happen. But in many developing countries it is still more expensive to invest in wind and solar than the climate-worst coal.

Although Africa has 60 percent of the world’s potential for solar power, only 0.4 percent is used investments in solar power your.

The solutions exist, and the money exists. Still, the money doesn’t go there.

The banks demand a much higher interest rate on loans for projects in developing countries, because they believe the risk of loss is greater. Thus, it does not occur climate financeclimate financeMoney that goes from rich countries to poorer countries, such as aid, loans or investments. The money goes to emission cuts, adaptation to climate change and technology..

– It must be made cheaper and easier for the weaker economies to invest in a solar park or wind power, says Rockström.

– How much do we know about what is needed to achieve the necessary emission cuts?

– We have today scalable solutionsscalable solutionsSolutions that work and are ready to be expanded on a large scale. which takes us quite a way. We do not have all the solutions to reach a completely emissions-free world economy, but we definitely have the solutions to halve emissions by 2030.

Guarantees

In January, the six largest humanitarian organizations in Norway set up an expert committee to work on the issue. The committee is chaired by former climate minister Vidar Helgesen, and today they present their proposals.

– Those who believe that we should do less in Norway should at least listen to this, says Helgesen.

The committee has several proposals.

The most important thing is not about giving or lending money, but about reducing risk.

Norway can take the lead and create a guarantee scheme for green projects in developing countries. It can be compared to insurance, which covers the banks’ losses if a project goes wrong.

– In order to get these investments, you must have a guarantee scheme, which means that the risk is reduced with public money. There is no international instrument for this today, and there is no one better placed than Norway to take that role, says Helgesen.

In the vast majority of cases, there will be no need for insurance.

– This means that Norway will very rarely have to pay anything.

But it takes away some of the fear of loss at the banks, which can then grant loans at the same interest rate as projects in the industrialized countries.

– What is very good is that Norway can stand behind a massive, historic mobilization. At the same time, the losses that have to be covered will be insignificant for us, says Helgesen.

The committee proposes to use the unusually high income from oil and gas for this guarantee scheme. Nor will the government need to draw from the oil fund to make this happen.

It can be done within the safe framework of the code of conduct, according to Helgesen.

Over time, the state has not used the full potential within the framework of the action rulethe action ruleGuidelines for how much of the Government’s pension fund abroad, often called the oil fund, can be used in the national budget each year.. Because Norway now earns extremely well from oil and gas, the guideline of three percent has has become too much money for us to spend it.

– We see that we will have more money within the action rule than we can manage to spend. Domestically, we cannot use this money without putting too much pressure on the economy, says Helgesen.

The former climate minister is aware that some will be adamant when the committee proposes that Norway should, for all practical purposes, try to save the world.

– Norway must not do this alone. But I know that many other countries’ leaders expect Norway to do more.

It solves another problem, says Helgesen, namely Norway’s increasingly poor reputation.

Read the interview with Peace Prize-nominated activist, Vanessa Nakate: – Norway, you are hypocrites.

Rockström: – Urgent need

– There is an urgent need to reduce the risk of investments in developing countries. The risk minimization that is now being put forward is absolutely crucial, says Rockstrøm.

The result at the other end of this mobilization, with an increasingly fossil-free society, will produce a better society than what we have today, the researcher claims.

– We have more and more evidence that it pays off financially, creates new jobs and creates positive effects for society.

– Shouldn’t the transition to a climate-friendly future be something painful and difficult?

– No not at all. There is no longer any debate about it. What confuses the picture a bit is that the transition phase itself has costs and losses as well. It requires a lot when we are in the middle of it, but not when we come out the other side.