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NAXOS, GREECE, Nov 10 (Reuters Breakingviews) - Donald Trump will be a ghost at the annual United Nations climate conference that starts this week in Brazil. The U.S. president’s campaign in favour of fossil fuels and against global action to prevent climate change will store up trouble for future generations. But all is not gloom. Technological, geopolitical, economic and financial trends are far stronger. No senior U.S. official will be attending the conference known as COP30. Trump has also given notice that America will quit the Paris climate agreement for the second time. That’s not all. His administration has cut green incentives while pushing hydrocarbon projects at home. It has also slashed climate aid and pulled out of plans to support South Africa, Vietnam and Indonesia with their clean energy transitions. Sign up here. Meanwhile, the United States has bullied, opens new tab the rest of the world into abandoning a plan to tax carbon emissions from shipping. The White House is also pushing, opens new tab allies to buy its gas. The Net-Zero Banking Alliance, a coalition of lenders, disbanded last month under political pressure. Trump even twisted the words, opens new tab of Bill Gates, the tech entrepreneur, to declare, opens new tab: “I (WE!) just won the War on the Climate Change Hoax”. Not so fast. The president is just one player in the battle over climate change, and not even the most powerful. TECH-GEOPOLITICAL NEXUS While Washington is pushing old dirty technologies, Beijing is championing new clean ones. This is partly for economic reasons. China dominates the production of solar panels, batteries and electric vehicles. It is deploying these in vast quantities at home and pumping them out abroad to sustain its growth. The People’s Republic also believes that, by focussing on clean technologies, it can close the innovation gap with the United States. What is more, its reliance on fossil fuel imports creates a strategic vulnerability. Renewables give it energy security. Other parts of the world that depend on imported hydrocarbons are thinking the same way. The European Union has learnt the folly of relying on Russian gas. Meanwhile, India, Africa and other sunbelt regions want to use a natural resource that shines at home rather than spend scarce foreign exchange to buy energy from abroad. The world is experiencing what Ember, a climate think tank, calls an “electrotech revolution, opens new tab”. Subsidies and government policies kickstarted solar power, wind power and batteries. But there is now a virtuous circle: as prices fall, the world rolls out clean technology, leading to economies of scale and faster innovation, further driving down costs and encouraging yet quicker deployment. Many emerging countries now see the clean transition less as an impediment to their development than as a way to drive it forward. Parts of the world that have historically been energy poor want to leapfrog directly to the new technologies, harnessing abundant cheap non-polluting electricity. The question is how to get enough upfront capital - for solar panels, wind farms, high voltage transmission lines, electricity storage and the like. The sums are huge. COP30 will consider a “roadmap, opens new tab” from Brazil and Azerbaijan, which hosted last year’s U.N. climate conference, setting out how to channel $1.3 trillion a year to emerging and developing countries to fund the transition. Rich countries will at best provide a fraction of the cash. It is not just the United States which is cutting aid. Priorities such as defence are competing for scarce resources elsewhere. FINANCIAL INNOVATION Still, there are reasons for optimism. One is the shift of mindset in many emerging economies. Countries such as Brazil, Egypt and Bangladesh are actively seeking private investment rather than waiting for richer countries to tell them what to do in return for handouts from public funds. The central idea is to develop “country platforms, opens new tab”, which provide coherent plans to drive economic growth with low-carbon technology. By taking a joined-up approach to government policy, they aim to develop investment pipelines that attract capital at scale. Public funds are still needed to accelerate this process. But the limited money needs to make a bigger impact. This is where financial innovation comes in. Work in recent years over how to maximise the impact of multilateral development banks (MDBs), such as the World Bank, is now bearing fruit. For example, the Inter-American Development Bank is planning, opens new tab to buy up loans from commercial banks, securitise them and sell them on to institutional investors. The condition is that the banks reinvest the funds in clean technology projects in developing countries. The IDB thinks the pool for such loans could be $3 trillion globally. The MDBs, which are run conservatively, also probably have more firepower than previously thought. S&P Global said, opens new tab last month that the institutions’ status as preferred creditors means they can stretch their balance sheets and still keep their top-notch credit ratings. They may have $600 billion, opens new tab-plus extra lending capacity in total. As a result, they can do a lot more before they have to raise additional capital - something Trump could in most cases veto. Private funds will also probably flow more freely with tweaks to global financial plumbing. The new roadmap calls on regulators such as the Financial Stability Board to examine if their rules account for climate risks adequately or impede investment in low-carbon projects in poorer countries. Governments of emerging and developing economies can also tax carbon emissions to drive the clean tech transition. This is appealing given tight budgets. Brazil, which is starting its own carbon market, is pushing, opens new tab the idea with other countries. Much has been said about the world missing, opens new tab a goal of limiting global warming to 1.5 degrees centigrade above pre-industrial levels. What has received less attention is the latest U.N. projection, opens new tab that temperatures will rise 2.3-2.5 degrees centigrade, much lower than the 6 degrees scientists forecast, opens new tab only 16 years ago. What is more, this is not the last word on the topic. Despite Trump’s efforts, technological and geopolitical forces mean there is scope to do even better in coming years. Follow @Hugodixon, opens new tab on X For more insights like these, click here, opens new tab to try Breakingviews for free. Editing by Peter Thal Larsen; Production by Maya Nandhini Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Hugo Dixon is Commentator-at-Large for Reuters. He was the founding chair and editor-in-chief of Breakingviews. Before he set up Breakingviews, he was editor of the Financial Times’ Lex Column. After Thomson Reuters acquired Breakingviews, Hugo founded InFacts, a journalistic enterprise making the fact-based case against Brexit. He was also one of the founders of the People’s Vote which campaigned for a new referendum on whether Britain should leave the EU. He was one of the initiators of the G7’s “partnership for global growth and infrastructure”, a $600 billion plan to help the Global South accelerate its transition to net zero. He is now advocating a $300 billion “reparation loan” for Ukraine, under which Moscow’s assets would be lent to Kyiv and Russia would only get them back if it paid war damages. He is also a philosopher, with a research focus on meaningful lives.
