HomeWorld NewsHow Do You Finance Climate Projects in a Currency Crisis?

How Do You Finance Climate Projects in a Currency Crisis?

  • November 16, 2022
  • Posted by: Bastion team
  • Category: World News
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Delegates at the United Nations COP27 climate conference this month have been seeking to understand why the world is failing to raise the cash needed for emerging countries to prepare for climate change. The answers are visible all around them. 

Egypt — home to Sharm el-Sheikh, the resort town hosting the event — last month devalued its currency, bringing the pound’s decline this year to nearly 36%. Bailout programs with the International Monetary Fund and Gulf monarchies over the past decade have amounted to nearly $130 billion, equivalent to a third of national income. Forget wind farms and desalination plants. Egypt barely has enough cash to pay for its wheat imports. 

For all that the politics and technology for tackling climate change has improved in recent years, the financial picture has been deteriorating. Rising interest rates are particularly punishing for renewables, whose costs are all in the construction stage and must be debt-financed years into the future. Cutting borrowing costs by 2% in emerging markets would save $15 trillion from the cost of hitting net zero, the International Energy Agency wrote last month — but the movement right now is in the opposite direction.

The surging prices of food and fossil fuels make things worse for the large number of emerging economies that aren’t self-sufficient in those commodities, raising their import bills and draining exchange reserves before they even think…

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