US climate envoy John Kerry admits to being ‘rattled’ over finance challenge of net zero transition

By on 14/12/2022 | Updated on 14/12/2022
John Kerry said governments must ‘excite trillions of dollars’ of private finance to fight climate change. Photo by David Tett

The US special presidential envoy for climate John Kerry has urged the world’s governments to engage the private sector in stumping up the huge investment required to help countries fulfil their climate commitments.

Speaking on the urgency of climate change at the Fulbright Distinguished Lecture at King’s College London on 9 December, Kerry emphasised the need for the private sector to plug the trillions of dollar annual gap in funding needed to tackle the climate crisis.

He told the audience that nothing had “rattled” him more in recent years of climate negotiations than the issue of money.

“In order to affect the [energy] transition, to win this fight, to keep [global warming] to 1.5°C, we have to find a way to be able to put money on the table to make a difference. No government in the world has enough money to make that happen or will allocate it. Private sector does. So we have to create the bankable deals,” said Kerry, who was US secretary of state under Barak Obama, and a one-time presidential candidate.

Setting the scene, Kerry told a story of Joe Biden, then a young senator who, with ambitions to become a leader in foreign policy, visited Foreign Relations Committee chairman Bill Fulbright. Fulbright told him “‘if you want to make a difference in foreign policy, you’re in the wrong place – go down the hall and see the chairman of the Appropriations Committee. He controls the money’,” Kerry recalled. “And half a century later, folks, not much has changed”.

“Fulfilling climate commitments, of course, requires finance”, he said, and while US and partner governments are stepping up, “believe me, all of us need to do more”.

He said nothing had “rattled” him more in recent years than the issue of money, highlighting that the presidents of Nigeria, Senegal and the Democratic Republic of Congo, for example – whom he had met recently – “would love” not to have to exploit gas but don’t have the means to adopt alternative energy sources without concessionary finance.

Pointing to research by the UN, McKinsey and others, which estimate that in terms of climate finance, there is a deficit of between US$2.5trillion-US$4.5 trillion per year for the next 30 years, he said: “My friends, we have to excite trillions of dollars to enter into this arena.”

Just Energy Transition Partnership and other examples

Kerry gave the launch of the Just Energy Transition Partnership (JETP) at the G20 Summit in Indonesia last month as an example of the sort of collaboration needed to attract private finance.

The JETP – a product of the International Partners Group, co-led by the US and Japan and including Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the UK – intends to mobilise an initial US$20bn, half of it public and half private, in climate financing over three-to-five years.

However, similar deals to have been reached at COP27 in Egypt and other such fora can take more than a year to negotiate, and “we don’t have time to do that,” he said. “We’ve got to find this money, put it into the marketplace and begin to create carbon market capacity to be able to help make a difference, and with environmental integrity”.

He acknowledged there is “no substitute for finance from contributor countries’ public funds” but that “we also need a massive infusion of private capital”.

The US federal government was working towards attracting this, in part though launching at COP27 in partnership with The Rockefeller Foundation and the Bezos Earth Fund, the concept of an energy transition accelerator – which aims to quicken the transition from dirty to clean power in developing countries.

“Over the coming year, we’re going to engage with governments, companies, civil society, all relevant stakeholders in order to turn this concept into reality,” Kerry said.

He added that “no one has been beating the drum harder” on the need for private finance in the fight against climate change than UK head of state King Charles, who together with business leaders launched the Sustainable Markets Initiative in 2020. This, Kerry said, was “a way of bringing the private sector to the table and helping to define the blended finance and other mechanisms by which you can deploy trillions of dollars”.

Three priorities ‘on the road ahead’

Closing his speech, Kerry said there were three priorities in the fight against climate change. First, “we must continue pressing for all major economies to align their 2030 targets with 1.5°C and to fulfil those targets by halting the construction of new coal, accelerating the deployment of clean energy, slashing methane emissions and halting deforestation”.

Second, he said multilateral development banks must be pressed to modernise their operational models so they are “fit for purpose to tackle this crisis” and able to help unlock billions of dollars for lending.

And third, “we need to demand urgency and accountability from everyone, everywhere, every day”.

“There is no mystery about what we must do. The real mystery is why it remains a fight. To just do what common sense science tells us we must do. We have a roadmap, we need to follow it. The question is not whether there is a solution. It’s how to more rapidly implement the solutions that are staring us in the face. If we do that, we know that the future is cleaner, greener, healthier, and safer. If we can get there together in time.

“My friends, I ask you just to remember that Nelson Mandela once said: ‘It always seems impossible until it is done’. Let’s get it done.”  

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About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

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