Inflation, the energy crisis and rising interest rates are creating conditions where a growing number of countries are at risk of default, with potentially devastating effects on their people, according to Achim Steiner, the UN’s head of global development. “There are currently 54 countries on our list [of those likely to default] and if we have more shocks – interest rates rise further, borrowing becomes more expensive, energy prices, food prices – it’s almost inevitable that we’ll see a number of these economies default,” he said. “And that creates a disastrous scenario – look at Sri Lanka [which has descended into civil strife] with all the social, economic and political implications this has.” Speaking at the Cop27 UN climate summit, Steiner said any such default would create further problems for solving the climate crisis. “It certainly won’t help [climate] action,” he said. Without measures to help them with debt, he warned, poor countries would not be able to deal with the climate crisis. “The issue of debt has now become such a big problem for so many developing economies that tackling the debt crisis is becoming a prerequisite for substantially accelerating climate action,” he said. “We need to inject targeted liquidity into countries to be able to invest in energy transitions and adaptation [to the impacts of extreme weather].” The climate crisis is further exacerbating the problem, he warned, as countries face increasing impacts from extreme weather events. Poor countries are not receiving the funding promised by the rich world, yet they face an increasing risk of storms, floods, droughts and heat waves. Steiner warned that some developing countries risk walking out of UN climate talks if developed country governments fail to deliver on a long-standing promise to poor nations of $100bn (£86bn) a year to help them reduce greenhouse gas emissions and adapt to the effects of extreme weather conditions. “If Cop27 does not achieve a convergent path to $100 billion, I think many developing countries will leave Sharm El Sheikh at least thinking about their commitments to the global climate process,” he said. “And I say that very deliberately, because it doesn’t mean they’re going to stop doing things at home that they’re already doing.” Countries could slow their efforts, he warned. “Part of accelerating our ability to tackle climate change relies on getting all countries to do something. So the biggest risk is that we slow things down again, some would say even more.” However, developing countries were already taking their own actions to address the climate crisis, he added. “The developing world is already investing multiples of $100 billion to help accelerate the energy transition. The way it looks to a taxpayer in London, Berlin or Paris, is why are we being asked to pay for everything that happens outside our country in the developing world? “And that’s just not true. China, India, countries like Kenya, South Africa, Ghana, Morocco, Egypt – they are all investing their own resources to move towards clean energy transitions. Never mind the extraordinary resources they must mobilize when a climate-related extreme weather event hits.” One of the most contentious issues at the Cop27 talks is loss and damage, which refers to the most devastating effects of extreme weather, from which countries cannot protect themselves. Steiner said the issue was often misunderstood. “It builds on something that in many of our countries is established practice. When flash floods happen and the taxpayer essentially steps in, with the government paying homeowners for the damage that hasn’t been recovered from the insurance companies,” he said. “We have an established practice that the common purse leads where a catastrophic event occurs. But when a Caribbean island has a third of its GDP wiped out in 12 hours by a hurricane, there’s no one to turn to.” That’s why a damage and loss fund was needed, he said. “This is where the injustice of climate change becomes so glaring in the eyes of many developing countries. Not even being the main causative factor [in the climate crisis]they are now paying an extraordinary price for the harm they are suffering.” He predicted there would be no final settlement at Cop27 on how a funding mechanism for loss and damage could work, but said countries meeting in Egypt, where talks are now almost halfway through, should be able to make substantial progress. On Thursday, the topics of discussion at the talks were science, youth and future generations. Hundreds of young activists turned out to show their support for climate action, but protests were muted as the Egyptian government has kept a tight rein on protests outside the talks. Some civil society groups have raised concerns about intimidation and surveillance. However, no such restrictions have been placed on lobbying inside the halls – a coalition of NGOs revealed on Thursday that more than 600 fossil fuel lobbyists were among those in attendance, a far higher number than in previous years. Also at the talks, new analysis showed that countries seeking alternative gas suppliers to Russia after its war in Ukraine had “overreached”. European and other governments are now planning new gas infrastructure and supply contracts that will far exceed the amount of gas countries previously imported from Russia, according to Climate Action Tracker data. If all these contracts are fulfilled and infrastructure is built, temperatures would exceed the critical 1.5C threshold, according to the analysis. However, in rare good news, Norway’s oil company has postponed development of the world’s northernmost oil field. The Wisting field would have been a $10 billion project, but it has been put on ice for four years. The company blamed “cost increases due to increased global inflation” and “uncertainty about the framework conditions for the project”. Campaigners claimed the move as a victory. Nancy Pelosi, the speaker of the US House, arrived in Sharm el-Sheikh to fanfare as Democrats fared better than expected in the midterm elections and warned that some Republicans still view the climate crisis as a farce. US President Joe Biden is expected to attend the conference on Friday and make an important intervention.
