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IDB Urges Caribbean Countries to do More to Meet Their Paris Agreement Commitments

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WASHINGTON, USA (CMC) – The Inter-American Development Bank (IDB) says Latin America and the Caribbean countries must include finance and planning perspectives to their climate policies and commitments in their nationally determined contributions (NDCs) if they expect to deliver on their Paris Agreement objectives and promote a sustainable recovery.

The IDB in its latest publication draws on the results of a joint study between Columbia University’s Center on Global Energy Policy and the IDB’s Sustainable Energy and Climate Change Initiative.

It said that the climate crisis can result in a potential poverty trap for countries in the region that do not step-up their investments in both gradual adaptation measures as well as adaptive capacity. The impacts of the COVID-19 pandemic make this scenario more dramatic. This is, in part, the result of an increase in the frequency of extreme weather events and losses associated with climate change.

The study provides examples of integrated sustainable agendas in Barbados and Colombia, and how more ambitious second rounds of NDCs are being developed by Chile, Costa Rica, Argentina, and Uruguay, amongst others. At their core is the decision to align environmental policy while addressing social and economic growth through the planning and public finance prism.

According to the publication titled, “Climate Policies in Latin American and the Caribbean: Success Stories and Challenges in the Fight Against Climate Change,” achieving sustainable development in the region requires a combination of environmental and economic policies, to deliver a comprehensive and mainstreamed climate policy solution.

The study identifies and argues in favour of multiple climate policies actions which can promote growth in the short term, while also strengthening resiliency and social development.

“Achieving a comprehensive coordination is only possible if finance and planning ministries assume a leadership role by ensuring that tax policy and resource allocation prioritizes this intersectoral approach”, said Mauricio Cárdenas, the former finance minister of Colombia and co-author of the study.

However, only four countries in the region surveyed in 2020 have reported the inclusion of a financial strategy document in their NDC strategies. And even within this limited group, the understanding of what a financial strategy should include varies greatly.

“The good news is that, in practice, some countries in the region have been implementing successful climate policies coordinated with different actors through their governments,” said Juan Pablo Bonilla, the manager of the IDB’s Climate Change and Sustainable Development Sector and co-author of the study.

“This gives consistency to their sustainable development agendas and promotes growth. From the IDB we want to help share these experiences, so they are included in their NDCs as well. This study is part of this effort and there’s more to come.”

The study provides examples of integrated sustainable agendas in Barbados and Colombia, and how more ambitious second rounds of NDCs are being developed by Chile, Costa Rica, Argentina, and Uruguay, amongst others. At their core is the decision to align environmental policy while addressing social and economic growth through the planning and public finance prism.

In terms of decarbonization strategies, the study evaluates the three sectors that together represent 87.2 percent of all greenhouse gas (GHG) emissions in the region, namely energy, cattle and agriculture, and land-use change, and forestry.

It addresses the pros and cons of fiscal instruments for decarbonization, including multiple variations of carbon pricing instruments. The research points out that decarbonizing has the potential to add more jobs than it destroys, when properly designed, to include and implement compensatory mechanisms.

In this sense, creating capacities in ministries of finance and central banks to understand these issues is as critical as the development of capacities in public debt offices to access novel financial instruments such as green or sustainable development bonds.

The publication also details a wide range of trends and opportunities that governments in the region would be benefited in expanding clean energy mechanisms, boosting electric public transportation, and strengthening green financial markets.

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