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Pre-COP27 UNECE Regional Forum warns action urgently needed on sustainable financing and use of Critical Raw Materials

Pre-COP27 UNECE Regional Forum warns action urgently needed on sustainable financing and use of Critical Raw Materials

Pre-COP27 regional Forum

Without scaled-up efforts to finance and sustainably manage the Critical Raw Materials needed for a rapid renewables and clean energy shift, countries of the pan-European region and North America will face huge challenges to deliver on the Paris Agreement and Sustainable Development Goals, the final pre-COP27 UN Regional Forum has warned. 

Putting the spotlight on the huge investment gap and pointing to available solutions, the Forum - organized by UNECE in partnership with the Egyptian Presidency of COP27 and the UN Climate Change High-Level Champions for COP26 and COP27 - underscored the transformative potential of targeted financing for ambitious climate projects, while stressing the key role of UN tools to mitigate environmental, social and ethical risks. 

Seeking to translate this into action, the Forum discussed investment projects from across the region, shaping a portfolio of thirty high-impact climate action projects, focused on areas from scaling up renewables deployment to means of energy storage, and from critical raw materials to waste and digitalization, ten of which will be presented at COP27 as part of a UN compendium of climate finance initiatives. They are a sample of a much larger universe of projects and initiatives that exist in the UNECE region. 

“Global emissions are at their highest level in human history, and despite all the warnings we know, they continue to grow and are set to increase by 14% based on current national commitments”, said UN Deputy-Secretary-General Amina Mohammed, warning that “every indicator on climate is heading in the wrong direction.” She further emphasized that “International financial institutions, multilateral development banks, and other key financing stakeholders must play their part. They must overhaul their models, including by going beyond GDP to facilitate access to low-cost finance and debt relief to all climate vulnerable countries, and increasing their risk appetite to mobilize trillions from the private sector.” 

“Leaders from our region need to demonstrate at COP27 that climate action truly is the top priority that it must be”, said UNECE Executive Secretary Olga Algayerova, who stressed that “The UNECE region remains dependant on fossil fuels for some 80% of its primary energy supply. With the devastating heatwaves, flooding and wildfires experienced this year, and the vulnerabilities exposed by the current global energy crisis, this is madness. Deep and rapid decarbonization, underpinned by sustainable financing and use of Critical Raw Materials in line with the circular economy, is not only possible but necessary. UNECE stands ready to support governments with its tools for resource management, traceability and financing, and to avoid adverse environmental impacts of projects through its Multilateral Environmental Agreements.” 

Underlining Critical Raw Materials as a key regional priority H.E. Mr. Mahmoud Mohieldin, UN Climate Change High-Level Champion for COP27 and UN Special Envoy on Financing the 2030 Agenda for Sustainable Development, stated that “a resilient, sustainable and ethical supply of Critical Raw Materials is essential for clean energy, mobility transitions, and digital transformation. We can’t afford to not act on Critical Raw Materials, because the cost of inaction is much higher than the projects you will hear today.” He announced that a compendium of 50 projects will be launched at COP27, in addition to an extended list of the 150 projects (50 selected + an additional 100) based on regional priorities that will be made available. 

Mobilizing financing for Critical Raw Materials will be key as demand surges  

Critical Raw Materials (CRMs) - such as lithium, nickel, copper, cobalt, manganese, graphite and rare earth elements – are fundamental to increased renewable energy deployment, battery production and the mass shift to electric vehicles. They are also key for digitalization. Over the next two decades, demand is expected to rise over 40% for copper and rare earth elements, 60 to 70% for nickel and cobalt, and almost 90% for lithium. According to the International Energy Agency, global battery and mineral supply chains need to expand ten-fold to meet projected needs for critical minerals by 2030. An estimated 50 more lithium mines, 60 more nickel mines and 17 more cobalt mines will be needed by 2030 to meet global net carbon emissions goals. The World Bank further estimates that over 3 billion tonnes of minerals and metals will be needed to deploy wind, solar and geothermal power and energy storage required to deliver a future below 2°C.  

John Scott, Head of Sustainability Risk, Zurich Insurance Group, recalled that the transition towards electrification means that demand for copper will double by 2050, requiring more copper than all consumed in the world between 1900 and 2021. Since starting a copper mine takes approximately 15 years, improving circularity will be key to overcome bottlenecks, he highlighted. 

The production, refining and use of these materials in low carbon technologies will also require investments worth billions of dollars. In response to these challenges, the Forum highlighted mobilization of finance through public-private sector collaboration – including through SDGs-aligned Public-Private Partnerships – and the use of climate finance instruments, such as green bonds, as playing a crucial role in securing access to the necessary capital, to foster innovation, and support the transfer of expertise.  

Sustainability issues must remain at forefront   

Meeting rising demand for CRMs is a key challenge in the UNECE region, which as a major producer and consumer of resources, must optimize the management of its endowments.   

Beyond the challenges of delivering the sheer quantities of CRMs needed, the Forum highlighted the complex issues that must urgently be addressed to ensure their supply is sustainable, ethical and resilient. Addressing these will require careful attention to environmental, economic and social considerations, and broad, inclusive multistakeholder collaboration.  

To support this, the Forum brought together high-level policy and decision-makers from Ministries of Economy, Finance, Trade, Industry, Energy, Natural Resources and Environment in the region, in addition to mining and metals industry leaders, the financial sector, and civil society, along with key stakeholders in the area of sustainable consumption and production and the circular economy.   

The sustainable management of critical raw materials is a key component of the UN Secretary-General’s strategy for transforming extractive industries for sustainable development and forms a growing part of UNECE’s broad support for climate change mitigation and adaptation.  Key resources to support countries and industry include the internationally harmonized United Nations Framework Classification for Resources (UNFC) and UN Resource Management System (UNRMS); cutting-edge work on traceability of value chains and Environmental, Social and Governance (ESG); and a range of normative and policy instruments to accelerate the shift to a circular economy

The importance of harmonization and interoperability to sustainably address demand for CRMs was a common theme in many interventions. Ben Backwell, CEO of the Global Wind Energy Council, called for global standards to support ESG compliance for wind energy – an area where existing UNFC specifications could make an important contribution. “The international community needs to get a handle on the coordination of supply. We need to treat this as importantly as oil stocks were treated in the 1970s.” 

The UNECE Forum on Regional cooperation on enhancing sustainable management and financing for the critical raw materials required for low-carbon transitions is the last of the five regional fora to be held in the build up to COP27, following events in Addis Ababa, Ethiopia (2-4 August), Bangkok, Thailand (25 August), Santiago, Chile (31 August – 1 September) and Beirut, Lebanon (15 September).  

United Nations Economic Commission for Europe

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