What will 2023 hold for the environment and development?
The end of 2022 certainly left us in an interesting — and concerning — place. The world’s three-year-old pandemic proved it was far from over, sickening millions and affecting economies. Global inflation hit 9% in 2022, its highest level since 2008. Russia’s invasion of Ukraine displaced millions of people and sent ripple effects throughout food and energy systems. And the impacts of climate change — from deadly floods in Pakistan to withering heat in India to drought in Africa — acted as a threat multiplier.
The poor felt the effects most acutely. Up to 95 million people were pushed into poverty in 2022 alone.
But given recent setbacks, will the world’s signs of progress grow into the systemic shifts it needs to stabilize the climate, safeguard ecosystems and improve everyone’s quality of life?
WRI President & CEO Ani Dasgupta sought to answer this question and more at WRI’s 20th annual Stories to Watch event. Dasgupta laid out four issues to watch in 2023 that will send powerful signals about the world’s future trajectory:
1) The Energy Crisis: How Will the Conflict in Europe Impact the Global Transition to Clean Energy?
Russia weaponized energy with its invasion of Ukraine, cutting off the natural gas pipeline responsible for 40% of the E.U.’s gas supply and triggering a 41.5% increase in power prices in October 2022. Europe responded by securing more Liquified Natural Gas (LNG) imports and expanding coal and nuclear.
The question now is: Will increased investment in fossil fuels derail the world’s clean energy transition and lock in dangerously high levels of global temperature rise? Or will it spur a larger shift toward safer, cleaner, less volatile renewables?
Some experts think it could be the latter based on early signals. In 2022, the E.U. increased its renewable energy targets from 40% to 45% of total capacity by 2030 through the REPowerEU Plan. Leaders recently went further by increasing the bloc’s emissions-reduction target from 55% to 57% by 2030. And polls show that 83% of people in the E.U. think Russia’s invasion of Ukraine makes it more important to invest in renewable energy.
Outside Europe, countries like India and China continue to invest in renewables even as they seek more LNG and other fossil fuels, putting this issue at a crossroads this year.
2) Tropical Forests: Will New Leadership Help Them Rebound?
The Amazon rainforest provides so much more than trees. Spanning nine countries, the vast ecosystem supports the livelihoods of 47 million people, houses 10% of the world’s biodiversity and stores up to 140 billion tons of greenhouse gases.
And yet the Amazon and the ecosystem services it provides are under threat. Roughly 18% of it has been deforested; scientists say that losing 20-25% of the Amazon’s trees will trigger its collapse, turning swaths of forest into savannah and transforming it from a carbon sink to a carbon source.
The Amazon’s fate depends largely on what happens in Brazil, which was responsible for 40% of the world’s tropical primary forest loss in 2021. At the end of 2022, the Amazon found new hope with the re-election of President Luiz Inácio Lula da Silva. The question now is: Will his return to power put the Amazon’s fate on a more positive path, as well as trigger stronger forest protections internationally?
Lula has already made strides by appointing pro-environment ministers, reinstating anti-deforestation measures scrapped under President Jair Bolsonaro, revoking mining permits in protected areas, and reopening the Amazon Fund, which provides finance in exchange for forest protection. But his pro-forest agenda faces political opposition.
What to watch: Will Lula’s conservation agenda take hold —especially in enforcing existing laws in a country where 98% of deforestation is illegal? And will zero-deforestation incentives catch on globally, such as through supply chain regulations, carbon markets, finance for forest protection, and, importantly, reduced deforestation in the world’s other two key tropical forest ecosystems in Indonesia and Africa’s Congo Basin?
3) Financing the Low-carbon Transition: Will Reforms in 2023 Unlock Funding for Developing Nations?
A low-carbon transition that’s good for nature and people will require $5.2 trillion of climate finance by 2030. In 2020, total climate finance totaled only $600 billion.
All countries are experiencing this investment gap, but it’s most acute in developing nations due to increasingly squeezed public resources and perceived risks from the private sector. And while this isn’t a new problem, there is momentum around a new solution: the Bridgetown Initiative.
Launched in 2022 and spearheaded by Barbados Prime Minister Mia Mottley, the comprehensive plan would completely overhaul the global financial system to direct low-carbon investments and finance where they’re needed most. The plan includes multilateral development bank (MDB) reforms, debt restructuring, funding for adaptation and loss & damage, and more. While ambitious, the proposal earned praise from such figures as French President Emmanuel Macron, International Monetary Fund (IMF) Managing Director Kristalina Georgieva and more.
The story to watch this year is whether these proposed reforms actually start happening and earn support from the MDBs, major-emitting nations and the private sector. Potential moments for momentum include the IMF and World Bank Spring Meetings in April 2023; the G7 and G20 meetings in May and July, respectively; the Heads of State Summit in India in October; and the next UN climate summit (COP28) in November.
4) US Climate Action: Will the Country Accelerate Progress for a Just Economic Transition?
Last year was momentous for U.S. climate legislation, with the country enacting the CHIPS and Science Act, the Bipartisan Infrastructure Law and the Inflation Reduction Act. Together, these policies will provide $79 billion annually in low-carbon, climate-friendly investments, with a promise through the Justice40 Initiative to direct at least 40% of climate investment benefits to historically underserved communities.
Importantly, these laws aren’t just about fighting climate change: They’ll improve quality of life while righting injustices. For example, the Bipartisan Infrastructure Law and Inflation Reduction Act together could create up to 3.1 million additional net jobs by 2030. American families who take advantage of all the Inflation Reduction Act’s clean energy incentives could receive up to $10,000 in tax credits and rebates.
The question now is: Will these groundbreaking laws jumpstart a just low-carbon transition in the United States — one that allows the country to meet its emissions-reduction goals while bringing economic benefits to all people?
Important signs of momentum to watch for include:
- Accelerated renewable energy deployment, including expedited permitting processes from Congress and at U.S. agencies;
- Implementation in states, including state-level “just transition” plans to support fossil fuel and other workers in the shift to a low-carbon economy;
- Businesses and consumers taking advantage of the legislations’ myriad clean energy incentives, such as subsidies for heat pumps, electric vehicles, solar panels and more;
- Follow-through on equity, such as the Environmental Protection Agency’s (EPA) promise to bring clean school buses to every community, and the publishing of a Justice40 scorecard to track progress against the administration’s equity commitments; and
- A domino effect where other countries around the world adopt similarly ambitious climate-friendly just transition policies.
Together, these stories will help shape the future of the world. For more information on how they could play out, check out the full Stories to Watch presentation.
Sarah Parsons is Senior Editor for the World Resources Institute.