 You are listening to Make Change Happen, the podcast from IIED. Climate change mitigation, adaptation and addressing loss and damage face slow progress due to complex and little known obstacles to effective change. In today's episode, we discuss IIED's initiative to unveil and eliminate these hidden handbrakes and how you can contribute. Hello and welcome to our first podcast of the new year. My name's Tom Mitchell. I'm the director of IIED and I'm delighted to be discussing the Hidden Handbrakes campaign today. And for those who aren't familiar with it, hidden handbrakes are those elements that are really holding back our ability to tackle climate change that we barely discuss. They're the kind of things deep within our system and protection of fossil fuels that we barely talk about. So it's our job on this podcast to reveal some of those hidden handbrakes, talk about them in more detail and then hopefully encourage you to join with us in the campaign. And I'm delighted to be joined by my colleague, Sejal Patel, who has been really at the heart of thinking through some of our hidden handbrakes. So Sejal, over to you. Thanks Tom for inviting me to join you in this discussion. I think it's a really interesting framing for the work going on across IIED. There are a lot of handbrakes holding back progress on several fronts and some are on the surface, like where you sort of owe up to your politics or the lack of lack of volume in money. But others are buried much more deeply and require a lot more nuanced exploration. And this resonates a lot with the work that I'm doing at IIED on climate and nature finance policy and governance. So I think it's a really interesting topic to get into. Sejal, thank you. Not everybody listening will necessarily have their head in the kind of these deeper systemic challenges of tackling climate change or what's protecting the existing kind of dirty system. But we're going to be hearing from experts and journalists. And so they're not in the room with us. We've got pre-recorded clips, but I really hope that it helps to contribute to our discussion of hidden handbrakes. And I think by way of introduction, I'd love to introduce Megan Rowling. Megan is a really well known, hugely experienced climate correspondent who's worked for Thomson Reuters and for the BBC and so on. I wonder whether we could hear from Megan about her perspectives on hidden handbrakes. I think for me, it's just that it's really drilling down into something that's often said about why are we not seeing climate action at the level we need to see it, which is, you know, the stock response is often, oh, it's a lack of political will. But, you know, as an explanation, as the years go by and the situation gets more urgent, that just isn't a sufficient explanation. It's not good enough. We can't stop at that and basically just point to all these potential things that could be done and the speed and the scale at which they need to be done and just sort of throw up our hands and say, well, you know, because politicians don't see the benefit within the electoral cycle or whatever it might be. But so for us, you know, we we're asking ourselves these questions. I think I hope on a daily basis about really, you know, actually why isn't isn't something happening. And I see that this is a problem at the global scale. It's also a problem at the national scale, but also for individuals which interest me, too. And, you know, we really need to ask these questions about why we need to ask them now. OK, clearly frustration there. I think one of the ones that really struck me as we got into this topic that I knew very little about was the hidden handbrake that relates to the protection that fossil fuel investors are given through either bilateral trade treaties or international agreements between countries that protect those investors. And so while we've talked a lot about there being stranded assets and that people are making investments in fossil fuels that they'll never get a return on, the reality is that there are many thousands of agreements, I think some two and a half thousand at last count that give protection to those investors. And so if a country was to take really bold climate action and reduce the dependence on fossil fuels, then we're in a situation where those assets may be worth less. Those investments may not be as lucrative and that the investors have the opportunity to sue the governments taking those actions. And this is to a point where the research that IED is done to uncover this has highlighted that so far over 80 billion has been channeled back to fossil fuel investors who've been able to sue or find ways of settling cases where actually the polluter is not paying for the challenge of tackling climate change. In fact, the polluter is receiving a payout because of bold action. And that for me was pretty shocking. So, Joel, I wonder whether there's something that's particularly got your attention as we've looked more at these hidden handbrakes? Yeah, maybe a similar example from some of our research around debt and credit rating agencies is pretty interesting. So one of the solutions that was brought forward by the G20 during the COVID-19 pandemic was this debt service suspension initiative. Through this initiative, countries could opt in to temporarily suspending the payments that they would make to service the debts that they owed to other governments. This would mean that the funds in the public budgets for those countries could then instead be redirected to health and other pandemic priorities. Of the 73 developing countries that were eligible to opt in, only 48 did. So, you know, we thought it was interesting to look at what influenced whether a country opted into the scheme or not. And one of the barriers for some countries we found through the research was that they didn't want their credit ratings to go down to be affected by basically being part of the scheme. So we see that lower income countries already have a hard time accessing the global financial markets, partly because these countries have highly vulnerable systems. And so they already have quite low credit scores. So many countries are already very hesitant to do anything that will further deteriorate their rating. Then you follow this thread to look more closely at credit rating agencies and what their role is exactly. Since we're now in the situation where the global financial system has disincentives built in for countries to undertake this kind of debt management, but the credit ratings have been built as a tool for investors to measure the reliability of their investments. So now we have this clash in objectives from different sectors and that's causing quite big challenges. Well, and I suppose that even flows on further, doesn't it? Two issues where I think we see in some of the countries that we work in that when it comes to lending money from local banks, because of the impact of that cost of capital, you're seeing, you know, 30 per cent interest rates on any loans. And it makes it incredibly difficult then to finance any projects, renewable energy projects, for example. And what you're saying, Shajjal, is that we've got credit rating agencies, many of which are based in London, for example, or in big financial centres, often sit in in in judgment, essentially, of the the the conditions in different parts of Africa, for example, without ever really understanding the nature of the challenges. And so I think it's another one of those cases where we see the huge impact of these hidden handbrakes, but actually they're really quite complicated and often really difficult to get to grips with exactly how to change them. But I wonder whether we could turn to David Schuchman to give his perspective. David, of course, is a very well known environmental journalist, was a was a key figure at the BBC covering climate change. And this is his perspective on hidden handbrakes. I suppose the biggest single obstacle is the behaviour of the oil and gas industries over many years, undermining climate science with denial and doubt. And Lord Deben said the most dangerous organisation in the history of humanity was ExxonMobil. But it's worth bearing in mind that all of these companies depend on an army of enablers, law firms, accountancy, PR, advertising, marketing, management, consultancy, and only now are their actions and decisions being exposed in the way they should. And I think it actually goes deeper than that as well. Because from talking to individuals in these different sectors, you can see how they can convince themselves that they're contributing to the net zero transition by engaging with oil and gas companies, that because they themselves set a net zero target and these companies have a net zero target, somewhere we're all working together. Now, it's better that they are engaged and having this dialogue and using this kind of language, better that than not. But the risk is that there's a slightly cozy embrace, a lack of questioning, which above all means that no one is saying are carbon emissions actually being reduced? I think we can all reflect on the fact that at the previous, you know, the most recent climate change conference COP in Dubai, we saw over two and a half thousand delegates coming from either fossil fuel companies or as fossil fuel lobbyists, which was way more than the total combined delegations of the 25 least developed countries. So we have a kind of a negotiations playing field that's still heavily stacked towards fossil fuel interests, trying to make sure that progress towards phasing out fossil fuels is blocked in those negotiations. And for me, then one of the handbrakes, I'm not sure it's so hidden, is that we should be making sure that the influence of those lobbies is very severely limited within the context of trying to tackle this problem. But I think what also for me, David highlights is that there are there's a significant enabling environment that goes around those fossil fuel companies and those fossil fuel lobbyists, which spans all of those areas that David highlights. And I'd add one more in that there are insurers who need to be ensuring fossil fuel projects. They need to give the certainty that there is to investors and so on. And so that's another part of our industry that does need to change. And it always, you know, really leaves me scratching my head about where you see even those insurers choosing to invest their assets, the premiums that they receive, also in fossil fuels as well, which actually ultimately creates a situation where that insurance market, the ability to ensure, for example, against the impact of extreme events becomes even more challenging because the ability to pay those premiums is reduced as the cost of the risk goes up. But I wonder, Sejal, whether there's a kind of a reflection from other work that you do across IED about some of the things that that we've been investigating on hidden handbrakes that you think responds to what we've heard from David or Megan? I think I would reflect on that and just say I agree. I think there's a lot to do with power imbalance and who gets to tell the story. And I think that's where these kind of this framing of hidden handbrakes and uncovering these hidden handbrakes and raising awareness through them has a lot of importance. And there's a lot of value in trying to uncover and scrutinize what the actual actions and decisions are that are being made from or the noise, whether that's from powerful companies, whether that's credit rating agencies in the West or these other actors. And I think that runs through a lot of the work we do. So, for example, I'm also working within the Global Interim Secretariat for the LDC Groups Initiative on Effective Adaptation and Resilience. And there I've been working very closely with the Malavi and government as they pilot a national mechanism for channeling finance to the local level. And what's really interesting about this initiative is that they're seeking to address a number of handbrakes in the system through a business and usual approach, meaning that they're trying to carry out activities, but in a way that isn't the way that the system has always worked. They're looking really critically at the system and based on their leadership. So the LDCs, the least developed countries, have come together to lead this initiative. They've developed it themselves. And so they are building a more balanced sort of field of power with the providers of climate finance. Well, I suppose that's that's also been in response to some of the work and research that we've been doing that was highlighting that even though pledges were being made for climate finance to flow to the poorest countries, that actually when we trapped the money, we found that some of those pledges never happened. Some of the pledges did happen, but then the money got caught up within the system somehow. It got spent on expensive consultants or it took many, many years to to approve. And I think IID research was highlighting that it maybe only 10 percent of that original money pledged was reaching the local level. So I suppose what you're referring to is an effort to really try and reimagine a system for getting the money to the places that need it most. And it strikes me that while we're taking steps forward, there's still a long, long way to go. Are you optimistic? I am. No, I agree with you. I think there is still a very long way to go. But I think there is progress. There is some movement. It's very slow. And sometimes, you know, that's discouraging. But I also think in recent years, we've had a huge rise in things like this whole movement of climate activism and youth movements that are also helping to put more scrutiny in this area of climate change and climate finance and raise awareness across different societies across across different sectors. And again, this sort of relates back to this idea of uncovering handbrakes in order to then be able to address them. So I think there is there is some potential there. I suppose on this theme, we should turn to a very old friend of IIDs, Dr. Achala Abaseng, who's the Asian Regional Director and Head of Programs at the Global Green Growth Institute, just to get her perspective on where she sees the most prominent hidden handbrakes. The hidden handbrake to climate action, as I see, is the lack of scalable and bankable project pipeline. Our country is going to this exercise of preparing nationally determined contributions, national adaptation plans and all other planning documents without really thinking about how these documents are funded. And in my experience, I know now a project takes around 12 to 18 months or sometimes even more up to 24 months to be funded. And if you work on your policy document, your planning document or a strategy document for a long time and then submit it without a pipeline of bankable and scalable projects, then it is going to take even longer time to get the financiers on board. And this is very much relevant to bringing in private sector on board without bankable and scalable project pipeline. Private sector will not come on board. So having that capacity, which is the capacity to develop a meaningful project pipeline, at the same time, the countries develop their plan, strategies and action, strategy documents, et cetera, is an essential element for climate action. What Charles' reflection reminds me of is also that research that IED had conducted highlighted that those plans for whether it's reducing emissions or tackling the impacts of climate change, many of the deadlines that were set by countries agreeing those deadlines are a research highlighted that more than 59% of those deadlines were missed. So if we've got countries missing the deadlines, we've got a situation that a Charler describes where they aren't costed plans. It then takes a long while to design the projects, make sure that they are investable. And then it also is an effort to then find the money. And I'm just noting that we've seen a scientific analysis within the last few days that highlights that 2023 was the hottest year on record. And many, many millions of people impacted by floods and extreme events and so on. But if we're in a situation where it takes five, seven, potentially nine years to be able to have a project that brings relief or acts on those things, it's a really miserable situation. But that's why I think we should be encouraged by the fact that the Dubai COP did agree the set up and first funding tranche of a loss and damage fund, which is intended to make sure that countries on the frontline of impacts can get access to money to give them relief far faster. But we need to keep a close eye to make sure on the way in which that can really change that calculation. I suppose, Sejal, I wonder from your view, what are you seeing in the countries that you work in in terms of that kind of speed of getting money where it matters? And equally, do you see what a Charler is saying that it just simply takes too long to be designing investable and bankable projects? But you have much more hands on experience than me at the moment. But yeah, what's your perspective from the frontline? Yeah, exactly. I think sort of building on you and a Charler have talked about about building this pipeline of bankable projects. It's a it's a hugely complicated process. And you know, it takes a lot of time, it takes a lot of resources. And one of the things we've looked at in our research is this sort of concept of a missing middle. There's a whole type of finance that is at the moment still largely missing. So this whole missing middle funding is needed to support countries in building out and integrating their plans more deeply into their national systems to help strengthen local and national institutions and governance mechanisms to strengthen the sort of institutions that are required for delivery to test and pilot interventions, all these sort of activities that help build up bankable projects. There is still, you know, very little funding in that part of it before we can then get to the stage where the funding that's provided by investors is able to be utilized effectively. So you know, this is essentially what initiatives like the LDC groups initiative on effective adaptation resilience is trying to do. And I sort of wonder, is that perhaps that they sort of value of hidden handbrakes and exposing some of these areas that aren't so well known is to help sort of promote discussion in those areas and then to help sort of fill those gaps? I suppose we're in a situation here where this kind of discussion on our podcast today has helped to refresh my thinking that there's a situation globally where we've got an incumbent, I suppose system of using fossil fuels for energy of polluting the planet of destroying the soils and ecosystems and natural assets that we've got. And that is really held in place by a set of protections that I think David highlighted in his contribution, which are involving many, many different people on the planet, many different organizations, and it's still of benefit to them to keep that system in place. And that those hidden handbrakes are the ones that we're trying to expose, that are the ones that keep that system in place. But equally said, Joel, what you're highlighting is that when we're putting efforts to put a different system in place, and make sure that we get money where it matters to the people on the frontline for renewable energies and so on, there are many barriers in the way, some of those hidden handbrakes to some of those deliberately put in place. I think one that struck me as a good example of this is one that most recently, IID's research has highlighted on hidden handbrakes. And that's the huge amount of money that governments give to subsidize an agriculture and food growing industry that produces some of the most destructive substances in our food chain, whether destructive for our health, or destructive to the planet, because they're they're hugely resource intensive, for example. So products like sugar or things that go into ultra processed foods, our research has highlighted that there are tens of billions every year in subsidies that governments are giving to some of the most climate damaging food stuffs. But equally, food stuffs that contribute to a plant based diet or to a cleaner planet are given additional tariffs. They're made more expensive and less attractive for people. So while we might spend our time berating the fossil fuel industry, and of course, it's right to do so, we need to acknowledge that there are whole other areas of life on this planet that are being given a special deal that are being kept in place when actually we should be changing those. Thanks, Tom. And I think that was a good summary of the discussion. It's been really interesting. And I think we're seeing a lot of this now in recent years of this discussion, for example, of the reforming the global financial institutions and the global financial landscapes. It's great that there's this sort of height and sense of scrutiny and accountability across a lot of these issues, bringing out a lot of the challenges into the open and really trying to find pathways to where we can, you know, address some of these nuances. Yeah, and I think, you know, for me, the sense that we is a global community of researchers and of activists and advocates that are pushing for positive climate action. It does feel as if we are fighting forces where we don't really fully understand the game or the protections in place. So I wonder with that, whether we could invite our listeners to join us in this effort to reveal the hidden handbrakes. We have a platform, we have a website that you can go to, we'd love to hear from you. So search up IED and find our hidden handbrakes platform and please do get in touch if you'd like to raise and bring visibility to a hidden handbrake, you know, or to partners in the campaign and would like to thank everybody for listening to Sahjal and I Sahjal, it's been a pleasure talking to you. Thank you. Thanks Tom. Thanks so much for having me on and thanks everyone for listening. You can share your own hidden handbrake with us and browse and comment on the ones that have already been shared on our website at www.ieed.org slash hidden dash handbrakes. You can find more information about this podcast and our guests at IED.org slash podcast where you can also listen to previous episodes and browse the rest of our website for more information about IED and our work.