As delegates descend on host country Egypt for COP27, now underway, they’re surely motivated by the brutal — and clear — consequences of climate inaction. But that consensus disintegrates over how to fund the staggering $4-5 trillion US in annual global spending and investment required to achieve the net-zero energy transition necessary by 2050, according to the International Energy Agency.
That’s because, as apocalyptic floods in Pakistan over the summer have highlighted, the nations most at risk of climate breakdown are those least able to cope with it. They are also the least culpable for causing climate change in the first place.
As widely reported, Pakistan has contributed less than one per cent of the emissions responsible for global warming. And yet the $30 billion US in damages caused by the recent flooding — a single, prolonged extreme weather event — amounts to more than 11 per cent of the country’s GDP.
Developing countries such as Pakistan are therefore seeking “climate justice.” In essence, they want wealthy nations, including Canada, with the highest per capita carbon footprints and largest historical emissions totals, to atone for their carbon sins first, while middle and low-income countries focus on meeting their energy needs.
Support is wildly insufficient
Industrialized countries want climate action to occur in unison, more or less. They point to how 95 per cent of the increase in greenhouse gases worldwide over the last decade has come from emerging market economies. Although, both the U.S. and European Union have shown tentative support lately for so-called climate reparations — additional compensation for the “loss and damages” already incurred by poorer countries on the front lines of climate change.
Rich countries also now say they will meet their 2009 pledge of providing $100 billion US in annual climate financing to the developing world by 2023 — three years later than promised. But there exists a troubling lack of transparency around how money for emissions reduction and adaptation is being distributed, and many voices in the Global South are now saying that the $100 billion figure is wildly insufficient.
Last year at COP26 in Glasgow, Scotland, a negotiator representing a bloc of African nations denounced the 2009 pledge as “already absurd,” saying the continent would require $1.3 trillion US per year from 2025 onward to reach international climate targets without sacrificing domestic economic and social development goals. An official from India, the world’s third-largest emitter, claimed his country alone would need $1 trillion US annually by 2030 to reach net-zero by 2070.
In the certainty that these demands go unmet — plus the way that thousands of the world’s largest corporations are greenwashing their operations, and Russia’s invasion of Ukraine has triggered a frantic rush by European states for new fossil fuel sources — developing countries have been increasingly vocal about the energy hypocrisy of rich nations.
The UN secretary general, António Guterres, has joined in. In September, Guterres told the UN General Assembly in New York that additional taxes should be levied on multinational energy giants to help offset rising food and energy costs and negative climate impacts. “The fossil fuel industry is feasting on hundreds of billions of dollars in subsidies and windfall profits while household budgets shrink and the planet burns,” he said.
Indeed, summoning the financial might and political will required to address the climate crisis appears daunting, to put it mildly — but not impossible.
Columbia University academic Adam Tooze has suggested it could be done by governments committing three to five per cent of their spending each year to climate initiatives — the equivalent of one-third of the Pentagon’s allotment in the U.S., or slightly more than double what Canada estimates it will spend on Veterans Affairs in 2022-2023. Those billions of dollars could then leverage trillions of dollars through public-private partnerships, according to Tooze.
Public money would assume the majority of the upfront, short-term investment risk of projects before private partners could engineer them into products that source money long-term on financial markets, argues Tooze.
Egypt’s minister for international cooperation echoed this idea during an interview in May, signaling climate finance solutions were a main focus of her government as the hosts of COP27, while saying that “more synergy” was needed between government agencies and private sector capital to “create de-risking tools.”
Alliance on shaky ground
Sensing opportunity, last year at COP26 former Bank of Canada governor Mark Carney unveiled a coalition of 450 financial companies across dozens of countries — the Glasgow Financial Alliance for Net Zero (GFANZ) — that say they’re ready to mobilize $130 trillion US toward net-zero goals if conditions are right.
This would ultimately socialize the risk and privatize much of the monetary benefits of climate action, all while handing a new profit stream to the same financial institutions that have bankrolled the fossil fuel industry for decades. It would also depend on private sector firms keeping up their end of the bargain. That’s far from a sure bet, given that some major players — including Canadian banks — are considering leaving GFANZ, showing that even this big, splashy alliance is on shaky ground.
It might trouble you that governments will be underwriting ways for the institutions that profited off the burning of fossil fuels to now profit off mitigating climate change, but a morally-dubious solution can still be a solution. This is especially true if the alternative, after 20 years of failed efforts, is to continue hoping that the machinery of democratic governments — increasingly hijacked by perpetual electioneering — or unaccountable autocratic regimes can collectively execute sweeping Green New Deal-type revolutions amid a new global macro-economic era of stubborn inflation, aging societies and jittery bond markets.
Similar to carbon pricing mechanisms, public-private partnerships carry enormous political risk and require massive efforts to maintain transparency. But if done right, together they may also stave off climate catastrophe.
Do you have a strong opinion that could add insight, illuminate an issue in the news, or change how people think about an issue? We want to hear from you. Here’s how to pitch to us.
Washington News Post Latest Breaking News, Headlines
Washington News Post|| World News||USA News||Washington||
Celebrity News||Movie Review