How to fund Loss & Damage

As you probably know, the big win at the last climate jamboree (COP27 in Egypt) was the establishment of the Loss & Damage facility. And a big win it was! The question, now, is how we’re going to provision that facility, how we’re going to fund the fund.

The principle of this website is transitional justice — how to provide the resources needed to actually achieve the climate transition. In the next year, we’ll have a lot to say about this, and about Loss & Damage finance in particular, but today, as I dig out my email, I just want to quote a particularly pithy summary of the road forward, one written by the inestimable Lidy Nacpil, together with Thuli Makama, both of whom hail from the Asian Peoples’ Movement on Debt and Development. It’s called Rich nations can afford to pay their fair share to fix global crises and here’s their summary of the menu, as it stood just after the COP.

The first [option] is making fossil fuel companies pay. While many households were pushed into poverty this year, oil and gas companies made record profits and governments continued to subsidise them. Ending fossil fuel subsidies would raise at least $600 billion a year, and a 10% tax hike on oil and gas production about $400 billion in 2022. Along these lines, the EU and UK among others have introduced windfall taxes on oil and gas profits, and U.N. Secretary-General António Guterres and small island governments are calling for part of these to be levied toward the loss and damage fund.

There is also momentum to shift a particularly influential form of fossil subsidy – international public finance – towards renewable energy instead. At COP26, 39 countries and institutions promised to end their $28 billion a year in international finance for fossil fuels by the end of 2022. While Germany, Canada, the U.S. and Italy have yet to meet this pending deadline, a growing group of countries has.

Second, a small tax on extreme wealth would raise $2.5 trillion a year, and related proposals to crack down on tax dodging would significantly bolster this. Because the world’s richest 1% have caused 23% of greenhouse gas emissions growth since 1990, these measures are also needed to reach climate targets. In a push that mirrored the loss and damage win, last week African countries secured a key step towards these reforms by passing a resolution for the U.N. to hold its own intergovernmental talks on tax rules rather than them remaining the sole domain of the OECD.

Calls to cancel Global South countries’ sovereign debts – incurred through our neo-colonial global financial system – predate the climate crisis but are intensifying with it. Campaigners brought these asks to COP27, pointing out that low-income countries are forced to pay wealthier countries the initial $100 billion a year they have been promised in climate finance many times over in debt service payments.

The economic volatility of the last few years has compounded debts in many countries, preventing public spending on basic needs, let alone climate action. In response, some governments and agencies are finally making serious debt proposals like cancelling $100 billion a year for the next decade.

Finally, Barbados Prime Minister Mia Mottley’s popular Bridgetown Agenda to tackle debt and climate has components of many these proposals, as well as an ask for the International Monetary Fund to inject at least $650-billion worth of reserve assets into struggling economies annually through Special Drawing Rights.

Together, these modest proposals add up to well over $3.7 trillion a year. More ambitious versions, closer to the scale of the Global North’s ongoing and historical debts to the rest of the world, could free up even more. We have always had the money for a liveable future where no one must choose between heating and eating, or transport and shelter – what may finally be arriving is the political impetus for the governments most responsible for today’s global crises to pay up.

Before and after the COP

Debates — honest and respectful, but sometimes sharp debates — are a sign of healthy political movement, which among much else, must avoid groupthink. I’ve been trying to do my part, as you might notice from these two webinars:

The first — a Global Just Transitions webinar organized by the Institute for Policy Studies — was What Climate Debt Does the North Owe the South? It took place before COP27, and featured (in addition to yours truly) Meena Raman, president of Friends of the Earth Malaysia and head of programs at Third World Network, and Alberto Acosta, Ecuador’s former minister of energy and mining and one of the principle drivers behind Ecuador’s storied attempt to raise international funds to keep the oil beneath the Yasuni rainforest in the ground. IPS’s John Feffer ably summarized the discussion here.

The second — How Can COP be Effective? — was organized by Jeremy Lent at the Deep Transition Network. It featured me, of course, as well as Osprey Orielle Lake, the Founder and Executive Director of WECAN, the Women’s Earth & Climate Action Network, International, and scientist and filmmaker Phoebe Barnard. Phoebe was unfortunately on a train with bad WiFi, but Osprey and I managed, between the two of us, to do a passable job of answering Lent’s extremely pressing question.

Adam Tooze: “There Is a Fix for Climate Change. But Can We Afford It?”

In this interview from Global Reboot, the Foreign Policy podcast, its editor in chief Ravi Agrawal asks the economic historian & critic & polymath & general know-it-all Adam Tooze some key questions and then lets him run, which is basically all you can do with Tooze.

The key topics here are:

1) the financing demands of the global climate transition, which for the purposes of this discussion limited to mitigation. Hint: 2 to 4 trillion dollars a years in additional investment, about half of which is “inefficient”, which is to say that it is insufficiently profitable or risky or otherwise unwise to count on, at least in a business-as-usual world.

2) the political conditions under which this mitigation finance might be mobilized, and why, in Tooze’s view there are only two ways it might actually happen. The first is something like a global green new deal; the second is a massive public / private “derisking” enterprise of the kind that Blackrock’s Larry Fink dreams about.

The first, of course, is ruled out by the realism of the day, while the second would stink to high heaven.

In any case, this is short and focused — an interesting piece of the puzzle.

Solving the Climate Crisis with Nuclear Energy Won’t Work

Back before the pandemic, the Abalone Alliance — the West Coast anti-nuclear alliance I was active with back in the day — had a reunion, and I was asked to speak. I came prepared to explain to my assembled co-fogies that, while we absolutely didn’t need to build any more nukes, we shouldn’t rush to shut down Diablo Canyon either. What with the global climate emergency and all.

I was asked to restrain myself, and to my shame I did. I feared that that distinction between keeping existing nukes operating, subject of course to real safety procedures, and building new ones would strike most people as scholastic, and that in any case the pro-nuke ideologues would love nothing more than repeat, with all their requisite distortions, that the old anti-nuke crowd was walking back its defining opposition to nuclear power.

Anyway, if you spend any time fielding suggestions that the anti-nuke movement had been, say, wrong, take a few minutes to read Robert Pollin’s short and decisive Solving the Climate Crisis with Nuclear Energy Won’t Work. You’ll be glad you did.

Targeting the emissions of the super-rich is essential if we actually want to stabilize the climate system

Energy Monitor just ran a lovely little piece based on the research of Lucas Chancel, which in turn draws on the World Inequality database. It reiterates the by now hopefully familiar fact that the wealthiest 10% of the global population is responsible for almost half of carbon emissions, but then connects a few dots that are, alas, generally allowed to float free, and tells us that targeting the “super-rich” could help define a fair path to a global net-zero world.

Here. for quick reference, from this study, are the latest numbers:

“the top 10% wealthiest people are responsible for almost half of individual CO2 emissions globally, with the top 1% contributing close to 17%. In contrast, the bottom half of people are responsible for just 12% of individual carbon emissions. Based on an input-output framework that represents the interdependencies between different economy-environmental sectors, the same study estimates that 60–70% of the global carbon footprint can be traced to individual consumption”

And here’s some news, and the key takeaway:

“While two-thirds of the inequality in individual emissions was due to emissions inequalities between countries in 1990, the situation almost entirely reversed in 2019: 63% of the global inequality in individual emissions is now due to gaps between low and high emitters within countries,” said researcher Lucas Chancel in the WID study.

This trend deserves a lot more attention. While once the defining inequality was between rich and poor countries, the balance has shifted. Global inequality is today defined more by the divide between rich and poor people, and this is true in all parts of the world. Stare at this for a while . . .

COP26: The Developing Countries have a Plan!

I’ve recently found time to read COP26: Delivering the Paris Agreement: A Five-Point Plan for Solidarity, Fairness and Prosperity, and I urge you to do the same. If you’ve been wondering what to expect from, and what to demand of, the upcoming climate talks in Glasgow, this is an excellent place to begin.

The title here – Delivering the Paris Agreement – sets the frame. Nearly 100 developing countries have endorsed this five-point plan for winning success in Glasgow, which is written in the belief that COP26 is “a time of both maximum need and maximum opportunity.”

The North’s activists are often quick to dismiss the climate summits as empty talk shops, but the South’s negotiators cannot afford to be so glib. Thus, the focus of this plan is the possibility of substantive wins, now and in the next ten years, wins that are absolutely necessary if the Paris Agreement’s temperature goals are to remain within reach.

The plan’s authors, many of whom have spent long and bitter years worrying the climate talks, could easily itemize the compromises and limits that define the Paris Agreement, but they call instead for its full and immediate implementation. This is a realism that centers the interests of the poor and the vulnerable, which happen to overlap considerably with the interests of humanity as a whole.

The goal here is to empower the developing countries, and in particular the poorest among them, to effectively do their part in a proper planetary mobilization. Which is why the plan prominently features core finance provisions designed to accelerate emissions cuts around the world, even as it also increases funding for adaptation and disaster management in vulnerable nations.

Mohamed Adow, the director of Power Shift Africa, is one of the plan’s driving forces, and having worked with him for years, I can testify to the focus of his intention. The same focus is visible throughout this plan, which demands a spotlight on vulnerable nations’ “assessed needs rather than an arbitrary political pledge by rich countries”. The details follow from this approach, as do the asks, and though they’ll seem exorbitant if viewed from the perspective of, say, Washington DC, they are in fact extremely minimal. Indeed, they are explicitly framed as “the bare minimum”.

This plan, even if fully implemented, wouldn’t deliver the grand transformation needed to stabilize the climate system. But it would help a great deal, which is why The Least Developed Countries group, the Alliance of Small Island States and the African Group of Negotiators have all backed it.

But be clear. This plan does not capture the limits of the South’s aspirations. And as the next round of climate talks begin, southern negotiators will certainly step forward to go further. Some already have. In any case, the many kind words that “fair share accounting” receives in these few pages are a clear signs of an underlying vision that goes far beyond the bounds of realism-as-usual.

Still, the journey of a thousand miles begins with one step, or in this case with five.  Here they are:

  • “Cutting emissions: despite welcome recent progress, the sum total of climate policies in place across the world will not keep global warming within the limits that governments agreed in Paris; an acceleration that is consistent with the 1.5 degree Celsius temperature limit is urgently needed, led by those with the biggest responsibility and capacity
  • Adaptation: with climate impacts increasing, provisions to help the most vulnerable adapt, including through increased financial support, need to be strengthened
  • Loss and Damage: the consequences of the developed world’s historical failure to cut their emissions adequately are already resulting in losses and damage for the most vulnerable. Responsibilities have to be acknowledged and promised measures delivered
  • Finance: The promises made in Copenhagen in 2009 and again in the Paris Agreement are unequivocal and must be delivered: at least $100bn per year by 2020, up to 2024, with a concrete delivery plan, with at least half going to adaptation, with increased annual sums from 2025. The debt consequences of Covid-19 mean that action outside the UN climate process is also essential
  • Implementation: After several summits of stalling, governments must by COP26 finalize rules on transparency, carbon trading and common timeframes for accelerating action, in a way that safeguards development and nature.”