A message from South Africa
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.
The Guardian just ran this article here. I really have no comment, except that I’m not even sure even this would work. Depends on who they are, I guess.
The climate fair shares idea is no longer novel. But as the planetary crisis deepens, its profile is changing. Humanity is facing a civilizational emergency – a polycrisis with both climate and injustice at its core – and we need big ideas that can help guide us out of it.
This discussion paper, which was prepared by the Climate Equity Reference Project for the Climate Action Network International, is focused on one such idea: climate fair shares. Its purpose is to support analysis and campaigns for equitable climate action, including – quite explicitly – greatly increased international climate finance flows.
Note here a political premise — the equity challenge cannot be set aside while we concentrate on “implementation.” To be absolutely clear — we are in trouble, but a rapid global climate transition can still be achieved. We have (all) the money and (most of) the technology we need. But it is hard to see how any sufficiently rapid transition will be possible unless the benefits and promises and also the unavoidable pain and disruption are shared amongst the people of this world in a way that is widely accepted as being fair, or at least fair enough. We can not follow, yet again, the all too often repeated pattern in which most of the benefits are captured by those who are already wealthy and powerful, while most of the pain and suffering is born by those already marginalized and oppressed.
- Lessons and Thoughts contains a careful executive summary, which is good, because the paper as a whole is pretty long. By today’s standards.
- It contains a tidy chapter on planetary inequality – which is what you get when you have a world of nations, some of them wealthy and some of them not, and all of them internally stratified between rich and poor.
- It contains a brief history of the equity debate within the international Climate Action Network, which is at this point a global network of more than 1,800 civil society organizations in over 130 countries.
- It reviews the various fair shares projects that have been done over the past few years — in Norway, Canada, the US, the UK, Quebec, New Zealand, France and South Africa. The lessons are both varied and interesting.
- It contains a brief — if somewhat technical — explanation of why, when thinking about national fair shares in an emergency climate mobilization, it might help to lean into the Climate Equity Reference framework. As opposed to some of the alternatives.
- It lays out some preliminary — but not entirely preliminary — thoughts about “climate realism”, which is considerably different from the traditional variety. Given the future we’re looking at, as we shoot far beyond the boundaries of a safe climate system, this conversation needs real attention.
- It offers some advice on framing the financial costs of stabilizing the climate system, and why these costs – though certainly denominated in trillions – might be far more tractable than they appear. Particularly given how much money we waste today, on the militaries and, of course, on the rich.
- Finally, it asks a group of big strategic questions, and invites reflections on difficult equity challenges that go beyond even climate fair shares.
Tom Athanasiou, for the Climate Equity Reference Project.
“Anything we can actually do, we can afford”.
John Maynard Keynes
How to create the political backing for the international effort necessary to achieve a fair and rapid global climate transition, even though that support would be properly denominated not in billions of dollars but rather in trillions, or even as percentages of Gross World Product?
One eye-opening approach is to proceed by way of comparison – to show that the likely costs of the climate transition, great though they may be, are small when considered against the alternatives, and entirely affordable when considered against other, even larger expenditures, which we routinely accept as inevitable, even though they are often ill-conceived and sometimes criminally frivolous, and tend increasingly to be self-destructive on a monumental scale.
In a way, we all already know this, for we never tire of pointing out that the damage costs of inaction will far exceed the costs of any plausible mobilization. But other comparisons are also helpful, comparisons against the sums mobilized for other purposes, and also against the trillions that are wasted, on every front, when luxury consumption sets the terms by which expense is justified.
The good news here is that such comparisons are now routinely being made. Since the 2009 global financial crisis, and especially since the COVID pandemic, large governmental and inter-governmental financial interventions have, in the face of cascading emergencies, become almost routine. In both cases, very large numbers of people, and even significant fractions among the political elites, have been jolted into understanding that major mobilizations of public finance are sometimes absolutely, indisputably, necessary.
However, it’s still not possible to talk honestly and openly about the scale of the climate finance that’s actually necessary, or to keep the formal climate finance conversation from devolving into one in which private investment gets all the airtime. To be sure, there are many people who believe that transformational levels of public finance will be necessary to stabilize the climate system. But many of them also accommodate themselves to a policy world in which, so the thinking goes, the challenges of public finance can be safely set aside. In fact, public finance, and public planning and coordination more generally, will be absolutely necessary to the economy-wide transformations the climate crisis requires. Major debates remain before this point is so clearly established that it can no longer be reasonably contested, but at the same time, the conversation has clearly shifted. “Trillion is the new billion,” and this helps a great deal.
The key point here is that money is not the real problem. Keynes’ declaration made during World War II, “anything we can actually do, we can afford”, applies here as well. That said, the institutional and political challenges of providing the public finance and technology support necessary to achieve 1.5°C would be immense. The issues here sprawl, but I think it’s fair to say that Keynes would also have considered them to be entirely solvable.
For the moment, here are a few useful points of comparison:
Environmentally destructive subsidies. Every day, governments spend massive amounts of money to subsidize the destruction of our world. How much money? If you count not only fossil subsidies but a variety of subsidies for environmentally destructive activities, across a range of sectors including agriculture, forestry, water management, and fisheries, activities leading not only to climate destabilization but also biodiversity loss, land degradation and global inequality, the latest expert estimate appears to lie north of $1.8 trillion a year, or about 2% of Gross World Product (GWP), all of which goes into directly supporting unsustainable production and consumption.
Of this $1.8 trillion, about $640 billion comes as explicit subsidies to the global fossil industry. Actual cash. But there’s more to this story, as far as fossil fuel subsidies are concerned, in part because some of it comes as consumption subsides designed to protect the poor (a fact the fossil cartel takes full advantage of, in its endless claims to be a great benefactor of humanity) and in part because there is another, truer way, to estimate fossil subsidies. This time it’s the IMF that has run the numbers, and despite criticism, stuck to its insistence that hidden damage costs must be counted as subsidies, and in 2020 calculated the real fossil subsidy was about $5.9 trillion, almost 7% of global GDP. Which comes to about $11 million a minute.
COVID Recovery spending. According to the International Energy Agency, pandemic recovery spending, as of October of 2021, had reached $16.9 trillion. Of that, about $2.3 trillion went into long-term investments, of which only about $470 billion was for clean energy and sustainable recovery – about 3% of the total. Much of this was a one-time outlay that will not be repeated, so it’s notable that fossil energy subsidies significantly outpaced clean energy subsidies. It’s also notable that the overall economic recovery was fantastically inequitable. According to the World Inequality Lab, the richest 1% of the global population have, since the beginning of the pandemic, captured 19 times more of global wealth growth than the whole of the bottom 50%. The extremity here is frankly amazing – Oxfam, in its Inequality Kills report, notes that “The increase in Bezos’ fortune alone during the pandemic could pay for everyone on earth to be safely vaccinated”.
Military spending. Military spending is the gold standard of wasted economic potential, so it’s notable that, in early 2021, the Stockholm International Peace Research Institute estimated the world military spending had risen to almost $2 trillion in 2020. And this figure is growing fast. The US military budget is the largest in the world (it recently came to about 40% of the global total) and“ according to a projection by the Congressional Budget Office, Congress is projected to spend about $8.5 trillion for the military over the next decade – about half a trillion more than is budgeted for all nonmilitary discretionary programs combined (a category that includes federal spending on education, public health, scientific research, infrastructure, national parks and forests, environmental protection, law enforcement, courts, tax collection, foreign aid, homeland security and health care for veterans)”. But rapid growth is also taking place in China, where the military budget is about $229 billion and “modernization” programs are driving its growth up by an estimated 7.1 percent per year, and of course in Europe, where the Ukraine war has led a new prioritization for all things military.
Odious Debt. The poor are in all ways disadvantaged, and this of course means adequate climate action is often beyond their grasp, as is sustainable development itself. For some key current details, see the 2022 Financing for Sustainable Development Report, which begins not with the COVID pandemic but with the “legacy of inequality” that already hung over the poor countries when it arrived, a legacy that only deepened as the COVID crisis cascaded into broader economic instability (supply chains, inflation, higher interest rates) and then into the instabilities and economic dislocations of the Ukraine war. The chief point here, to be undiplomatic, is the billions in debt interest that the developing countries must every year pay to their creditors in the wealthy world, a burden that is sometimes so odious that the term “debt slavery” seems more a simple honest description than any kind of hyperbole.
How large is the developing world’s external debt? Estimates vary, as does the legitimacy of the debt – how valid was it, really, to transfer South Africa’s apartheid debt to its inheritors, most of whom never had any part in negotiating it, or benefiting from it? What is clear is that the total external debt of the developing countries reached $10.6 trillion in the wake of the pandemic, and that the servicing of this debt consumes resources that are now desperately needed for both development and the climate transition. In the low-income countries alone, external debt sharply increased during that pandemic, reaching $860 billion in 2020. No wonder a new wave of defaults has begin, and that widespread debt distress appears to be on the horizon.
Dynastic wealth. This brief list would not be complete without a mention of dynastic wealth, which is passed down from generation to generation within families, and of course within castes and classes. The numbers vary tremendously from country to country, but the US figures alone are boggling enough. Wealth managers estimate that “nearly 45 million U.S. households will transfer a total of $68.4 trillion in wealth to heirs and charity over the course of the next 25 years”. And of course, much of these transfers will be protected from taxation – according to one keystone study, “these wealthy families will avoid as much as $8.4 trillion in estate and generation-skipping taxes between now and 2024, by using dynasty trusts and other currently legal loopholes”.
Tax Avoidance. Speaking of the rich, we should mention hidden wealth, which is shielded by tax havens and secrecy laws, and has now been estimated to be about 8% of the world’s household financial wealth, or 10% of GWP . In 2007, this came to about $5.7 trillion. More generally, and this is probably the best bottom-line figure for this brief summary, taxing the world’s richest could raise about $2.52 trillion a year. It’s not enough to support all the ongoing social services associated with a just and sustainable global society, but it would definitely help. It would certainly cover the core of the climate transition. And if we may add a country specific data point, note that the wealth of the US billionaire class increased by an estimated $1.7 trillion since the beginning of the COVID pandemic, and that, under current laws, almost none of this new wealth will ever be taxed.
Blood Fossils. Finally, given Russia’s war on Ukraine, it seems appropriate to note that a good fraction of the untold billions that are spent on fossil fuels are diverted, sometimes immediately, to support the worst kinds of infamy. The exact figure varies with the price of gas and oil, but as of this writing, good estimates held that “Europe’s ongoing energy purchases send as much as $850 million each day into Russia’s coffers” (estimates vary, but see the citation to the Bruegal think tank’s numbers here). This, of course, is clear evidence of an intolerable dependence, and voices everywhere have risen to denounce it. What is not clear is how many of them will denounce the larger dependence, which hems us in on every side, with anything like equal vigour. Russian oil and gas, after all, is only the tip of the fossil iceberg.
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”https://wid.world/document/global-carbon-inequality-1990-2019-wid-world-working-paper-2021-22/
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 . . .
February 17, 2021
The petition is the latest call for Biden administration to walk the walk on climate by taking responsibility for historical emissions
Washington — Just days before the reentry of the United States into the Paris Agreement becomes official, environmental groups delivered the signatures of more than 50,000 people in the U.S. The signatures are the latest escalation in a growing call demanding that the Biden Administration commit to doing its fair share of emissions cuts and honor owed support for Global South countries, including climate finance. The petition reflects analysis released in December from the U.S. Climate Action Network (USCAN) that provides a path for the U.S. to take action that is in line with its responsibility for the climate crisis.
The delivery follows a sign-on letter from over 100 U.S. climate groups including USCAN which represents more than 175 US climate organizations, released for the 5-year anniversary of the adoption of the Paris Agreement. The call has now been endorsed by a total of 195 organizations including the international Climate Action Network, which represents more than 1,500 organizations from over 130 countries.
Earlier this month a similar coalition also demanded that the Biden administration commit $8 billion to the Green Climate Fund as well as further contributions to the Adaptation Fund. While the Biden transition team has yet to acknowledge the demand from this national coalition of people and organizations, incoming Climate Envoy John Kerry has spoken about the need for the US to do its fair share.
According to the analysis released by USCAN, for the U.S. to begin to do its fair share of the global action needed to help limit global warming to 1.5°C, it must reduce U.S. emissions 195% by 2030 (down from 2005 levels). To assemble this contribution, the analysis calls for U.S. domestic emissions reductions of 70% by 2030 combined with a further 125% reduction achieved by providing financial and technological support for emission reductions in Global South countries.
The Biden administration has enacted a flurry of climate executive orders and previously committed to a plan of net-zero by 2050. But announcements to achieve net zero have been met with criticism from climate groups and scientists for not being ambitious enough and relying on technologies and approaches that are unproven, dangerous, or not achievable at scale.
The extremely large U.S. fair share contribution partly reflects U.S. emissions to date. Today’s global warming is driven by cumulative emissions (not annual emissions), and the U.S. has already historically emitted more than any other country. In fact, many analyses deem that the U.S. has far surpassed its fair share of the cumulative global carbon budget for limiting warming to 1.5°C. The domestic reduction of 70% by 2030 recommended by USCAN roughly aligns with an extremely ambitious decarbonization via a prosperous economy-wide mobilization.
The fair share demand is one part of a larger framework prescribed by environmental groups called the Climate President Action Plan. The plan includes ten steps the administration can take to fulfill its promise to take bold steps on climate and rebuild trust abroad.Continue reading “Over 50,000 people & 195 global groups demand Biden commit the U.S. to do its “fair share” on climate”
The focus of the 2020 Emissions Gap report is, of course, the emissions gap, which, alas, the pandemic will do little to close. But this year’s edition of this indispensable series also contains a surprise: Chapter 6: Bridging the Gap – the role of equitable low-carbon lifestyles.
The gap itself has been well reported, so I’ll not review it. The crucial numbers are that total emissions reached 59.1 GtCO2e in 2019, leaving us with a gap of 15 GtCO2e to close by 2030, if we would have a 66% chance of achieving the 2°C temperature goal, or 32 GtCO2e if we’re still dreaming about 1.5°C (with the same 66% probability). Today’s pledges (formally, NDCs) are absolutely not on the necessary scale.
“countries must collectively increase their NDC ambitions threefold to get on track to a 2°C goal and more than five-fold to get on track to the 1.5°C goal.”
Furthermore, most of the pandemic stimulus has thus far been wasted. Globally, Covid related government fiscal spending has to this point amounted to about $12 trillion, a huge percentage of 2020’s global GDP. Unfortunately, a lot of this money has gone into high fossil sectors. The details are more than dispiriting, for they show that many countries have used the pandemic emergency to deepen their support for fossil energy. According to Energy Policy Tracker, the world’s largest countries, grouped into the G20, had (as of December 9th) directed more than $240 billion in stimulus funds to support high-carbon activities and fossil energy, while $157 billion had gone to renewables and low-carbon activities. The US, a particularly egregious fossil funder, had directed over $70 billion to high-carbon activities.
The surprise, and a good reason to go beyond the executive summaries and actually read the GAP Report, is Chapter 6, which focuses on “lifestyle emissions” or, as I prefer, “class footprints.” The first part of this chapter ably summarizes the latest research. The second part is also worth a good look, in part because it offers a master class in just how bland and bloodless analytic prose can get, even when it’s taking on politically fraught matters of absolutely existential significance – like the burden of the rich and their consumption.
Anyway, here’s the takeaway, in a nutshell:
“Around half the consumption emissions of the global top 10 per cent and 1 per cent are associated with citizens of high-income countries, and most of the other half with citizens in middle-income countries (Chancel and Piketty 2015; Oxfam and SEI 2020). One study estimates that the ‘super-rich’ top 0.1 per cent of earners have per capita emissions of around 217 tCO2 – several hundred times greater than the average of the poorest half of the global population.”
The two citations here are essential reading. The Lucas Chancel and Thomas Piketty paper, Carbon and inequality: from Kyoto to Paris, is I suppose a classic, because it came out before Paris. (I reviewed it here). The Oxfam and Stockholm Environment Institute paper, The Carbon Inequality Era: An Assessment of the Global Distribution of Consumption Emissions Among Individuals from 1990 to 2015 and Beyond, is the hot new item, and it deserves far more attention than it has received.
The U.S. Climate Action Network has taken a position on the U.S. fair share, which is to say–the US Fair Share in a global emergency effort to stabilize the climate system at 1.5C. This is a long story, but the position itself is short and sweet. To wit:
“USCAN believes that the US fair share of the global mitigation effort in 2030 is equivalent to a reduction of 195% below its 2005 emissions levels, reflecting a fair share range of 173-229%.”
This position was actually adopted some time ago, on July 17th 2020, when a long “alignment process” led by ActionAid USA, North Carolina Interfaith Power and Light, the Center for Biological Diversity and EcoEquity culminated in the adoption of this position during USCAN’s annual national meeting in 2020.
We’re now going public. The US Fair shares website is at https://usfairshare.org/, and it contains, among other things, a political and technical briefing, which is what you should read if you want the details of this position and its meaning. One point I want to stress is that we’re not saying we have the keys to the kingdom of global climate stabilization. Far from it. We’re just saying we have a critical missing piece, one that spotlights the logic of global climate justice, one that could help make the global climate mobilization fair enough to actually succeed.
There’s some nice early press. Notably, Bill McKibben featured the USCAN fair shares position in his New Yorker Climate Newsletter — in a piece he called The Climate Debt the U.S. Owes the World. I myself placed a longer and more detailed piece in Sierra Magazine called It’s Time for the US to Carry Its Fair Share on Climate Change. Bill’s piece is of course well written, but mine lays out more of the gory details.
And there’s more! Hunter Cutting has an excellent tweet thread here. There’s a very informative press release here. A YouTube of the press briefing is available here. And, finally, there’s a cool Video.