Opinion – Martin Wolf: Delay only makes climate action more urgent

by

The priority of COP27, in Sharm el-Sheikh, is to guarantee the continuation of life on this planet as we know it. However, there are those who argue that the goal of limiting the temperature rise to a maximum of 1.5 degrees Celsius above its pre-industrial level should be abandoned: it is no longer realistic.

Adapting our goals to our failures is defeat. If we can’t reduce emissions faster, we’ll end up having to spend a lot more to adapt. We will also have to figure out ways to remove vast amounts of carbon from the atmosphere. We may even have to adopt the daunting option of geoengineering. It is true that much, or even most of it, may become inescapable in the future. In fact, adaptation has already become inescapable, as the flood disaster in Pakistan shows. Even so, we need to stop emitting greenhouse gases into the atmosphere. This remains a priority.

Again, there are those who argue that those who have made free use of the global carbon sink for up to two centuries owe reparations to those who have not. The disparity in cumulative emissions per capita is truly brutal. Yet, once again, diverting attention from present priorities in order to seek to compensate for past injustices will not lead to action, but to endless and unproductive disputes.

So what needs to happen if we’re to even hope to get anywhere near the temperature limit we’ve agreed upon? The Energy Transition Commission presents us with a worrying picture: by 2030, annual carbon dioxide emissions need to be 22 gigatons less than they would otherwise be; only about 40% of this volume is covered by (dubious) action promises; progress on gaining new adherence to the net zero emissions principle and on turning this principle into law has slowed; and the likely cumulative emissions from China, India and high-income countries over the next half century will more than deplete the planet’s residual carbon budget, making the need for large-scale carbon removal inescapable.

In short, we are very likely to fail. The biggest challenge is in developing and emerging market countries. How should the development of their populations be combined with the containment and, ultimately, elimination of greenhouse gas emissions? Solving this challenge is not a sufficient condition for worldwide success, but it is certainly a necessary condition.

In high-income countries and China, the challenge, while enormous, is a political and public policy challenge. In developing countries, it is also a challenge to access technology and finance. This is discussed in the Energy Transition Commission report. It is also exposed in detail in the “Finance for Climate Action” report, which comes from a group of first-rate experts.

The problem is clear, and worrying. We have a global challenge that can only be solved with large investments, notably in new energy systems. But our capital markets are fragmented by country risk. The only solution is for rich countries to assume a substantial part of these risks, offering financing on favorable terms, both bilaterally and multilaterally, and thus promoting desperately needed flows of private capital.

In summary, to achieve the necessary transformation in developing and emerging market countries, there needs to be a huge acceleration in investments, a parallel increase in private external financing, a considerable expansion of the role of multilateral development institutions, a doubling of the value of financing assistance provided by high-income countries by 2025, based on the 2019 level, and imaginative ways of managing developing country debt problems. In round numbers, the world will need to mobilize $1 trillion a year in external financing for developing and emerging market countries, excluding China. It’s not about the $100 billion a year that high-income countries have promised and so far haven’t even tried to deliver, but something much bigger than that.

Without all this, the goals set out in the Paris Agreement and the Glasgow pact will not be achieved; it will not be possible to pay them. Some in the group of high-income countries, frightened by the amounts needed, may harbor the hope that the countries in question will choose to spend less and grow less. But, in addition to being inconceivable, this would mean continuing to grow along the current destructive path of high emissions and large-scale deforestation. The most transformative and most generous path is that of rational self-interest.

The needs are indeed enormous. Developing and emerging market countries, with the exception of China, will need to spend around 4.1% of their GDP (Gross Domestic Product) on a large-scale investment strategy in sustainable infrastructure, by 2025, and then 6.5% of GDP per year by 2030, up from just 2.2% in 2019. This will require radical policy reforms, notably the elimination of subsidies that distort fossil fuel markets and pollutant emission permit markets. One way to deal with this second factor could be to keep domestic fossil fuel prices at today’s high levels as world oil prices fall. A substantial part of the additional funding needed, possibly up to half of the total needed, would hopefully come from domestic resources. But a large part must come from external sources, through public and private partnerships that provide the necessary flows.

However, once this whole picture is exposed, people are likely to conclude that the idea is unrealistic. But that doesn’t work. Most of the additional external financing will come from the private sector and from a more imaginative use of the balance sheets of multilateral development banks. The expert group recommends that bilateral climate assistance funding should increase by $30 billion a year by 2025. This would equate to just 0.05% of rich countries’ GDP.

No one can reasonably argue that this level of support would be unsustainable. On the contrary: this is not what would be unsustainable. We have an obligation to fight a war that must be won. We cannot afford, in practical or moral terms, to bequeath to the future a planet with an irreversibly destabilized climate, perhaps already in the near future. We shouldn’t give up without even trying. At COP27, we need to deal with this in the most serious way.

Translation by Paulo Migliacci

You May Also Like

Recommended for you