You can regard the depressing denouement of the COP29 climate conference in Azerbaijan at the weekend as a sort of diplomatic echo of the US election result three weeks earlier.
In the US, progressives found themselves blocked by a surprisingly strong coalition of both traditional Republicans, and a faction of working class and non-white supporters whom they had regarded, perhaps naively, as their natural allies. At the UN climate conference in Baku, rich nations found that efforts to reduce their own emissions and fund climate programs elsewhere in the world bought them little favor with developing countries most at risk of global warming.
Both situations are powerful examples of aspirational politics. Since the 19th century, conservatives have marketed themselves to the electorate by arguing that their policies were the best way to achieve the wealth and independence sought by working-class voters.
Illustration: Mountain People
Those opposed to climate action make a similar pitch to low and middle-income nations — environmentalism is a protectionist plot to keep poor nations poor. Only fossil fuels can provide the development you need to grow wealthy. Rich nations can never do enough to repay the carbon debt they have incurred.
It is a potent argument because there is a grain of truth to it. Consider the 86 countries the World Bank considers to be “high income.” After the traditional colonial powers of Europe, Japan, North America and Oceania and their immediate neighbors in the Caribbean and Eastern Europe, the largest grouping are all petroleum exporters.
Thanks to oil, the Arabian Peninsula — a region that had been barely governable in the 13 centuries since the death of the Prophet Mohammed — now has the diplomatic clout to make or break climate policies. To countries still climbing the development ladder, the rapid growth of China and India (which together burn 70 percent of the world’s coal) looks like an attractive advert for a similar fossil-fired road to wealth.
Against that backdrop, global summits, like democratic elections, often come down to judgement calls about which side is most likely to enrich those at the bottom of the heap. Wealthy, climate-conscious countries need to accept that they have been losing that argument.
Consider the haggling over upgrading the US$100 billion in climate finance per year promised at the 2009 Copenhagen meeting to US$300 billion a decade hence. The sum is a pittance compared with the trillions needed, as my colleague Mark Gongloff has written, especially when one considers how little is new funding and how much consists of standard loans. More to the point, it is also failing to compete with the hard-money allure of fossil-intensive development.
Gabon, a central African member of OPEC, is a case in point. With 2.5 million people, it often receives as much foreign direct investment as the Democratic Republic of the Congo, home to more than 100 million. Or take Guyana, the world’s fastest-growing nation. It took in more foreign direct investment last year than Taiwan or the Philippines, and twice as much as the entire Caribbean.
Of the US$31.3 billion in foreign direct investment that went to the 45 least developed countries last year, more than one-third flowed to seven nations — Chad, Mauritania, Mozambique, Senegal, Sudan, Uganda and Tanzania — which are operating or building petroleum export projects.
What can rich nations offer as a substitute?
The advantage of petroleum is that oilfields and terminals both borrow money and earn export revenues in US dollars, immunizing them against the currency crises that plague poor countries. If you used greenbacks in 2021 to finance a wind farm outside Cairo, you would have been in trouble this year when the Egyptian pound fell to about one-third of its value back then. There is little prospect that your consumers would be able to pay electricity tariffs high enough to cover your interest payments.
The best answer is for rich nations to recognize that climate change is truly a crisis, and act accordingly. A US$650 billion issuance in 2021 of the IMF’s Special Drawing Rights — an obscure quasi-currency mostly known only to central bankers — played a decisive, but unheralded role in cushioning poor countries against the damage from COVID-19. About US$69 billion of the total is now being diverted to climate funding.
What is needed is a far more dramatic program for poor countries to buy the vast numbers of solar panels, batteries and wind turbines the world can produce. Those funds might not generate a good return in the strictest financial sense, but the benefit the world would get if every country is able to industrialize and grow wealthy on the back of clean energy would be vastly greater.
David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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