Since the Industrial Revolution, the countries mainly responsible for causing climate change crisis are basically those that form the developed world. Yet after the end of colonization in the last century, countries that gained independence after that have had needs to reduce poverty, and in turn ambitions for economic growth to catch up on last time as colonized people, and given the ability to modern state of technology to make such rapid gains in industrialization possible, have continued to quickly gain ranks in terms of contributing towards global carbon emissions.
A recent Foreign Affairs (FA) published article ‘The coming carbon tsunami: developing countries need a new growth model – before it’s too late’ by indicated in this regard as follows: ‘Since the dawn of the Industrial Revolution, countries have released one and a half trillion metric tons of carbon dioxide into the atmosphere. The largest cumulative emissions have come from the United States, European countries, China, and Russia, in that order. But these countries are now prosperous enough to pay for policies that can place them on the path to net-zero emissions by midcentury. The top emitting countries of the future could come largely from the developing world—countries such as Brazil, India, Indonesia, and South Africa, which face the herculean task of bringing millions out of poverty while simultaneously adapting to the harsh realities of climate change.’
Transition to green new technologies requires finances to support workers, and firms in making that shift, including investing in skills’ capacities to adjust with the needed change. According to International Monetary Fund, already high corporate debt of firms globally, increased all the more and rapidly during the pandemic. A recently published article ‘World’s biggest firms failing over net-zero claims, research suggests’ by Guardian highlighted a study, which pointed towards weak performance of a number of major firms globally in making a meaningful contribution in an overall effort to deal with the climate change crisis. The article highlighted as follows: ‘Some of the world’s biggest businesses are failing to live up to claims they will hit net-zero emissions targets, according to research that suggests they will cut their carbon emissions by only 40% rather than the 100% cuts claimed.’ At the same time, developing countries with limited fiscal space, rising debt sustainability issues, especially in the wake of the pandemic, and keeping a balance between making health/development/ stimulus related expenditures, and in shifting towards technologies that put carbon emissions in an overall effort to reach net zero in the next few decades.
Yet, the developed countries have neither provided enough climate finance to developing countries, nor have played much-needed meaningful role in reforming the multilateral system away from Neoliberalism to make it fairer, and in turn allow developing countries to be on a sustainable growth path, one that suffers minimally from money-laundering and off-shore accounts/safe-heavens, allows greater debt sustainability, and ability for developing countries to practice counter-cyclical policies, and in turn have enough fiscal space to make both needed climate- and development/stimulus expenditures.
In addition to providing enough climate finance to developing countries, developed countries will need to quickly improve its policy focus with regard to money laundering, if it wishes to build the otherwise little capacity of developing countries in making needed climate related expenditures.
The same FA published article pointed out in this regard that ‘If industrialized countries do not shoulder the responsibility to help prevent this next wave of emissions, the global effort to avoid climate disruption will fail. …In order to simultaneously preserve the environment and help lift hundreds of millions of people out of poverty, rich countries must provide financing and policy support at a scale that has so far been unavailable to poorer countries. There are roughly two dozen emerging economies across the globe that are poised to expand their greenhouse gas emissions dramatically in the near future if they do not receive this assistance.’
With regard to money laundering taking a lot out of the fiscal space of developing countries, and the overall insufficient policy emphasis of developed countries to play their part in discouraging money-laundering, economics Nobel laureate, Joseph Stiglitz recently pointed out in his Guardian published article ‘Credit Suisse has allowed the morally bankrupt to steal from the poor far too long’ as follows: ‘The bombshell revelations of the Suisse secrets… are a continuation of the path-breaking work of the Panama Papers and the Paradise Papers. …it appears the countries that suffer the most from the bank’s assistance to bad actors are developing countries and emerging markets. …How many stories, how many revelations, how many exposés, will it take for Switzerland, the US, UK and other countries to change their laws on secrecy in banking and real estate, and all the other activities that facilitate money laundering and promote crime and corruption? While this treasure trove showed Switzerland benefiting from a flow of money from poor countries, the system itself is corrupting: the rot of tainted money spoils all that it comes in touch with.’
Hence, in addition to providing enough climate finance to developing countries, developed countries will need to quickly improve its policy focus with regard to money laundering, if it wishes to build the otherwise little capacity of developing countries in making needed climate related expenditures. Overall, also, not much could be achieved during COP26 meetings last year in terms of detailed tangible steps as to how countries will move towards the net-zero carbon emissions goal.
On the contrary, a recent Financial Times (FT) published article ‘Fossil fuel and agriculture handouts climb to $1.8tn a year, study finds’ highlighted a study, which pointed out the significant level of subsidies being provided globally that would likely exacerbate the climate change crisis. The article pointed out in this regard that ‘Governments worldwide are spending at least $1.8tn a year on subsidies in support of heavily polluting industries led by coal, oil, gas and agriculture, according to new research, despite their commitment to climate change targets. About 2 per cent of global gross domestic product was spent annually on subsidies that encourage unsustainable production or consumption, deplete natural resources and degrade ecosystems, the independent researchers Doug Koplow and Ronald Steenblik concluded. The biggest beneficiary of the handouts was the fossil fuel industry, which enjoyed $640bn a year, while the agricultural and forestry sectors received $520bn and $155bn, respectively, the research found.’
This subsidy provision direction needs to change if a serious effort needs to be made, in dealing with an otherwise existential, and fast unfolding climate change crisis. Already for instance, and this is just for Europe and only for the last forty years, according to a recent Guardian published article ‘Extreme weather has cost Europe about €500bn over 40 years’ the impact of extreme weather has been very significant. The article, reflecting the study by European Environment Agency, pointed out as follows: ‘Severe floods and other extreme weather have cost Europe about half a trillion euros in the past four decades, with Germany, France and Italy the worst-hit countries.’
