What Climate Debt Does The North Owe The South?

Nov. 30, 2022

Richer countries haven't met their $100 billion promise to help poorer countries move beyond fossil fuels. Where's the money going to come from?

To keep the planet from overheating, there’s just so much more carbon that humans can pump into the atmosphere. From the onset of the Industrial Revolution until today, humanity has used up approximately 83 percent of its “carbon budget”—the amount of carbon the atmosphere can absorb and not exceed the Paris climate agreement’s aspirational goal of a 1.5C degree increase in global temperatures since the pre-industrial era. At the current rate of emissions, the budget will be used up within the next decade.

Equally troubling has been the distribution of those carbon emissions. “With just below 20 percent of the world population, the Global North has overconsumed 70 percent of the historic carbon budget,” notes Meena Raman, president of Friends of the Earth Malaysia and head of programs at Third World Network, at a Global Just Transition webinar. “Those who became rich in a world unfettered in terms of emitting greenhouse gasses are responsible for much of the destruction we’re facing today.”

Because of this large disparity in emissions and in wealth earned alongside those emissions, the rich countries of the north owe the poorer countries a kind of “climate debt.” Now, when carbon emissions have to be controlled severely, the north has a historic responsibility to help the south make its own transition to a post-fossil-fuel future.

This responsibility is not simply a function of carbon emissions. The extraction and burning of fossil fuels by the Global North during and after the Industrial Revolution went hand in hand with an ongoing process of looting the Global South. The colonial era established an unequal power balance between the north and south, which has continued into the post-independence era. The Global South continues to supply the Global North with natural resources, increasingly to support a “clean energy” transition. The countries of the Global South also remain locked into various forms of debt servitude to the financial institutions of the Global North.

“We need to talk about all of these external debts—foreign, financial—which involve colonialism, the exploitation of labor, racism, and patriarchy,” observes Alberto Acosta, Ecuador’s former minister of energy and mining. “These ways of expropriating nature have been from the beginning instruments of domination over the Third World or developing countries or poor countries. These countries on the periphery have been historically bled out.”

Avoiding the worst-case scenarios of climate change will require money: a lot of it. “Regardless of how we frame the discussion—climate debt, climate reparations, climate fair share—the challenges are immense,” points out Tom Athanasiou, co-founder of EcoEquity. “There is no conventional politics that can properly address both the climate crisis and the inequality crisis. The science tells us that we have to phase out fossil fuels globally in only a few decades. That means that the countries of the Global South must rapidly decarbonize even while they are still poor, even if they have fossil resources they hope to extract and sell for development.”

But where will this money come from and what political structures are necessary to rectify the imbalance of power and wealth between the north and south?

The Stakes

In 2021, the Inter-Governmental Panel on Climate Change (IPCC) concluded that 85 percent of the world’s population had been affected by climate change. This year, unprecedented monsoon rains late this summer put one-third of Pakistan under water. Drought has brought high levels of malnutrition to East Africa, while the deforestation of the Amazon has happened at a record pace in the first six months of 2022. Meanwhile, the smaller islands of the Indian and Pacific Oceans are getting smaller every day. Among other climate disasters in the north, forest fires have devastated Russia, Europe, and the United States.

“If you look at recent IPCC reports, the window for adjusting to climate change is fast closing,” Meena Raman says. “This is not only the window for emission reduction but also the window for adaptation. We are already in the era of loss and damage. Real suffering is happening around the world: there’s been flooding in Pakistan and Nigeria, and in the rich world too.”

“The scientists are close to panic,” Tom Athanasiou reports. “It’s possible that the global temperature could very briefly hit the 1.5-degree limit in only two years. At the end of this decade, it will likely be at 1.5 degrees, or very close. By that point, with conditions getting very, very dangerous, political dynamics will have changed.  It’s inevitable.  Of course we don’t know how they will have changed.”

A shift in the political dynamics might also result from disruptions that take place beyond national borders, such as glacial melt in the Antarctic. The Thwaites glacier, nicknamed the “doomsday glacier” for the impact its melting will cause around the world, is now shrinking at twice the rate it did over the previous decade. “When the Thwaites glacier goes and sea level everywhere rises, will this change the political dynamics?” Athanasiou asks. “Does radical change that previously was completely off the agenda find its way on the agenda in a new way? People know that neoliberal economics have got to go. It’s not just street-fighting people. Everyone knows. So, what new channels of cooperation, resistance, and transformation does this open up?”

These recent disasters are the culmination not just of climate change but of a maladaptive human philosophy toward nature. “This climate collapse reflects the reality of anthropocentrism,” observes Alberto Acosta. “But this disequilibrium of the planet is not the result of all humans, but of privileged humans exercising their consumerism. It’s the history of capitalism, a history of voracity for accumulation that affects billions of people on earth, especially women and indigenous communities.”

In part because of the effects of this disequilibrium—the floods, droughts, intensified hurricanes—humans have finally begun to address climate change, but not with the requisite urgency or resources. So, for instance, the Paris agreement in 2014 established targets for the reduction of carbon emissions, but national efforts towards these targets are voluntary. Similarly, the more recent pledges by countries to reach “net zero” by 2050 are not enforced by any international authority.

“Net zero by 2050 is too little, too late,” Raman points out. “The developed world should have gotten to real zero by now. And because of the war in Ukraine, they’ve even backtracked to increasing their use of fossil fuel, with Germany for instance turning back to coal.” Alberto Acosta agrees that the Ukraine war has been a step backward for the climate justice movement Nuclear energy, like coal, has made a rebound. And tremendous investments have gone into armaments, he notes, at precisely the moment when they’re needed for addressing climate change.

As Tom Athanasiou points out, getting to zero by mid-century “would be hard even if we had functioning democracies and responsible leadership, and we don’t have either. In fact, a lot of very powerful people stand to lose a lot of money by phasing out the fossil fuel industry.”

Although nearly everyone in the world now experiences a byproduct of climate change, these impacts vary according to geography and wealth. “The countries with the highest climate vulnerability indexes—the countries most vulnerable to climatic destabilization, are almost all ex-colonies,” Athanasiou adds. “That tells you a lot right there.”

Alberto Acosta puts the blame squarely on colonialism. “The extraction of resources is a function of colonialism,” he says. “Consider the destruction of the Amazon to grow soybeans and export protein in the form of animal feed to the richest countries on earth. This transfer of natural resources to the Global North to feed industrial processes is done without consideration of the costs to the Global South. Meanwhile, going the other way from the Global North to the countries on the periphery is the spread of agricultural monocultures, the imposition of the most polluting industries, and the dumping of toxic wastes.”

That unequal relationship has carried over to the era of “clean energy.” The Global North’s push to reduce its dependency on fossil fuel has meant, Acosta continues, “transferring the problem to the Global South through the mining in poor countries for lithium and copper for electric cars and the destruction of tropical forests to obtain balsa wood to build more wind farms.”

Another divide, Athanasiou points out, is between different philosophies of development. In Africa, he notes, the conflict has heightened “between governments that want to develop fossil resources and civil society that want to keep those resources in the ground and launch crash program of renewable development. This conflict is sharp and visible and very different from what it would have been five years ago.”

The Scale

To put the brakes on global warming, the richer countries of the world need to reverse this colonial relationship and provide the funds necessary for the poorer countries to make the transition to a post-fossil-fuel future. This, Meena Raman points out, is not just an ethical or moral issue. It is a legal commitment.

“The UN Framework Convention on Climate Change, the Kyoto Protocol, the Paris Agreement: these are legal instruments,” she explains. “The Global North is legally committed to provide resources to the developing world.”

But what is the price tag for this transformation and what are the mechanisms to effect this change?

First, the richer countries have made commitments. In 2010, they promised to reach $100 billion per year in climate financing. “The number was plucked from a hat,” Meena Raman reports. “It was not based on what developing countries needed.” By 2021, the richer countries claimed to have mobilized around $80 billion, but in reality the figure was, as Oxfam estimates, about one third that much. “So, the $100 billion goal was shifted in 2021 to delivery by 2025,” she continues, noting as Oxfam does that the developed world counts even loan and insurance as part of that 100 billion.

Another mechanism of paying off the climate debt is the Green Climate Fund, an initiative pushed by the Group of 77 and based in Incheon, South Korea.  “Since 2014, it has delivered only $13.9 billion, which is very little in terms of the scale,” Raman reports. The Adaptation Fund, created in 2001 under the Kyoto Protocol, has committed only $850 million.

Compare these numbers—under $100 billion a year—with the scale of the challenge. According to one research report last year, the world needs to spend $5 trillion by 2030 in climate finance to meet the Paris goals by 2030. But as Raman points out, this figure is based on only 30 percent of the costs. Meanwhile, on the adaptation side, the UN Environment Program estimated in 2016 that $140 to $300 billion a year was necessary to cover adaptation costs in the developing world (which it placed closer to the upper range in its 2021 report).

These numbers don’t take into consideration the loss and damage costs. According to one study, the developing world will be paying somewhere between $290 billion and $580 billion per year by 2030 to deal with the consequences of climate change.

“We have to put the scale of the crisis in proper context,” Raman concludes. “It’s not about there being no money but about the political will. The movements for climate justice and debt justice have to go together. So, we need to talk about debt cancellation as part of reparations.”

The original loans, Acosta notes, were often taken by autocratic governments that wasted the money in corruption. Debt repayment, moreover, has forced countries not only to cut social programs but to increase their mining and extraction. In this way, the foreign debt directly drives carbon emissions.

In addition to the compensation for loss and damage are the opportunity costs associated with keeping fossil fuels in the ground. “What about compensation to countries like Ecuador that possess fossil fuels but refrain from extracting these resources?” Athanasiou asks. “How do they receive it? And do the big Middle East oil producers get compensation for not continuing to pump out their oil and how much, and who pays? Is the liability for those compensations the same as for global loss and damage?”

Other costs would include those associated with climate refugees forced to resettle because their homes have become uninhabitable. “Even if we determine what should be paid, who will pay?” Athanasiou asks.

Who Pays?

The climate transition will cost trillions of dollars. The developing world, locked into a neocolonial relationship of debt and dependency, doesn’t have the resources. So, where will the money come from to help the Global South leapfrog into a post-fossil-fuel era?

“There are three possibilities,” Tom Athanasiou suggests. “Fossil fuel corporations. The rich countries of the north. Or the rich people of the world.”

Fossil fuel corporations have historically profited enormously from peddling the products that have produced climate change. Even worse, they are making windfall profits now as a result of the Ukraine war, which has put restrictions on the amount of Russian oil and gas that’s available to Western markets. In the second quarter of 2022, for instance, BP “earned” profits of $8.5 billion, its biggest take in 14 years. In total, according to the International Energy Agency, fossil fuel companies have pulled in $2 trillion in profits over the course of the war so far. “People around the world want to push for a windfall profit tax for both tactical and strategic reasons,” he continues. “And I wouldn’t argue with them!”

The second option is the traditional climate debt approach, to make the rich countries of the north pay. “These countries obviously have to pay the greatest part of the bill because they have the greatest historical responsibility and the greatest capacity to pay,” he adds. “Yes, but there are lots of poor people, poor by global standards, in the countries of the north, including in the United States, the richest country the world has ever seen. And there are also some very rich people in the countries of the south.”

Because wealth is not so neatly divided between north and south, “maybe it should be rich people and not rich countries that pay,” Athanasiou suggests. “This is not as crazy an idea as you might think, especially if you follow Thomas Picketty and his colleagues at the World Inequality Lab. They argue that more than half of inequality on the planet is now within countries rather than between countries. So, what if we tax the emissions of just the richest one percent of the global population regardless where they live—at a rate high enough to pay for the entire cost of the emergency climate transition?”

Assessing individuals rather than countries would still conform to a fair share approach by geography. “About 6 percent of luxury emissions come from China, so it would have significant fair share,” he explains. “The United States, with 57 percent of the global luxury emissions, would have a far larger share, about ten times the size of China’s.”

He cites the work of Olúfẹ́mi O. Táíwò and his recent book on reparations: “Táíwò says that we need a constructive approach to reparations or to climate debt, a forward-looking, world-building approach that supports mobilization and cooperation. Such an approach cannot simply reference the climate debt that the north owes the south, huge though that is. It must also spotlight the responsibility to pay of rich people wherever they live in whatever countries.”

The bottom line, Athanasiou concludes, is that “with so many governments going neo-fascist, it’s not really very likely we’ll get tens of trillions from central bankers in the next several years. You can’t just print that money. It has to come from the rich. It’s complicated how it will be done. But it’s extremely important that the luxury consumption of the super-rich be made a big issue on this planet. And there’s no way of doing that except by taxing it. Such a tax will not in and of itself solve the problem. But to create a sense that a just world is being built, there has to be a sense that the rich are being reined in.”

Other Mechanisms

In 2020, the world subsidized fossil fuels to the tune of nearly $6 trillion (in both direct and implicit subsidies). Of that figure, the G7 countries shell out around $88 billion a year in direct subsidies, which they recently pledged to phase out by 2025. “This is a wasted resource,” Meena Raman points out, “which could be redirected to the developing world to address both the climate crisis and the development crisis.”

A second mechanism for raising money is, as mentioned before, taxes. In addition to a tax on luxury emissions, a tax on financial transactions (also known as a Tobin tax) has been long discussed as a generator of funds to address climate change. Such a tax has been introduced in a watered-down version in the European Union, but a stronger global version could help finance a just global transition, as Albert Acosta has suggested. He also recommends going after tax havens, which have cost governments around $500-600 billion annually in lost revenue (with poorer countries losing around $200 billion of that amount).

A third mechanism would be for the international community to pay countries to keep their fossil fuels in the ground. Acosta, who created an initiative for Ecuador to raise money internationally to keep oil beneath the Yasuni rainforest preserve, believes that “rich countries have to pay more to preserve the equilibrium of the planet. We have to keep underground two-thirds of all fossil fuel reserves, whether oil, gas, or coal. If we don’t, global temperatures will increase past the 1.5-degree limit.”

Another mechanism for redirecting resources southward would be the “special drawing rights” or SDRs that the IMF issues. During the pandemic, when the global economy teetered on the precipice, the IMF issued $650 billion in SDRs. “These went to rich countries,” Meena Raman reports. “The IMF can do this, but it’s not doing it for the developing world.”

The prime minister of Barbados, Mia Mottley, is attempting to change this situation. She has called for redirecting $500 billion of these SDRs to the developing world annually for decarbonization. “We in civil society have to push for this as well,” Raman urges.

At the same time, any number of “false solutions” to the climate crisis have been proposed. “Beware of green colonialism,” Alberto Acosta warns. “Beware of carbon markets and the mercantilization of human rights.”

Through carbon offsets, as Meena Raman explains, “you can continue to emit a ton of carbon if you sequester another ton through planting trees.” Ultimately, the polluting enterprises continue to operate as before. No net decarbonization takes place, and the same economic and energy system remains in place.

“Elites in the north, in cooperation with corporations, are now looking at geoengineering, the removal of emissions from the atmosphere through technical ‘solutions,’” she continues. “How do we veer away from false solutions to protect systems that are still intact? The last frontiers in indigenous communities are now under threat of land grabs. Free trade agreements allow corporations to sue governments for doing the right thing through investor-state dispute settlement mechanisms.”

On the other hand, some leaders are coming to the fore, like Gustavo Petro and Francia Marquez in Colombia. “These new leaders are talking about new development models, post-extraction and post-fossil-fuel solutions,” she adds. “But it’s not easy having to fight to dismantle structures and proposing alternatives like canceling the debt.”

Making Connections

To address climate change effectively, countries have to work together across any number of divides: north and south, east and west, rich and poor, and those rich in fossil fuels and those rich in sustainable energy sources. That is the challenge facing the annual Conferences of the Parties or COPs, the latest of which just took place in November 2022 in Sharm al-Sheikh in Egypt.

This imperative to cooperate extends to civil society as well. “We need to find solutions that connect all of our movements from north and south,” urges Meena Raman, “to fight the same system that is creating the climate crisis, the inequality crisis, and the development crisis.”

She continues, “We need to have a longer conversation about how to connect progressive movements. In the Global South, we can do what we can, we can bring progressive governments to power. But if the northern governments maintain the current mechanisms, we won’t have real change here. So, change has to come in the north. We need massive progressive solidarity movements in north. These movements are working in your interests in the north and in our interest too. That’s the motto for Friends of the Earth International: mobilize, resist, and transform for real system change.”

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