[The COP27 climate conference, in Egypt, was in large part a
global search for cash.]
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HOW TO PAY FOR CLIMATE JUSTICE WHEN POLLUTERS HAVE ALL THE MONEY  
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Bill McKibben
November 19, 2022
The New Yorker
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_ The COP27 climate conference, in Egypt, was in large part a global
search for cash. _

Joe Biden speaks at the twenty-seventh Conference of the Parties. If
he thought his efforts to curb climate change would buy him affection
at the event, he was only partly right., Gehad Hamdy / Getty

 

The climate summit just concluding in Egypt ran hard into one of the
world’s greatest structural problems: most of the money is in the
Global North, but most of the need is in the Global South. Nearly
three hundred years of burning fossil fuels have produced much of that
northern wealth, and now the resulting greenhouse gases are heating
the planet and producing much of that southern need. So is there some
way to mobilize that money to build a more livable future? The
conference went into overtime on Saturday, in part to make a small
start on that very big question.

For two weeks, the money issue bedevilled negotiators in the grim
warehouse in a desert that Egypt, the host police state, offered up as
the headquarters for the annual global gathering. It’s actually a
fairly new focus—until now, most _cop_ meetings have primarily
aimed to pressure the big emitting nations to set ambitious targets
for decarbonization. But the congressional passage
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the Inflation Reduction Act finally brought the laggard United States
into some kind of compliance with its proffered carbon-reduction
targets, and a recent meeting between President Joe Biden and
President Xi Jinping of China, at the G-20 conference on November
14th
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seemed to indicate that coöperation between the carbon superpowers
was back on some sort of track, after it was derailed by Nancy
Pelosi’s visit to Taiwan. For now, the industrialized world is
working on its own energy transformation.

If Biden thought that his efforts would buy him some affection at
the twenty-seventh Conference of the Parties
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he was only partly right. As delegates streamed toward the plenary to
hear his speech, they passed a crowd of activists chanting “Pay up,
pay up, pay up for loss and damage.” Many of the protesters were
from Africa; this is just the third _cop_ on the continent, and
civil society had been awaiting it keenly, because Africa is the best
example of the world’s economic gulf. Though it has produced just a
small percentage of the greenhouse gases now warming the Earth, it is
fast falling prey to almost unimaginable floods and droughts. In South
Sudan, for instance, to the west of the fast-warming Indian Ocean,
so-called once-in-a-century rains fell in 2019 and again in
2020. Bloomberg reported
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in August, 2021, “with the land saturated even after average
rainfall, the White Nile flooded. The Lol [River] was stopped by the
weight of the waters. It began to flow backwards and burst its
banks—the worst flooding in 60 years. There are some one million
people here among the world’s permanently displaced by climate
change.” Meanwhile, a thousand kilometres away, in Somalia, the
fifth straight rainy season without much rain is currently under way;
scientists are now predicting a sixth and attributing the drought to
climate change.

You can imagine the tension—the anger—that comes from watching
your part of the world dry up or flood, knowing that the countries
whose pollution caused your problems also have enough dollars to
repair the damage. The moral argument couldn’t be more
straightforward: Americans have produced almost a quarter of the
excess carbon in the atmosphere; a quarter of the damage should be on
our tab. And yet we have not yet started to pay it, not in any
straightforward way: Congress won’t spend tax dollars on reparations
for the descendants of enslaved Africans; they’re even more unlikely
to do it for survivors of the climate crisis in Africa or Asia. At
least, not in sums remotely equal to the damage: at _cop_27, a
handful of the usual countries (think Denmark) pledged climate-relief
aid on the order of about seventy-five million dollars, with an
“M.” The initial estimate of the damage from Pakistan’s wild
summer of flooding
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by contrast, is about forty billion dollars, with a “B.”

So there needs to be some less direct way of accessing the wealth of
the north. More than half the world’s capital is in the U.S. and
Europe; more than a third of it is in the U.S. alone. Much of that
money lies in retirement accounts—money that isn’t charitable, and
won’t simply be turned over to cover what the U.N. calls the “loss
and damage” of climate change, no matter how just the claim of the
poor nations might be. But the trillions of dollars in those
funds _could_ provide the financing that the developing world needs
for an energy transition—and if African nations have the funding to
build, say, solar arrays, they can generate lower-cost clean energy
and produce a return for American pensioners. At the moment, though,
that’s unlikely. Investing in an American wind farm is relatively
easy; the pension fund can predict their earnings based on a hundred
years of historical returns from utility companies. Investing in a
Senegalese solar company that lacks a track record, and which could be
at the whims of the local political and judicial system, would be a
different story. Because such investments are relatively risky,
pension funds would charge prohibitively high interest.

“With money at six or seven per cent, solar in Africa can outcompete
anything and turn a profit,” Nicholas Stern, an old warrior in these
fights whom I stumbled across in the corridors of _cop_27, told me.
“At fifteen per cent you can’t make a profit, and so it won’t
happen.” Currently a professor at the London School of Economics,
Lord Stern was once the chief economist at the World Bank, and is most
famous for having authored—in 2006, at the behest of the U.K.
government—the most comprehensive account of how much climate change
was going to cost the world. A lot, as it turned out. “Climate
change is a result of the greatest market failure the world has
seen,” he wrote. “Those who damage others by emitting greenhouse
gases generally do not pay.” But he keeps trying to find ways around
that basic impasse.

Basically, you need to figure out how to de-risk the investment, so
that a pension fund feels as comfortable investing in an African solar
farm as in a Kansas windmill, as John Kerry explained
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me in October. And the tools for that de-risking belong to the
multilateral development banks—the World Bank, the Asian Development
Bank, the African Development Bank. These organs, among other things,
manage flows of money from north to south—and they’re filled with
clever people who can figure out how to sprinkle, say, a little bit of
public money into a deal so that the hazard largely disappears.
Stern’s estimate, in a long paper
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just before the _cop_, is that this would require “grants and low
interest loans from the governments of developed countries to double
from $30 billion today to $60 billion by 2025.” Spend that
relatively small sum—just a fraction of the nine trillion dollars
that rich countries spent on _covid_, and an even tinier fraction of
the overall cost of climate change—and private investors would
likely plow a _trillion_ dollars into developing markets. But even
this relative bargain can seem out of reach: even a Congress
controlled by Democrats refused to approve Biden’s request for $11.4
billion annually for this kind of aid. If future House Speaker Kevin
McCarthy was unsure about sending weapons to Ukraine, one guesses that
sending cash to Africa may not be high on his to-do list.

So the search for workarounds continues, and increasingly it is
focussing on the World Bank. Simply by shifting some of its standard
practices, the World Bank could free up capital for this kind of work,
Kelly Sims Gallagher, the director of the Climate Policy Lab at Tufts
University, told me. (I first met Gallagher, another veteran of this
decades-long fight, at _cop_3 in Kyoto, in 1997, and I came across
her booth around the corner from where I spoke to Stern.) Right before
the Egypt gathering, Gallagher argued in _Foreign Affairs_
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the World Bank already has the ability “to lend much more than they
do” for renewable-energy projects. She also pointed out that the
World Bank is still pouring huge sums into fossil-fuel development,
against the advice of climate scientists who say there’s no more
margin for new oil and gas projects, and that it urgently needs to
“mobilize additional green capital.” But little will change, she
told me, unless the World Bank itself is “overhauled.”

Surprisingly, this is a possibility. The U.S., by tradition, approves
the selection of the World Bank president, and the current occupant of
that chair, David Malpass, was put there by Donald Trump. Malpass, who
was the chief economist for Bear Stearns until it went bankrupt,
recently made the mistake of indulging in a little straight-up climate
denial: over the course of a long interview with
the _Times_ reporter David Gelles, he passed up one opportunity
after another to say that humans were heating the planet, finally
resorting to a dodge worthy of some _maga_ senator: “I don’t
even know. I’m not a scientist.” His team hustled him onto CNN a
day later to try and repair the damage. (“It’s clear that
greenhouse-gas emissions are coming from man-made sources, including
fossil fuels, methane, the agricultural uses, the industrial uses,”
he said, which is not exactly an eloquent formulation.) But those who
wanted reform saw an opening: Al Gore called him a denier and demanded
that he be fired; neither Kerry nor the Biden Administration publicly
pushed back against that idea. And in an interview in the World
Wildlife Fund booth at _cop_, under a giant panda logo, the
Massachusetts senator Ed Markey told me that, once back in D.C., he
planned to organize the Senate Dems (now at least fifty strong) to
demand Malpass’s ouster. Markey, who is the Senate sponsor of the
Green New Deal, said he wanted to “send a very strong signal that,
while it’s unprecedented that the World Bank president is removed,
it’s also unprecedented that the world would face such a
catastrophe, and that a climate denier would be in charge.”

There are even farther-reaching demands for reform of the global
financial system. Mia Mottley, the Prime Minister of Barbados, has put
forward what’s being called the Bridgetown Agenda, named for her
capital city. It calls for the I.M.F. to issue half a trillion dollars
in “special drawing rights,” or other financial instruments to
help boost investment in the Global South. “It’s a way of
rethinking the institutions created after World War Two” at the
Bretton Woods agreement, Gallagher said. “It would fully integrate
climate into their mandates,” which, she said, is necessary, because
the classic debt trap (where poor countries have to keep borrowing
just to pay off the interest on old debts) has been replaced with a
“climate-debt trap.” Countries suffer one climate disaster after
another, accruing enormous economic damage and having to borrow more
simply to build back to where they were. Such policies require
governments like ours to pony up more cash, but the poor nations are
not without leverage: world leaders such as Prime Minister Sheikh
Hasina, of Bangladesh, and former Maldives President Mohamed Nasheed
have raised the idea of a global debtors’ strike, arguing that the
high emitters have not kept their side of the bargain. If enough
countries decided not to pay interest to countries that continue to
spew carbon, they could conceivably influence the larger financial
system.

None of these financial schemes precisely addresses the demand that
the most vulnerable nations are making: for money to cover their
devastating losses and damages. On Saturday, however, as the
conference came to a close, negotiators, including those from the
U.S., tentatively agreed to a concrete step in the right
direction—the formation of a loss-and-damage fund within the next
year, albeit without any details on who will fund it or how much that
funding will amount to. There’s also an insurance scheme—Global
Shield, its backers are calling it—that might offer relief in the
aftermath of crises. These steps will not produce forty billion
dollars when a country like Pakistan floods, at least not anytime
soon, nor will they repair the grinding, slow-motion
crises—desertification, drought, sea-level rise—that pose some of
the worst risks on an overheating planet. But they are evidence of how
hard the Global South is pushing, and how unimpeachably just their
demands are.

_cop_27 is one more reminder, however, that justice only proceeds,
fitfully, through politics. Rebalancing the world’s wealth, even a
little, is the trickiest of political tasks. Yet our chances for a
livable world may depend on it. ♦

_BILL MCKIBBEN
[[link removed]] is a founder
of the grassroots climate campaign 350.org and a contributing writer
to The New Yorker. He writes The Climate Crisis
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The New Yorker’s newsletter on the environment._

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