2 weeks Ago
Instead of retreating into catastrophising, we can leverage the climate transition as a catalyst for rethinking the global economy, Laura Carvalho writes. This year’s COP29 in Baku was the most precarious climate summit yet. It was far more fractious and far less ambitious than earlier COPs.
Halfway through the meeting, many climate leaders wrote a public letter claiming COP was unfit for purpose and called for an urgent overhaul. Many senior negotiators expressed frustration with what some termed the worst COP in a decade. The meeting was haunted by the spectre of a second Trump presidency and derided for being hosted in a fossil fuel autocracy for the third time in a row.
It was acknowledged that the incoming Trump administration next year will cast a long shadow with the inevitable rolling back of environmental regulations and withdrawal from international agreements. The $300 billion finance plan — that COP29 President Mukhtar Babayev managed to gavel through to help developing nations cope with the soaring costs of global warming over the next decade — is extremely unpopular with developing nations. While it may seem significant, this amount falls drastically short of the $1.
3 trillion estimated to be needed by 2035 to tackle climate change effectively. Moreover, as Fadhel Kaboub shows, when adjusted for 5% annual inflation, the $300 billion goal is equivalent to just $175 billion in 2024 dollars. It's also important to note that this goal is based on low-quality finance, focusing on capital mobilization rather than provision, meaning there is no real commitment or accountability.
Despite this, it’s not all doom and gloom. There can be no sugarcoating the challenges to the climate that lie ahead, though not all of them emanate from Washington. The collapse of Germany’s governing coalition leaves many energy reforms and climate initiatives up in the air.
The political environment, and calls for immediate reform to COP, open up space for innovative approaches to tackling global challenges. The Baku summit was branded "the finance COP," but financing, while necessary, is not the only show in town. We have to look at alternative solutions.
The more developing countries steer the global conversation on climate initiatives, the better potential outcomes we will see. Summits like COP too often fail to explore alternative pathways that reduce emissions while creating jobs and transforming economies in developing countries. Lack of finances is not the only hindrance to climate action.
The Global South is also held back by constant trade-offs between green goals and socioeconomic development. In recent years, the US and China have been accelerating their green industrial policies to ramp up the production of electric vehicles, solar panels, wind turbines, and other climate-friendly products. While these countries seize economic benefits from the climate transition, developing countries encounter economic costs mainly.
Resource-rich developing countries can at least boost their economies by exporting critical minerals like nickel and cobalt. Still, they are forced, along with resource-scarce countries, to buy the green technologies produced in China and the West. They are obliged to make these purchases with climate finance loans — tied to punishingly high interest rates — which only fuels a lopsided approach to the transition and sours an effort that needs the highest levels of goodwill and cooperation.
Rich nations need to acknowledge that both aims — reducing emissions while creating jobs and transforming economies — are equally important. These are not easy asks at a time when the world is still struggling to pay pandemic and defence costs while battling the ensuing political instability. However, governments frequently find room to commit significant resources to security - whether framed around terrorism, migration, or belligerent regimes - yet neglect to adequately address the clear and present danger posed by the climate crisis.
Two weeks after biblical floods decimated the Valencia region of Spain, rescuers are still searching for victims. Skimping on confronting the climate crisis today will incur a devastating cost in the near future. And efforts must start by reframing of the whole debate.
2025 will see more turbulence, but the abdication of the US from the climate financing space could pave the way for Global South countries to promote radical transition agendas. As Brazil gears up to host COP30 and South Africa becomes the first African nation to host the G20, there is a clear opportunity to shape a new trading system that is more than a zero-sum game — one that protects the development needs and ambitions of poorer countries. That would be the right thing to do even if the world was not facing existential climate threats.
Instead of retreating into catastrophising, we can leverage the climate transition as a catalyst for rethinking the global economy..
