Bon(n) voyage, planet Earth
As the world edges closer to climate disaster, the Bonn Climate Change Conference struggled to get started, let alone deliver.
The Bonn Conference might not have the glitz of COP summits but what’s agreed this week lays the technical groundwork for COP28 later this year. In the 14 days it’s taken negotiators to decide what to talk about, the world’s richest 1% burned up their entire annual carbon budget. Priorities, please!
One of the biggest divides was over climate finance for a just transition, which rich countries don’t seem keen to discuss, delaying the Bonn agenda. Perhaps unsurprising given they’ve repeatedly broken promises on climate finance.
For this week’s Equals Bulletin, we spoke to Oxfam’s guru on climate change, Nafkote Dabi, to get the lowdown on the slowdown.
Broken climate finance promises in numbers
Hi Naf, what have you been up to in Bonn?
Tearing my hair out! Bonn is the countdown to COP28. What’s agreed here sets the agenda for November —and at the current rate there won’t be much of an agenda. Oxfam is in Bonn to make the case for much stronger climate finance for poorer countries, including the scaling up of finance for just transition, which is the major sticking point this week.
What’s the deal with climate finance?
Rich countries promised $100 billion per year from 2020 to 2025 to help Global South countries mitigate and adapt to climate change. Donor countries report that they mobilized $83 billion in 2020.
That doesn’t sound so bad. Let me guess, there’s a catch?
Yep, there’s more than one. Digging into the numbers, we’ve found that the true amount is—at most— $24.5 billion. And 74% of the money they “gave” came as loans. Rich countries have wrecked the planet and now are very generously adding to the debt crisis so that poorer countries can adapt to the problem they had little hand in creating. The $100 billion should be grants not loans.
OK, so maybe it doesn’t look quite as good as on paper. But at least these loans are going to the right places, right?
If investing in a Belgian romantic film sounds like a good use of climate finance then, sure, they’re doing a great job! Climate finance is going to some weird places. Italy funded ice cream shops in Asia and Japan funded a coal plant in Bangladesh. Reuters have done a fantastic investigation.
No wonder people aren’t happy! The $100 billion deal runs out in 2025 —what needs to happen next?
The $100 billion was an arbitrary “political number”, not based on any type of scientific assessment. The next number must be “needs-based”, meaning based on the actual needs on ground. If we look at the current scale of climate finance, we’re talking many multiples of what’s on the table. Rather than adding to the debt burdens of already heavily indebted countries, rich countries have to cough up and pay up. Oxfam calculated that the G7 alone owes low- and middle-income countries $13.3 trillion in unpaid aid and funding for climate action. A new study published in Nature estimates that to meet net zero targets, rich countries could be liable to pay $170 trillion in climate reparations by 2050. But instead, every day, the Global South pays hundreds of millions of dollars in loan repayments to the G7 and their rich bankers.
Those are some pretty big numbers, where should the money come from?
Polluters must pay. This means the richest individuals and corporations that have caused the most damage. The emissions of richest 1% are set to be 30 times higher than what is compatible with the 1.5°C goal and their wealth is soaring. 63 percent of all new wealth since 2020 was captured by the top 1%. A tax of up to 5% on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year. The annual climate reparations owed by the world’s top fossil fuel companies is at least $209 bn. These same corporations are making enormous windfall profits that need to be properly taxed.
Time is running out. We have to hope that COP28 isn’t a repeat of Bonn.
Scope for hope
Millionaires call for a European wealth tax on the 1%. A group of economists, activists, politicians and millionaires are calling on the European Union to adopt a permanent annual wealth tax on Europe’s biggest fortunes to raise revenue to reduce poverty and inequality both at home and in poorer countries, and to tackle the climate crisis. The group will have one year to collect one million signatures, starting in July for it to be considered by the European Commission.
Things to read and listen to
Read Branko Milanovic’s long read on the nuances of inequality in the context of globalisation.
Watch a different way to explain economics.
Meme of the week