What you need to know:
- “Last year, OPEC countries alone earned $888 billion in hydrocarbon-export earnings."
If the United Nations Climate Change Conference (COP28) in Dubai is to be judged a success, it will have to bring an urgently needed breakthrough on climate finance. Sultan Al Jaber of the United Arab Emirates, the president of this year’s COP, and Brazilian president Luiz Inácio Lula da Silva, whose country will assume the G20 presidency this month, must work in tandem to establish a facility that would provide the Global South with at least $1 trillion annually to invest in development and climate-change mitigation and adaptation.
Al Jaber has already recognised the importance of fixing climate finance, which he listed as one of the four pillars of COP28. As CEO of Abu Dhabi National Oil Company, Al Jaber has a unique opportunity to ensure that the UAE, other Gulf states, and Norway – all beneficiaries of high energy prices – lead the way in bridging the climate financing gap faced by low- and middle-income countries. Not only are these poorer countries transferring billions of dollars to oil-producing states, which has contributed to the recent rise in extreme poverty; they also suffer significantly from air pollution caused by burning fossil fuels.
Specifically, the president of COP28 must present a proposal to recycle a fraction of these petro-states’ record-high oil and gas revenues to a facility aimed at accelerating the green transition in the Global South. Given the failure of rich countries to meet their long-standing pledge of channelling $100 billion per year to developing countries for climate mitigation and adaptation, now is the time for action.
According to Fatih Birol, the executive director of the International Energy Agency, petroleum revenues soared to $4 trillion in 2022, compared to an average of $1.5 trillion in recent years. This is 20 times the foreign aid from official donors in 2022, more than 30 times the combined budget of all multilateral development banks (MDBs), and 40 times the $100 billion per year that rich countries promised back in 2009.
Some private oil companies have already paid extra taxes on their windfall profits. But, given that state-owned companies control most of the world’s oil production, petro-states have been the biggest beneficiaries by far. Last year, OPEC countries alone earned $888 billion in hydrocarbon-export earnings, compared to $576 billion in 2021.
The principle of fair burden-sharing is simple: countries and sectors that have historically contributed the most to greenhouse-gas emissions and boast the highest per capita incomes should bear more of the costs for global climate action.
MDBs could leverage such guarantees four times over to create new resources that would help LMICs address both development challenges and global warming.
To mobilise the $1 trillion in annual investment required to help the Global South shift to clean energy, it will be crucial to implement the Singh-Summers proposal, which calls for tripling the World Bank’s annual spending to $390 billion. It will also be necessary to pursue Barbadian Prime Minister Mia Amor Mottley’s ambitious Bridgetown Initiative, which proposes channelling $100 billion in unused special drawing rights to developing countries.
These interventions align with the recommendations in the “Breakthrough for People and Planet” report by UN Secretary General’s High Level Advisory Board on Effective Multilateralism, which recognises the importance of increasing financing from all sources: national, global, public, and private.
To support this endeavour, Lula should offer to convene a joint online session with the G20 and OPEC where petro-states and historic emitters can agree on this new funding arrangement and commit to contributions based on their capacity to pay. Such an outcome would augur well for the negotiations at COP28 and unlock progress on global climate goals.
Authored by Ban Ki-moon
-- Project Syndicate