The International Energy Agency in 2021 had an unambiguous message: developing new fossil fuel resources is incompatible with restricting global heating to below 1.5C, a threshold beyond which the most disastrous climate impacts lie. Yet the oil and gas industry isn’t listening. Last year it committed half a trillion dollars for new capital expenditure on future drilling and extraction, while making outrageous profits of $4tn. Business as usual will destroy life as we know it.
Energy is fundamental for development and meeting basic needs. But producing it from coal, oil and gas is simultaneously the cause of the climate emergency. Clearly the issues of climate, energy and development must be addressed in an interconnected way. This is very difficult against a post-Covid backdrop when poor nations have record levels of debt. In the wake of the Ukraine invasion, rising interest rates have caused the dollar to surge – raising the cost of meeting loan repayments which are often denominated in the US currency. African nations spend up to five times their health budgets on debt obligations.
The French president, Emmanuel Macron, should be congratulated for hosting a summit to reimagine financial solutions to the interlinked global goals of tackling poverty, curbing planet-destroying emissions and protecting nature. But there is still a long way to go. The announcement by the International Monetary Fund that rich countries had met a target, set in 2019, of a $100bn climate fund for poor countries is probably less than meets the eye. The contrast with the trillions of dollars mobilised in an instant, to bail out finance houses in 2008, is stark. It is inexcusable that funds to address global heating cannot be found.
“For us it is about saving lives, for others, it is about saving profits,” said Mia Mottley, the prime minister of Barbados, chiding the rich world for inaction during a “polycrisis moment”. Colombia’s president, Gustavo Petro, called for a global financial transaction tax. Kenya’s president, William Ruto, came to Paris after endorsing a report, “Just Transition”, which pointed to Africa’s potential for harnessing renewable energy far outstripping any projected needs. Yet the continent has been barely able to industralise at all, let alone tap its vast green power potential.
Leaders in North America and Europe are intent on reshaping their energy systems, but the key materials required are found in the developing world. Even China, which dominates critical rare earth elements and their processing, lacks vital metals. This should allow for a grand bargain, where poorer countries are given policy space to address the three structural deficiencies that hinder their development – a lack of food sovereignty, a lack of energy sovereignty, and low value-added manufacturing – in return for sharing their minerals. Otherwise, parts of Latin America, Africa and Asia risk becoming targets of a new scramble for resources – with clean energy firms behaving as destructively as fossil fuel companies: buying off politicians, wrecking ecosystems and lobbying against environmental regulations. The cash, debt relief and access to western markets needed by developing nations should not feed the engines of extractive capitalism.
Mr Ruto said the three weeks taken to create the current “Bretton Woods” financial institutions should be enough to design their replacement. This might sound ambitious but it was Martin Luther King who warned against the “tranquillising drug of gradualism”. This sense of urgency is needed now to stop an environmental disaster.
