Whilst the effects of and action needed are often discussed in relation to climate change, financing this transition is often left out of the discussion. This may be because many view international finance as an over entangled web, or believe that the financial cost doesn’t really matter. Still, as Alice Nott explores, its inclusion in the COP26 agenda has put it at the heart of discussion.
Day 3 of COP26 looked at how to mobilise “public and private finance flows at scale for mitigation and adaptation.” The inclusion of adaption is significant; it shows an acknowledgment by leaders that we may have already passed the point of no return and that the effects are now irreversible.
cuts to public spending have been a key condition of much of the financing that has taken place
The global financial system has, since the second world war, been based on states and governments, alongside private creditors and international bodies such as the IMF funding each other. This interconnected web expanded after the end of the cold war, with scholars such as Ann Marie Slaughter seeing it as the dawn of a new age of peace.
However, as the last twenty years has shown, what may be peace to some, is violence to others. Cuts to public spending have been a key condition of much of the financing that has taken place (see Greece in 2008 or even the UK in 1976). This has led to government prioritizing immediate concerns such as health and public safety over environmental funding.
Deals such as that made at the Earth Summit in 1992 to create Protected Areas of biodiversity have been left chronically underfunded, meaning their efforts are mute. In the UK, real terms public expenditure on environmental protection has stagnated since 2010 and in some financial years (2018/19) even dropped.
if we do not transition quickly, we are facing an imminent and existential threat
The reason for explaining all this is that for any deal coming out of COP26 to work there must be the funding for transition. Two things remain almost certain; global capitalism is unlikely to go anywhere over the next ten years and if we do not transition quickly, we are facing an imminent and existential threat.
With these two things in mind, leaders from across the political spectrum must come together and advocate for a funding drive like that which was seen in the space race or even arms race. Rather than competing, though, this project will only work if done multilaterally, which is not to negate that the West in large part created the problem through its development.
Therefore the deal struck by 25 countries on Wednesday “committing to ending international public support for the unabated fossil fuel energy sector” by the end of next year is a good start. It will free up over $17billion for renewable energy funding.
However, it is arguable that such a deal must stretch past these countries, with the majority of signatures being in Europe and Africa. Asia now has the largest GDP of any continent, and whilst they were not responsible for the initial industrialisation, Asian countries now make up 5 out of the top ten carbon emitters.
It is fair to say that some of these emissions are due to Western Countries offshoring production, but still, the financial systems created now in Asia will be the ones they need to see through the transition with. It will be these economies that will need to help fund the transition to carbon neutrality.
all resources, including financial ones, should be thrown at making the world habitable
There are signs to be hopeful, but we are now at ‘Code Red’. All resources, including financial ones, should be thrown at making the world habitable- not just for two more generations but two hundred and beyond. We must send a message that we want our future, and our children’s future, financed. Climate action needs the same blank check they were wiling to give the military or space race.
This article is part of Impact Nottingham’s COP26 series. For more articles on the conference check out the link here.
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