Chris Hegarty, Chair of Parmenion's Ethical Oversight Committee (EOC) shares his thoughts after COP 29 in Azerbaijan - digging into the shaky climate finance deal, the pressing need to cut emissions, and the big questions around who pays for clean air and climate justice.
How much is clean air worth to you?
In many ways, it’s a well-understood concept. Most first year Economics students will learn about ‘externalities’ - failures or glitches in markets, where the real costs or benefits of economic activity aren’t reflected in the price, and other people end up dealing with those effects, whether good or bad.
Climate change is the ultimate externality
The massive over-burning of fossil fuels highlights the fact that it has been ‘free’ (or at least wildly cheap) to pollute a shared, priceless asset, with devastating consequences. While the benefits of this underpriced exploitation have gone to a relatively small group, the unimaginable costs are felt by us all, and especially by those in low-income countries, by women, and by vulnerable people.
Although the concept of externalities is easy to understand in theory, in practice the world struggles to address or resolve one on this scale, and of this importance. Much of the focus of this year’s annual UN Climate Summit (COP 29) in Azerbaijan was grappling with this issue – how much should the countries that have benefitted most from the use of fossil fuels have to pay to those that have gained less and are already suffering more?
How much will it cost?
While I started with a simplistic question about the value of clean air, in reality it’s about a whole lot more than that and quickly becomes fiendishly complicated and subjective. How can we agree, in global terms, how much it will cost to have low-income countries leapfrog fossil fuel use and go straight to more sustainable drivers of their economies? How much will it cost low-income countries to adapt to the multiple and growing effects of climate change over the decades to come? What are the responsibilities of countries that have historically been relatively low-income & low consumption, but now are not? And, even more complex, what is the value of a nation’s culture, or perhaps even – in the case of some of the low-lying states – its very existence? All such questions form part of the discussion of ‘climate finance’ that dominated the talks in Baku.
A flimsy agreement
As usual, after a delayed conclusion to the conference, and an unusual walk-out by several of the parties, a compromise was finally cobbled together that allowed COP 29 to end with some sort of ‘deal’.
By 2035, $300 billion per year in climate finances is expected to flow from richer countries to so-called ‘developing’ countries. Plus, there’s broad acknowledgement that the combined total of private and public funding will need to exceed over four times that amount annually.
But that agreement feels flimsy. Low-income countries say it is woefully inadequate. Many richer countries claim they face severe budgetary constraints. There are precedents of such pledges being delivered late, if at all. And there is relatively little detail on the mechanisms to both raise and distribute these funds.
Meanwhile, the root cause of all this – the over-burning of fossil fuels – continues. While I completely understand the focus on who pays what, to whom, to deal with the climate change that we already know is already baked-in to the Earth’s atmosphere, I also worry that the focus on climate finance might in some ways distract from the ever-more-urgent need to reduce greenhouse emissions.
The 2024 UN Emissions Gap report suggests the world is currently on track for as much as 3.1 degrees Celsius of warming by the end of this century. And unless we bring that number down rapidly, the amount of money we will collectively need to find to deal with this issue will rise further and faster. It’s in all of our interests - economic and otherwise - to tackle that root cause, fast.
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