Rich nations’ climate hypocrisy is accelerating global heating, pushing the planet closer to irreversible catastrophe, with its worst consequences borne by the poorest, both countries and peoples.
Climate injustice
While official and other discourses acknowledge or even invoke the need for collective responsibility, the disparity in culpability between wealthy nations and the developing world is stark.
Historically, the industrialised nations of the global North have been the primary contributors to greenhouse gas emissions but continue to evade their fair share of responsibility.
The narrative of an equally shared burden of combating climate change conveniently obscures disproportionately greater emissions and historical exploitation by rich countries.
The European Union’s ambitious new ‘equitable’ climate policies, such as the Carbon Border Adjustment Mechanism (CBAM), continue this hypocrisy. While ostensibly aimed at reducing emissions, such measures burden developing countries more, further deepening world inequalities.
Market solutions best?
Similarly, carbon taxes, prices and emissions trading systems make it much harder for nations with fewer resources to afford adequate climate action. They have few resources to adapt to global heating and its effects, let alone afford the costly transitions to cleaner technologies and other mitigation measures.
Furthermore, developed nations have relocated energy-intensive industries to the global South to ‘export emissions’. Thus, they effectively shift blame while consuming most goods and services produced at high environmental costs.
Limiting the average temperature increase to no more than 1.5°C (degrees Celsius) above pre-industrial levels, as agreed to by the UNFCCC, will require drastic reduction of carbon (dioxide equivalent) emissions by 45% below 2010 levels by 2030!
Instead, the Intergovernmental Panel on Climate Change (IPCC) estimates current trends will increase the average temperature by 2.7°C by 2100, far above catastrophic levels.
Despite the urgency, countries are mainly focused on committing to the distracting ‘net-zero’ carbon emissions by 2050, ignoring the urgent need for substantial greenhouse gas (GHG) emissions cuts.
At recent climate conferences, carbon pricing and related market mechanisms have been ‘sold’ as an effective and fair means to rapidly reduce carbon dioxide and other GHG emissions to mitigate climate change.
Carbon tax revenue distribution
Worse, there is no discussion of how revenues from carbon taxation should be distributed equitably to accelerate climate adaptation and mitigation efforts in poorer countries.
Carbon pricing claims to penalise GHG emitters for the economic damages and losses caused by global warming. However, there is little evidence of efforts to compensate those most adversely affected.
Moreover, carbon market schemes have only made grossly inadequate impacts. Emissions have only been marginally reduced, well short of what the world needs to address the climate threat.
Besides being ineffective, only a tiny fraction of global GHG emissions are subject to carbon taxes, often imposed using biased methods and assumptions.
Carbon price discounts
Carbon prices have also been grossly discounted to induce market participation and public acceptability. Hence, carbon tax rates do not reflect the supposed social costs of adverse externalities.
Worse, despite the potential of carbon taxes to generate significant revenue for climate finance, progressive redistributive measures have not been developed, let alone implemented.
Hence, carbon pricing policies are not up to the task. They also fail to address underlying systemic issues driving global heating. Carbon taxes tend to be regressive, disproportionately burdening low-income individuals and countries.
Without a progressive reallocation of resources, poor nations and people cannot afford to adapt to global heating, let alone contribute to needed worldwide climate action efforts or achieve sustainable development.
Government fossil fuel subsidies, e.g., to ensure support against Russia after its Ukraine invitation, have undermined the purpose of carbon pricing. With such subsidies, carbon prices became negative in many countries in 2022.
Zero for ‘net-zero’
Carbon offset markets, touted as a way to achieve net-zero emissions, have been criticised as an ineffective distraction, allowing the wealthy to continue emitting GHGs while profiting financial intermediaries.
While successfully touted as a rallying slogan for climate action, the net-zero emissions target is dangerously misleading. Commitments to achieve net-zero emissions typically rely on ‘offsetting’, which allows countries and companies to avoid reducing emissions.
Despite earlier surges in demand for carbon offsets from major financial investors, much of the profit goes to arbitrage, speculation, and trading rather than decarbonisation efforts.
Initiatives like the Glasgow Financial Alliance for Net Zero were touted as significant breakthroughs. However, there is much reason to be sceptical about the effectiveness of such initiatives for reducing GHG emissions.
Less than half a year after the Glasgow Conference of Parties (COP), the North Atlantic Treaty Organization (NATO) and allied countries abandoned their declared commitment to end burning coal despite all its additional dangers, such as sulphide and sulphate emissions.
Market solutions or delusions?
While carbon pricing and offset markets have been promoted as solutions to mitigate global warming, their limitations and ineffectiveness in significantly reducing emissions underscore the need for alternative strategies.
Selective investment and technology promotion policies and greatly increased climate finance for adaptation and mitigation in developing countries are crucial.
They can only succeed if pragmatically conceived and implemented, considering the range of sustainable development and other challenges faced.
Addressing climate change requires a comprehensive, equitable, and pragmatic approach that prioritises substantial emissions reductions and supports vulnerable populations most affected by global heating.
Jomo Kwame Sundaram is a prominent Malaysian economist. He is senior adviser at the Khazanah Research Institute, visiting fellow at the Initiative for Policy Dialogue, Columbia University, and adjunct professor at the International Islamic University.
