At their core, climate negotiations continue to be shaped by equity concerns between postindustrial countries in the Global North and emerging economies in the Global South. The debate is largely over which countries have contributed most to greenhouse gas (GHG) emissions and how the costs of mitigating and adapting to climate change should be shared. How effectively the principle of equity will be embodied in global efforts to combat climate change will help determine the scope and ambition of these efforts.
Tallying Past and Present Emissions Amid Equity Concerns
Industrialized and postindustrialized nations are responsible for a great share of the historical carbon dioxide (CO2) emissions in the atmosphere today (see figure 1). The United States has emitted more carbon than any other country to date and is responsible for 25 percent of historical emissions. Next in line are the twenty-seven countries of the EU (plus the UK), which are responsible for 22 percent of global CO2 emissions. Meanwhile, China’s historical contributions are estimated to be around 12.7 percent. By contrast, India (3 percent) and Brazil (0.9 percent) have not been large contributors to global emissions in a historical sense. Similarly, the contributions of African countries (3 percent combined), relative to the continent’s population size, has also been very small.
In addition, the Global North continues to have much higher per capita emissions than much of the world even today (see figure 2). The United States ranked high among postindustrialized countries in 2019 with 16 tonnes of CO2 emissions per capita, just behind Australia (16.3 tonnes per capita) and ahead of Canada (15.4 tonnes per capita). The figures for Europe generally fall between 5 and 10 tonnes per capita depending on the country. Hydrocarbon-based economies like Russia and members of the Gulf Cooperation Council in the Persian Gulf like Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates also rank quite high, some of them even higher than countries in the Global North.
Equity concerns essentially stem from the asymmetry between countries’ emissions and their respective burdens to respond to climate change (including the costs of emissions mitigation, adaptation, and other impacts and risks). Most human-driven GHG emissions in the atmosphere are from economic activities performed in or for affluent countries. Yet a more significant burden of the impacts of climate change is carried by poorer nations weathering climate-induced environmental shocks.
A further dividing line in climate negotiations is a result of the contrast between past emissions and future emissions. While industrialized and postindustrialized countries in the Global North are responsible for the majority of past emissions, these countries led by the EU are implementing policies to reduce their GHG emissions. At the same time, the emissions of most developing nations (particularly China) remain on an upward trajectory. This second group of countries will not reach peak emissions for another decade at least. As a result, developing countries share the responsibility for reducing future emissions. These juxtaposed trends also create issues of generational justice.
These differences coupled with the immediacy of the effects of climate change also shape the diplomatic groups engaging in multilateral climate negotiations. Subgroups among countries in the Global South and issue-based coalitions of countries in the Global North and South have emerged on the basis of common concerns. Less developed economies and small island nations, which are already facing the existential threat of climate change, are demanding immediate answers from postindustrialized and developing countries alike. The members of the Organization of the Petroleum Exporting Countries are urging postindustrialized economies to embrace policies that reduce welfare losses in nations that rely on petroleum exports.
Although all uphold the principle that developed and developing countries have different responsibilities for mitigating carbon emissions, as established at the 1992 Rio de Janeiro Earth Summit, the four countries in the BASIC grouping split when Brazil and South Africa accepted greater responsibility than India and China. More recently, however, China announced in September 2020 (to widespread praise) its intention to achieve carbon neutrality by 2060, and Chinese leader Xi Jinping further unveiled plans to curtail (or even end) Chinese funding for overseas coal power plans in September 2021. Yet the equity principle in the global debate over adjustments to climate change still leads to several important, commonly held policy positions among developing countries on mitigating GHG emissions, adapting to climate change, and financing the climate transition.
Mitigating Climate Change
First, developing countries generally expect postindustrialized nations to lead efforts to reduce GHG emissions. In multilateral climate negotiations, India articulated the basic positions on climate change held by many emerging economies on the respective roles of developed and developing countries. As Sandeep Sengupta has put it:
First, the primary responsibility for reducing greenhouse gas (GHG) emissions . . . rested with the developed world. . . . Second, the emissions of developing countries were still very low and needed to grow to meet their future development [needs]. . . . Third, any formal agreement on climate change needed to provide for technology transfer and funds for developing countries to help them address this challenge.
Latin American countries have also regularly emphasized that their historical contributions to the problem of climate change are minimal and that developed countries therefore bear more responsibility for working to mitigate its effects and otherwise help developing countries adapt with financing, technology, and other resources. In Latin America, the term climate justice is used to express the need for developed countries to pay their environmental and ecological debt to developing countries affected by climate change and help them remedy its effects.
Meanwhile, African countries have emphasized their need to be free to pursue economic development at least to some degree through new and existing deposits of fossil fuels. These countries firmly believe that it is unjust for immediate and severe mitigating targets to be erected without any form of compensation or financial aid. The African continent has plenty of fossil fuels, but the global shift away from hydrocarbons may cause further economic losses. According to a United Nations University report, oil, gas, and minerals contribute to over half of African GDP and account for around 70 percent of African exports. As the global economy transitions to greener, more renewable energy systems, African countries with large deposits of fossil fuels will pay a high price for not extracting these resources, a price for which they believe they should be compensated.
In addition, African countries will increasingly face the social, economic, financial, and governance challenges of responding to climate disruptions. They believe that the Global North has failed to acknowledge the extent of this economic stunting and these structural inequities. Some of these countries are vulnerable and have few resources, so they require regional and international assistance. Despite these considerations, any mention of the special vulnerabilities of African countries was excluded from the text of the Paris Agreement. African countries have been attempting to rectify this ever since.
China has also backed the position of developing countries writ large, emphasizing the historical responsibilities of postindustrialized nations. At an April 2021 climate summit convened by U.S. President Joe Biden, Xi stated:
Developed countries need to increase [their] climate ambition and action . . . they need to make concrete efforts to help developing countries strengthen the capacity and resilience against climate change, support them in financing, technology, and capacity building, and refrain from creating green trade barriers, so as to help developing countries accelerate the transition to green and low-carbon development.
Yet China’s position on climate change remains controversial given its current and rising levels of carbon emissions. China reportedly emitted an estimated 27 percent of global GHG emissions in 2019—more than twice as much as the second-ranking country (the United States with 11 percent) and more than the combined emissions of all developed nations. China’s emissions ballooned by a factor of more than three in the past three decades, according to the Rhodium Group.
More generally, developing countries insist on the recognition of the UN-enshrined principles of “common but differentiated responsibilities” and “respective capabilities” between postindustrial and developing countries for reducing GHG emissions. This claim takes into account differences in countries’ historical contributions to global emissions as well as developing countries’ need to have flexible policy options for spurring economic development.
But the future paradigms of economic and urban development will likely be very different from past ones. As things stand, policymakers around the world lack a proper understanding of how development in a climate-disrupted world will look. It is difficult for many developing nations to craft policy responses to address this new reality and these uncertainties. Their development goals and strategies remain embedded in past experience, which in all likelihood will not provide an adequate vision to drive sustainable growth in the future.
Adapting to Climate Change
Although developing countries have put equity concerns on the agenda for climate negotiations, postindustrialized countries have largely done the agenda setting, which thus far primarily has focused on mitigating climate change, as opposed to adapting to its effects through resilience. The vast majority of green finance is earmarked for climate mitigation initiatives, which lower emissions from existing sources. For example, according to San Bilal and Pamella Eunice Ahairwe, the European Investment Bank allocated only $432 million for climate adaptation, even as it poured more than ten times that amount (nearly $5.3 billion) into climate mitigation efforts. These mitigation-focused initiatives allow funders to earn solid returns on their investment. The benefits of decreasing those emissions are felt around the world, resulting in widespread societal returns. Funds to help communities adapt to and weather the effects of climate change, on the other hand, are often used for initiatives with more localized benefits. As a result, these projects typically have lower financial incentives and more concentrated societal benefits, making them less appealing to potential funders.
Yet developing nations want the disproportionate burden of weathering the impact of climate change and the costs of adaptation to take center stage in the climate debate. Emerging economies are calling on developed countries to honor their financial pledges and help them build resilience. Under the Paris Agreement, developed countries pledged to furnish $100 billion per year for climate action. According to the Organisation for Economic Co-operation and Development, the pledged money actually flowing to developing countries may have reached nearly $80 billion in 2019. This figure nonetheless has been controversial. India has, for instance, raised issues with the skewed flows of climate financing. After all, the bulk of climate finance (more than 90 percent) continues to be tapped for climate mitigation even though developing countries need funds focused on adaptation.
Financing Climate Assistance
The support of postindustrialized economies will be critical for helping developing countries—through financial assistance, capacity building, and technology—as the latter undergo a green transition.
Consider, for instance, how most of the obligations of African countries under the Paris Agreement are conditional on such support. The African Development Bank has estimated that African countries will need $20 billion to $30 billion per year for climate adaptation until 2030 or so. This amount could increase to $50 billion per year by 2050 even if temperature rises are kept in check (below 2 degrees Celsius), according to a 2015 UN report. Meanwhile, the acceleration of climate disruptions suggests that even the most advanced climate models still may be underestimating the pace and extent of climate disruptions.
A host of developing countries have explicitly tied the availability of climate finance to their mitigation ambitions. For example, in a 2019 report, the Indian government argued that in contrast to its significant needs, global financial flows to India were miniscule. The document explicitly tied India’s ability to meet its Paris Agreement obligations to access to climate financing, stating, “in order to respond to the worldwide call for stepping up climate actions, [there will need] . . . adequate provision of means of implementation to developing countries. Climate finance is a key pillar in enabling climate actions.
A welcome development has been the newfound enthusiasm of China and the United States for allocating more funding to help countries adapt to climate change. China has prioritized efforts to help the world’s least developed countries, such as African nations and small island states. Ahead of the 2015 UN Climate Change Conference in Paris, Xi established the China South-South Climate Cooperation Fund to provide 20 billion renminbi ($3.1 billion) to help developing countries tackle climate change. Subsequently, at the summit itself, Xi elaborated on his commitment, stating that China would implement ten low-carbon industrial parks, 100 climate mitigation and adaptation projects, and 1,000 training opportunities on climate change for participants from developing countries. Climate policy is a pillar of Beijing’s charm offensive to increase its soft power worldwide as well as an economic policy aimed to enhancing market access for Chinese goods.
The EU and more recently the United States have been among the leading contributors to the instruments of climate finance. In 2019, the EU provided the largest share of external public funding for climate projects to the tune of 23.2 billion euros (about $26 billion). Meanwhile, Washington has promised to significantly increase its contributions to climate finance for developing nations to around $11 billion per year.
Pricing Carbon Emissions
In addition to the prevailing divisions over mitigation responsibilities and climate finance allocations, another highly divisive issue between developed countries and the developing world is the potential impact of the carbon pricing schemes that several countries in the Global North are gradually implementing.
Postindustrialized countries view carbon pricing not only as a tool to raise additional public revenues but also as a way to account for the negative externalities of carbon emissions. To this end, some have suggested the creation of a global carbon pricing mechanism, in the form of a tax or an emissions trading system (ETS). With carbon taxes, regulators set a price on carbon by defining a tax rate on GHG emissions or the carbon content of fossil fuels, while emissions reductions depend on the corresponding measures taken by companies. For instance, the International Monetary Fund states that large GHG-emitting countries need to introduce a carbon tax of $75 per ton or more by 2030 to be consistent with the goal of limiting global warming.
An ETS—a cap-and-trade system—puts a ceiling on the total level of GHG emissions and allows firms with low emissions to sell their surplus allowances to those who emit more. Under an ETS, the market determines the price, while regulators determine the quantity of emissions reductions. The effectiveness of the ETS model remains debated, with some claiming that it allows larger polluters to continue polluting the atmosphere by acquiring emissions rights.
The chief strength of such a global price mechanism for carbon is its potential ability to shift the burden for mitigating the harm caused by climate change onto the market players that are responsible for this harm and can reduce it. Such mechanisms would encourage producers in all countries to adopt low- or zero-carbon technologies by sending an economic signal instead of dictating who should reduce emissions and how they should do so. Such price mechanisms would remove uncertainty for the private carbon-offset markets, which companies and individuals use to compensate for their emissions. Specifically, supporters claim that a price that is applied simultaneously in all countries may help level the international playing field.
Meanwhile, critics argue that global carbon pricing tends to treat inevitable and unavoidable emissions like electricity generation for consumption in poor households on par with other categories of emissions and fails to allocate emissions rights fairly between developing and developed countries. A global ETS would leave less room for developing economies to burn fossil fuels to meet their economic needs. The increase in energy costs that would arise from reduced fuel consumption in wealthier countries may curtail economic activity in markets that cannot absorb such price changes. In countries where the economic structures depend on energy-intensive activities that are heavily exposed to international competition, industries fear that competitive disadvantages in international markets could result in job losses.
For these reasons, developing countries tend to reject ETSs for sidelining the multilaterally agreed-upon international regime and establishing ad hoc norms. They view ETS schemes as protectionist measures at odds with the rules of international trade. They want multilateral negotiations to lead norm creation, as these focus not just on mitigation targets but also on minimizing subsequent welfare losses.
A second and more recent policy option discussed in developed countries is a domestic carbon tax levied together with border adjustments on imports from countries that do not impose an equivalent carbon duty on their producers. Led by the EU, supporters of this approach view it as an efficient way to let the consumers of postindustrial economies take responsibility for their GHG footprint both domestically and in the emissions of other countries. The underlying logic rests on an expectation that unilaterally imposed border adjustments would provide a building block toward global price mechanisms by incentivizing exporting countries to impose equivalent domestic carbon taxes to prevent companies from paying taxes at the importing country’s borders. Proponents propose that the revenue collected at the border could be channelled to overseas climate aid programs to prevent the mechanism from functioning as a de facto tariff.
From the perspective of developing countries, however, a carbon border-adjustment mechanism incorporates several pitfalls. A carbon tax may raise the price of energy-intensive products such as steel and cement, which would increase construction costs and imperil infrastructure projects in developing countries that import these products. When imposed only by the importing countries, domestic carbon pricing would hinder the competitiveness of exporters. Developing countries have less capacity to offer offsets to their companies in the industrial sectors that would suffer a resulting competitive disadvantage against international competition. Moreover, border adjustments can act as tariffs because if carbon taxes are imposed at the importing country’s border, rather than within the exporting country, the importing country gets to keep the tax revenue with no assurances over how the funds would be used. In light of these considerations, developing countries view these types of policies as a disguised form of protectionism.
Conclusion
Ultimately, the cleavages in international climate negotiations between the Global North and the Global South are driven by the need for an adequately ambitious global response to climate change. In other words, the current agenda of the Conference of Parties’ (COP) gatherings under the UN Framework Convention on Climate Change may not be comprehensive enough to tackle this structural and critical challenge. COP meetings like the upcoming Glasgow Climate Change Conference in October and November 2021 provide a forum for exchanging views and deliberating about climate mitigation and adaptation.
But these global discussions need to be more open and ambitious and must account for the needs of developing countries, not just postindustrial ones. There are other important matters these deliberations cannot ignore. For instance, there is a need to address issues like climate-induced migrations and an overhaul of the international regime governing the treatment of refugees. These discussions should also include proposals to reform the intellectual property rights regime to incentivize a clean development agenda for the developing world. A fair settlement on the burdens of adjusting to the realities of climate change can only emerge if a broader policy agenda can be constructively promoted.
Carnegie Europe is grateful to the Open Society Foundations for their support for this work.
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