It was originally planned to be a turning point. French President Emmanuel Macron invited foreign leaders and finance ministers on Thursday and Friday to the Palais Brongniart, a neoclassical building built by Napoleon's orders to house the Paris stock exchange. The aim was to find a mechanism to finance climate change. The meeting started promisingly. For decades, economists and activists have persuaded reticent politicians to agree to the amount of money needed to persuade developing countries to cut their emissions and make their economies climate-resilient.
The group of economist-campaigners were rubbing their hands with glee when Macron, U.S. Treasury Secretary Janet Yellen and 50 leaders from the developing world agreed that the problem was a price tag in the trillions of dollars, rather than immature estimates spanning hundreds of billions of dollars.
But rich countries were reluctant to do more than talk. An indication of this was that, despite the fact that large numbers of senior officials from Africa and Asia had come to seek funding, very few people of comparable rank from wealthy resource countries, other than Mr. Macron and Ms. Yellen, attended the meeting. Italy sent a junior minister, and Britain sent its tired Development Minister Andrew Mitchell, who had endured a lot. Representatives from Germany and China appeared only at dinners after Thursday's main meeting.
Actual contributions were modest. The next phase of the initiative, one of which Macron and Kristalina Georgieva are proud of and first announced two years ago, has been unveiled. A basket of currencies that the IMF allocates to each nation to hold on its central bank balance sheet. These coins, the closest thing to a global magic money tree, are recycled into various loan funds as part of the scheme. Private credit rights of rich countries worth $100 billion will also be recycled. Unknown amounts will go into climate finance, but currently only 5% of the total has any public funding.
Other concepts have changed the organization of development organizations tasked with coordinating climate money as well as eradicating poverty. The World Bank could increase its debt/equity ratio and take on more risk. President Ajay Banga announced that new loans will be added with provisions that stop payments if borrowers are affected by a natural disaster. Banga also tasked a new group of academics and dignitaries, including Mark Carney, a former governor of the Bank of England, with managing trillions of dollars of private sector finance that has a poor record with international policymakers.
A global shipping tax is a broader idea, but it has faced years of political opposition from trade ministries and the International Maritime Organization. Other ideas, such as a worldwide carbon tax, a tax only on fossil fuels, or even a new climate bank, have been derailed by the policies of rich countries.
The commitments made during the meeting are extremely inadequate. According to the Grantham Institute, a think tank affiliated with the London School of Economics, developing countries need to spend $2030 trillion a year on adaptation and mitigation by 2.4. The institute believes that rich countries and investors should contribute at least $1 trillion of this total. The total impact of all the summit's ideas would be between $50 billion and $200 billion from development agencies, according to Ms. Yellen. It will take some time for most of this amount to arrive, if at all.
📩 09/09/2023 12:10