The immediate cause is Thursday’s parliamentary by-election in northwest England. But the roots of Starmer’s demise go back to his election as party leader six years ago.

This week’s by-election was one of the most remarkable to have taken place in a century of British parliamentary democracy. It was called after the Labour MP in the little-known Makerfield constituency stood down to allow Starmer’s chief Labour critic, Greater Manchester mayor Andy Burnham, to return to Westminster as an MP and challenge for the party leadership.

The result was by no means a foregone conclusion. Makerfield, a former mining district, is typical of many parts of small-town England: it lost its economic purpose and prosperity under Margaret Thatcher’s deindustrialisation and has never recovered. A solid Labour seat up until the Brexit referendum in 2016, it voted overwhelmingly to leave the European Union; since then its Labour majority has declined in successive elections under pressure from far-right parties led by Brexiteer-in-chief Nigel Farage. Just last month, Labour was wiped out in the local council elections, with more than 50 per cent of voters choosing Farage’s latest party, Reform UK.

Andy Burnham hails from the area, and — having served in Gordon Brown’s cabinet between 2007 and 2010 — has been a successful and popular mayor. But Makerfield’s recent voting history meant he was by no means bound to win. It was a brave place from which to launch his challenge to Starmer.

But the result was not even close. On a higher turnout than in the general election of 2024, Burnham stormed to victory with 54 per cent of the vote. His Reform UK opponent managed just 35 per cent, and Restore Britain, a splinter party with an even further right anti-immigrant platform, won 7 per cent. The Conservatives, Liberal Democrats and Greens got a mere 3 per cent between them.

The result is a personal triumph for Andy Burnham. Canvassers on the doorstep reported what the polls had already suggested: Labour is deeply unpopular and few people were prepared to vote for the party. It was Burnham himself people were supporting, often precisely because they wanted to get rid of Starmer. Burnham’s “Vote Andy” election leaflets didn’t even mention the party; any other Labour candidate would undoubtedly have lost.

If Burnham’s popularity is remarkable — he has been mayor for nine years and his approval ratings have risen the longer he has been in the job — Labour’s unpopularity isn’t hard to fathom. Under Keir Starmer it has squandered the opportunity that he himself had created to reverse the public’s growing disillusionment with politics.

Starmer was elected to the Labour leadership in 2020 after his predecessor, left-winger Jeremy Corbyn, lost his second general election to the Conservatives. Though not as radical as Corbyn, Starmer promised his party he would govern from the left. But since winning a remarkable victory in the 2024 election — taking the party to a huge majority of 174 seats over all other parties in parliament — he has abandoned almost all his pre-election promises. Having campaigned on the basis of “change,” he is widely perceived as having delivered very little of it.

Starmer only became an MP in 2015. Having previously been a human rights lawyer and director of public prosecutions (for which he was awarded a career service knighthood) he had almost no background in politics or political activism. What his parliamentary colleagues and party members have since discovered was that he also has few political ideas or values.

His rapid rise to a shadow cabinet position in 2016 was largely due to the refusal of many leading Labour MPs to serve under Corbyn. But when Corbyn stood down in 2019 Starmer’s calm, even dull demeanour and technocratic experience looked appealing, and he was comfortably elected leader. When he took the party from the depths of defeat to a landslide victory in 2024, party members’ choice appeared to have been triumphantly vindicated.

His two years at 10 Downing Street, however, have been a disaster for himself and for the party. The tone was set early on. Inheriting an alarming fiscal position from the outgoing Conservative government, his first policy announcement was not to, say, raise taxes on the wealthy, but to cut a welfare benefit given to pensioners to help them heat their homes in winter. It caused an uproar, and Starmer eventually had to (partially) reverse it. But his approval ratings never recovered. Later he tried to balance the books with a £5 billion cut to welfare spending, mainly targeted at disabled people, which was defeated by his own backbenchers.

In all, Starmer has been forced to retreat no fewer than thirteen times from policies he has announced — not because of anything the Tories have done (they have far too few seats to make a difference) but because of public opposition and anger. He has increasingly been seen as simultaneously unprincipled and incompetent.

That impression has been exacerbated by his apparent inability to communicate any principles that might define his or his government’s purpose. Starmer has insisted that he is a pragmatist — that there will never be such a thing as “Starmerism” — but the result is that opinion polls consistently say the public no longer knows what Labour stands for. When Starmer made a hardline speech on immigration last year whose language evoked that of an infamous racist of the 1960s, calls for him to be replaced as leader started gaining ground.

This is not to say there have been no achievements. Starmer’s government has instituted a new set of workers’ rights, especially for those in the ultra-flexible gig economy. It has limited private landlords’ rights to evict tenants for no reason. Health service waiting lists are falling. Starmer has personally managed a difficult relationship with Donald Trump, leaving Britain with lower American tariffs than its European peers.

But such wins have barely cut through to the public. Starmer’s approval ratings have declined month on month and now stand at nearly minus 50 per cent. Labour fell behind Reform UK in the opinion polls in early 2025 and has been languishing ever since. In the elections to the Scottish and Welsh parliaments and English local councils last month Labour suffered huge defeats, both to Reform on its right and the Greens on its left. At national level Labour is now on 17 per cent, half its 2024 election vote share, with Reform on 26 per cent and the Conservatives 18 per cent.

If this situation were sustained to the general election in 2028 or 2029, Nigel Farage would be the next British prime minister. It is this prospect that has led Andy Burnham to declare his desire to challenge Starmer for the Labour leadership.

So what happens now? There are three possibilities. One is that Keir Starmer refuses to give up his position and says he will fight Burnham in a leadership contest among Labour’s members. In those circumstances another candidate, former health minister Wes Streeting, would almost certainly join the race too. It is hard to see either of them beating Burnham, however, which would mean Burnham becoming Labour leader, and prime minister, at the end of such a contest in September.

A second possibility is that Starmer acknowledges his unpopularity and says he will stand down, but Streeting refuses to pull out. Again, there would be a leadership contest Burnham would almost certainly win.

Burnham’s own favoured option, unsurprisingly, is for there to be no such contest, with both Starmer and Streeting acknowledging the inevitable and standing aside (in Streeting’s case presumably in return for a senior job in a Burnham cabinet). In that case he would ask Starmer to conduct an “orderly transition” over the next three months, which would allow Burnham to appoint a team and prepare new policies and then to take over at 10 Downing Street in mid-September.

You may have noticed that all of these possibilities have the same end result. But if it is now more or less certain that Andy Burnham will soon be entering the famous front door, the political conversation will quickly turn to what he will do when he gets there. He has promised more radical policies to reduce the cost of living, bring the privatised energy and water industries under control public control and “reindustrialise” forgotten areas like Makerfield. He has also pledged reform of the electoral system. Most of all he has promised to restore “hope” to an increasingly disillusioned and fractious British public.

But there are plenty of cynical commentators who point to Britain’s struggling post-Brexit  economy, constrained public finances and divided public opinion and, electoral miracle-worker though he may be, doubt Burnham can do any of it.

It is not as if others haven’t tried, they point out. When Andy Burnham in due course replaces Keir Starmer at Number 10, he will become the UK’s seventh prime minister in ten years. •

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Britain doesn’t have American-style mid-term elections, of course: last week’s voting was for the Scottish and Welsh parliaments and local authorities in England. But Labour’s extraordinary rout has seismic implications for national politics. If the results were replicated in a general election, Britain’s next prime minister would almost certainly be Nigel Farage, leader of the far-right populist party Reform UK, chief architect of the Brexit referendum and figurehead of the anti–European Union “Leave” campaign.

Projected nationally, Reform’s 26 per cent vote last week would see it comfortably ahead of the newly populist and leftist Greens, who finished in second place on 18 per cent. Labour would limp in joint third with the Conservatives on just 17 per cent, with the centrist Liberal Democrats on 16 per cent.

Britain doesn’t need to hold a general election till June 2029, so none of that is imminent. But it already marks an extraordinary turn in British politics. Less than a decade ago, in the general election of 2017, the country’s two major political parties, Labour and the Conservatives, won 82 per cent of the popular vote between them, with the Liberal Democrats on 7 per cent. The remainder was shared mainly between the Scottish and Welsh Nationalists and the separate Northern Ireland parties. The Greens won just 1.6 per cent (and one seat). Reform’s predecessor, the UK Independence Party, won 1.3 per cent, and no seats.

Now Britain has entered the uncharted waters of seven-party politics. Not only that: the most popular two parties are on the far right and the left, and neither has any experience of government. The Conservative Party is facing an even more existential threat than Labour, having effectively been replaced by Reform as the principal party on the right of British politics.

Britain’s antiquated first-past-the-post electoral system looks likely to buckle under the strain. Labour’s victory two years ago was broad but shallow, with a vote share of less than 34 per cent. Depending on how the various parties’ votes are distributed across constituencies, Reform could win a parliamentary majority in 2029 with just 27 per cent of public support (and less if non-voters are included). That risks looking not merely disproportionate, but illegitimate.

Last week’s results have sent shockwaves through the Labour Party. It has been the dominant party in Wales since 1922 and has governed there continuously since the devolution settlement of 1998. (Wales and Scotland have devolved powers comparable to those of Australian states.) Last week its representation in the Welsh parliament, the Senedd, fell from forty-four seats to nine, and it was beaten by both the Welsh nationalist party Plaid Cymru, which will now form the Welsh government for the first time, and Reform UK.

In Scotland, Labour looked on course two years ago to retake the government from the Scottish Nationalists, or SNP, who have ruled since 2007. But last week it lost a fifth of its seats and had the humiliation not just of seeing the SNP retain power with fifty-seven out of the parliament’s 129 seats, but also of ending up level with Reform in second place with seventeen.

In the local elections in England (which are also contested between the national parties), Labour shed more than 1400 council seats, the worst result in its history, and lost more than half the authorities it controlled. The defeats came thick and fast, right across the country, with seats and councils lost to Reform in many of Labour’s traditional working-class heartlands, and even more voters lost to the Greens in London and other cities.

Labour’s door-to-door canvassers reported the same message from the public in every constituency. Voters are angry that the cost of living seems to be rising without end, with skyrocketing energy prices, unaffordable rents and food prices increasingly reflecting the impact of the Iran war. (Charities warn that millions of families are going without food to make ends meet.) Labour was elected on the slogan of “change,” but little change seems visible: healthcare waiting lists are still high (though falling), town centres still depressed, potholes still unrepaired.

Most of all, though, the public has taken against Keir Starmer. He is now on some measures the most unpopular prime minister since such records began, with a public approval rating between minus 50 and minus 57 per cent. Even more significant is the personal vitriol meted out on the doorstep: for reasons no one can quite explain, Starmer is viscerally loathed by very large proportions of the public.

It’s this personal animus heard by Labour MPs in their constituencies that has led many of them to move against him. By Tuesday this week eighty-seven MPs had called publicly for him to stand down, four junior ministers had resigned from the government, and several cabinet members had apparently told him privately that he could not carry on. The media were delightedly reporting on the content of Labour MPs’ WhatsApp groups and the plotting of potential leadership challengers.

Starmer declared he had no intention of resigning of his own free will. On Monday he sought to save his premiership with a speech inevitably billed as his “most important ever.” Declaring that he took responsibility for the election losses but was determined to stay on and “prove my doubters wrong,” he announced policies he hoped would represent a new start: nationalisation of the stricken British Steel company, moving the UK back to “the heart of Europe” and a new youth employment guarantee.

It didn’t work. The reaction of his MPs was almost universally negative. Indeed, in many ways the speech exemplified the problem. He said nothing about the issue most of concern to voters, the cost of living. And none of the policy announcements was actually new: each had been trailed before. The “back at the heart of Europe” claim was just empty rhetoric: so far from committing to rejoin the EU, as many in his party have urged, Starmer couldn’t even bring himself to say that the government would seek to rejoin the EU’s Customs Union or Single Market, which would at least be meaningful steps to stimulate economic growth.

Starmer emphasised his commitment to traditional Labour values, but still offered no overarching vision or story by which his government or his personal beliefs might be defined. He acknowledged Labour needed to offer people more “hope.” But as one Labour observer bitterly noted, acknowledging it is not the demand being made of him. People want him actually to do something that offers it.

Two paths are available for the party to remove Starmer. One is for more ministers to resign from his government, making his position untenable. That is how Boris Johnson was persuaded to leave office in 2022. You can’t be PM if no one will serve under you. If that happens, Starmer could say he will resign in September, say, and initiate a party leadership election to identify a successor by then.

Alternatively, Labour’s rules make an election mandatory if one-fifth of the Parliamentary Labour Party (currently that means eighty-one MPs) declare in favour of a challenger. Starmer could then choose whether to contest it or not.

Two people have long seemed the most likely challengers. On the Blairite right of the Labour Party, the combative health secretary Wes Streeting has been accused for some time of preparing a leadership bid (a charge he has of course denied). On the party’s left the overwhelming favourite is the popular mayor of Greater Manchester, Andy Burnham.

Burnham is not just liked within the Labour Party. He is by far the most popular politician in the country. He was a minister in the last Labour government under Gordon Brown and stood for the Labour leadership in both 2010 and 2015 (in the latter case when it was won by left-winger Jeremy Corbyn). But he resigned his seat in 2017 to become the mayor of Britain’s fourth-largest city.

In that role he has been a vociferous champion of devolved government and especially for the interests of the North of England. Manchester has enjoyed an investment boom, and Burnham’s policies of integrated public transport and social housing have been widely admired. He has been re-elected twice, the last time, in 2024, with a remarkable two-thirds of the popular vote.

Affectionately known as the “King of the North,” Burnham has an ability to speak to voters in a manner unmatched by any other British politician. Over the last year he has articulated a political project he has called “Manchesterism,” founded on the belief that if governments are to control the cost of living they need to own the major price levers. He favours not just integrated public transport under local authorities, but rent controls, mass public house-building and public ownership — in some form — of the energy and water sectors.

While this is not yet a fully fledged program for government, these ideas and Burnham’s popularity have made him the leading candidate of Labour’s centre-left — but only if he can get back into parliament first. Only MPs can stand for the leadership.

And this is where his problem lies. Just a couple of months ago Burnham successfully encouraged a Labour MP in Manchester to resign their seat, creating a by-election for which Burnham put himself up to be the candidate. But Starmer blocked his candidature, demanding that Labour’s National Executive Committee, or NEC, refuse him permission to give up the Manchester mayoralty. The Greens subsequently took the seat. Polls suggested that, had Burnham been the candidate, he would have won it.

So the questions on everyone’s lips this week were: can Burnham persuade another Manchester MP to fall on their sword for the greater good? If so, would Starmer and the NEC change their minds and allow him to stand? And when is Streeting going to announce he has eighty-one MPs on his side and initiate a leadership election – before Burnham can get back into parliament?

After days of feverish speculation, on Thursday both Streeting and Burnham made their moves. At lunchtime Streeting resigned from cabinet, issuing a scathing letter of criticism of Starmer’s leadership. A few hours later a Labour MP in Greater Manchester said he was resigning his seat to allow Burnham to return to parliament, and Burnham declared he would put himself up for the consequent by-election.

But it didn’t then go the way the media has assumed. Much to everyone’s surprise, Streeting didn’t trigger a leadership election. On the contrary, he said that he thought that in any such contest Andy Burnham should be able to stand. It almost looked like they were collaborating.

So there is no leadership election for now. Rather, there is a very difficult by-election for Burnham to win. Members of Labour’s NEC have already said they will not stand in his way this time. But the constituency of Makerfield, which lies on the edge of Greater Manchester, voted Reform in last week’s local elections. The party took all the council seats available on a vote share of 50 per cent, more than double Labour’s 23 per cent. Burnham is by no means guaranteed to win.

In a curious way, whether he does or not will settle the leadership question. If Burnham loses to Reform he is finished: no longer mayor and not an MP. But if he wins, he will have proved precisely what his party want to know: that this is indeed the leader who can defeat Reform and win the 2029 general election, an election last week’s results showed Labour under Keir Starmer would almost certainly lose.

At that point — the by-election will be on 18 June — Labour MPs and members won’t need convincing that Starmer should stand down. Either he goes of his own accord, setting out an orderly timetable for Burnham to become leader and prime minister, or Burnham will challenge him and he will be defeated in a membership vote.

Starmer’s one hope of remaining in office is therefore that Burnham loses the by-election and he then fends off an alternative challenge from Streeting. It’s not a good look for a prime minister to want to see his party defeated, just to save his own skin. •

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In its 2018 report on limiting global warming to 1.5°C above preindustrial levels (the Paris climate agreement’s widely accepted goal), the Intergovernmental Panel on Climate Change was somewhat coy about this. It stated unambiguously that all its 1.5°C scenarios included significant use of carbon dioxide removal, or CDR, and it listed possible CDR methods. And then it described all of these as “subject to multiple feasibility and sustainability constraints.”

That’s a scientifically careful way of saying that none of the methods yet looks capable of safely storing the quantities of CO₂ — tens of gigatonnes per annum — required to achieve net zero.

But the good news is that the race is on to identify and develop processes that might do this. And in that race a possible winner seems to be emerging: carbon sequestration in the world’s oceans.

There are essentially three ways to remove carbon from the atmosphere. (Carbon removal is a separate field from “carbon capture and storage,” which uses industrial processes to capture emissions produced by chemical or power plants before they enter the atmosphere.)

The first is via vegetation. Photosynthesis is carbon removal: the more vegetation planted, the more carbon removed. Since trees and other forms of plant life can also support local livelihoods and biodiversity, considerable efforts are being made in many parts of the world to restore degraded and deforested land.

But this method has its limits. Using land for carbon storage means not using it for food production. And the increase in vegetation must be permanent, which is hard to guarantee. Only if the vegetation is burned to produce energy and the emissions directly captured and stored (a process called “bioenergy with carbon capture and storage”) is carbon definitely removed.

The second possible method of carbon removal is direct air capture, or DAC. CO₂ is retrieved from the atmosphere by solid or liquid absorbents operating either in a vacuum or at high temperature, then stored underground or in building materials. DAC technologies are in their infancy; since they use highly energy-intensive processes they are dependent on abundant and cheap renewable energy as well as accessible storage sites. Eighteen DAC facilities are currently operating in Europe, Canada and the United States, but even the largest of them, in Iceland, will only be able to capture 36,000 tonnes (0.000036 gigatonnes) of CO₂ a year.

This is why attention is increasingly turning to ocean-based methods. The world’s oceans already absorb more than a quarter of all carbon emissions; in principle they have the physical capacity to sequester the many additional gigatonnes required in the IPCC’s scenarios. This is the new scientific and commercial field of “mCDR” — marine carbon dioxide removal. The question is whether it can be done safely and cheaply enough to make net zero possible.

Some mCDR is well under way. Around the world, coastal ecosystems — mangroves, reefs, seagrass meadows and tidal salt marshes — are being conserved and restored to enhance “blue carbon” uptake. Such methods offer vital economic benefits to local communities, but their carbon removal potential is relatively small. The major gains can only be made by enhancing the oceans’ natural “carbon cycle” — the processes by which carbon is redistributed between the atmosphere, surface waters and deep waters.

One way of doing this is by adding alkalinity to the ocean. Human-made CO₂ has made the oceans more acidic, with adverse ecological effects including damage to coral reefs. Adding alkaline minerals to the ocean would convert dissolved inorganic CO₂ into carbonates and bicarbonates, which are stable forms of carbon with lifetimes of thousands of years. CO₂ equilibrium would then be restored in surface waters by natural carbon removal from the atmosphere. De-acidification would also have significant ecological benefits.

The ocean alkalinity produced naturally by the runoff from slowly weathering rocks could be greatly enhanced. Billions of tons of alkaline minerals — olivine, basalt, limestone — are readily available to be mined and could be applied to beaches or the open ocean. A number of commercial firms are developing “enhanced weathering” processes of these kinds. Others are looking at the electrochemical filtration of seawater to remove excess acid caused by human-made CO₂ and return alkaline seawater in its place.

A different element of the marine carbon cycle is powered by photosynthesis. Microscopic algae living in the ocean’s surface waters — known as phytoplankton — photosynthesise dissolved CO₂. This again pulls in more carbon from the atmosphere in a natural rebalancing, with a portion of the organic matter sequestered in the ocean depths. The more phytoplankton, the more carbon removed and stored.

Phytoplankton growth can be stimulated by adding mineral nutrients, particularly iron, to the ocean. This could be done either in engineered substrates — a controlled but expensive method — or in the open ocean. Artificial pumping could then push greater quantities of organic matter downward for sequestration. Perhaps surprisingly, large areas of ocean have almost no microalgae, and therefore little life of any kind. Fertilising these areas with iron to stimulate phytoplankton could therefore have wider ecological benefits as well as removing carbon from the atmosphere.

Equally, though, it could be environmentally damaging. Any interference with the sensitive ecology of the oceans risks unforeseen and adverse effects, and it makes environmentalists nervous.

In the United States, Friends of the Earth has little doubt: “These technologies would have to be implemented at truly massive scales to have any impact on the climate, imposing disastrous side-effects on ocean ecology, marine life [and] coastal communities.” Arguing that carbon removal is a distraction from the primary task of reducing emissions — and thereby lets polluting companies off the hook — they oppose all forms of what they call “marine geoengineering.”

But other NGOs are keener to engage. In the US the Environmental Defense Fund is taking part in scientific mCDR research. The EDF accepts that, even with rapid emissions reduction, carbon removal will be essential to achieve global warming goals, and believes that trials of the different removal methods are necessary to explore their technical and commercial feasibility and environmental impact.

Iron fertilisation is generating particular attention because it looks likely to be the cheapest method of large-scale carbon removal. Phytoplankton are very efficient at absorbing carbon dioxide and iron is cheap. It is estimated that the cost of carbon removal could be less than $50 a tonne, against a benchmark of $100/tonne generally used as the threshold for commercial viability.

In the last few months the scientific prospectus for mCDR has seen some important advances. In November the European Marine Board, an independent advisory body, recommended a set of standardised protocols for research and feasibility studies. In January a network of scientific bodies, NGOs and philanthropies, Ocean Visions, published a detailed research framework for investigating phytoplankton-based carbon removal, identifying how remaining uncertainties and knowledge gaps can be reduced.

The next stage is major field trials. More than twenty small-scale experiments in ocean iron fertilisation have already been conducted, but larger and longer studies are needed to understand sequestration potential and environmental impacts. The Woods Hole Oceanographic Institution in the US has set out a program for such trials, with the Gulf of Alaska in the Northeast Pacific a particularly promising location.

But the obstacles to large-scale deployment of mCDR remain formidable. For a start, the international ocean waste governance regime will need to be amended; the 1972 London Convention and its 1996 London Protocol forbid “dumping” of materials in the ocean. And mechanisms for financing mCDR deployment still need to be devised: if this were through “offset” markets allowing polluting companies to substitute cheap removal for more expensive emissions reduction it would almost certainly generate furious opposition from environmental NGOs.

Yet the attraction of marine carbon dioxide removal is also evident. Ocean-based solutions wouldn’t compete with other uses of scarce land, such as food production. Because they use naturally occurring biological and chemical processes of carbon absorption they will almost certainly prove cheaper than direct air capture methods. Most of all, the sheer abundance of the world’s oceans — if the ecological impacts can be proven positive — makes it possible to imagine global carbon removal on the scale that will be needed to keep 1.5°C of warming within reach. As that goal becomes more pressing over the next two decades, the world’s major emitting countries may be willing to pay for such solutions.

Last week Fiji and Tuvalu were announced as hosts of the “pre-COP” meetings in October that will prepare the next UN climate conference, COP31. It might not have escaped the attention of the Pacific islands that they have some of the largest territorial ocean waters in the world. •

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Few of those attending COP30 judged it a success. Yes, securing a final agreement means the multilateral UN system has been maintained. Developing countries will see a tripling of financial assistance to help adapt to climate change. There is a new (though incoherent) global goal on adaptation, a new “just transition” mechanism and — despite the best efforts of Iran, Russia, Saudi Arabia and the Vatican — a gender action plan.

But COP30’s main task lay elsewhere. It needed to acknowledge that the world is significantly off track to achieving the Paris agreement goal of keeping global warming to 1.5–2C above preindustrial levels — and do something in response.

In this, it failed. A majority of countries wanted the COP to agree on new analytical and discussion processes (so-called “roadmaps”) to help countries transition away from fossil fuels and end deforestation. But this was blocked by a coalition of the Gulf states, Russia, China and India.

Expressing the anger felt by many delegates from both developed and developing countries, Juan Carlos Monterrey, Panama’s special representative for climate change, addressed his closing remarks to the world’s young people. “The negotiators that your governments sent to COP30 are not defending your future. They are defending the very industries that created this crisis: the fossil fuel industry and the forces driving global deforestation… A ‘forest COP’ with no commitment on forests is a very bad joke. A climate decision that cannot even say ‘fossil fuels’ is not neutrality. It is complicity.”

This is not just about a single conference. The outcome of COP30 leaves the UN climate regime with a double problem.

On the one hand, future COPs already had little to negotiate about. Since the Paris agreement was signed in 2015, successive COPs have completed the Paris Rulebook on how to implement it, and they have now concluded the tasks Paris bequeathed. A New Collective Quantified Goal defines how much money needs to flow from the rich world to support developing countries tackle climate change up to 2035; a Loss and Damage Fund will assist them recover from climate disasters; and now there is a Global Goal on Adaptation.

Given how hard Australia and Turkey fought to to be responsible for COP31 — in the end Australia was put in charge of the negotiations, while Turkey will host the event in the Mediterranean resort of Antalya — the actual agenda next year will be ironically thin. Not until COP33 in 2028 will anything really important be up for negotiation: that will be the next five-yearly “Global Stocktake,” when the Paris agreement requires the world to assess progress against its global goals and define new ones.

But that prospect merely highlights the second problem. On the issue that matters most — whether or not emissions can be slowed to a trajectory sufficient to limit warming to 2C before returning to 1.5C — the world is now irrevocably split.

What happened at COP30 was not surprising. Two years ago, when the last Global Stocktake concluded in an agreement that the world should be “transitioning away from fossil fuels… so as to achieve net zero by 2050,” Saudi Arabia and Russia were furious. The phrase threatened their economic and political interests, they believed, and should not be repeated.

Having stopped both the G20 and COP29 from using it last year, they were implacable in Belém. Marshalling the other Gulf States and the rest of the Arab Group alongside their allies in the BRICS alliance, China and India — and by pressuring a number of poorer African and Asian nations — they were able to build a bloc easily large enough to prevent the consensus, or even compromise, required by the UN system.

At their back sat Donald Trump. The United States did not attend in Belém, but the president’s extremely friendly meeting in Washington with the Saudi leader Mohammed Bin Salman during the second week of the COP will surely have aligned their climate strategies. The extraordinary bullying by the US of delegates to the International Maritime Organisation meeting in October, which stopped the IMO adopting an emissions reduction plan for global shipping, had already revealed the Trump administration’s ruthless determination to sustain the market for fossil fuels.

In this sense COP30 witnessed the emergence of what we can call an Axis of Obstruction: a small but powerful set of oil and gas producers and their major customers determined to resist further global emissions reduction commitments. Russia, the US, Saudi Arabia, the UAE and Iran are the key producers: India and China their customers.

On the face of it, China’s position is puzzling. As the world’s largest producer of wind and solar equipment, electric vehicles and critical minerals, it has a huge economic interest in the rest of the world’s decarbonisation. But it is also Russia’s major backer in the Ukraine war, and it sees its strategic interests best served by the Trump-inspired division of the Western alliance. In Belém many observers felt that, had there been a consensus for the fossil fuel roadmap, China would have gone along with it. But the priority was its wider geopolitical goals.

Having won this significant victory in Brazil, it is very difficult to see the Axis of Obstruction — or at least, its core oil and gas producing members — compromising at future COPs. Which means that, however often the Europeans, Latin Americans and small island states demand an explicit commitment to transitioning away from fossil fuels, they will not get it. The Belém stalemate will continue.

The question is, does this matter? There’s a strong case for saying it doesn’t.

The Paris agreement creates a very clear division of labour. The UN system sets the global goals and rules of climate action, by consensus. But it is up to individual countries to decide what they will do to meet them. The actual mechanisms of emissions reduction and adaptation are national climate plans and policies, and subsequent business investment in solutions.

In other words, climate policy and investment — the implementation of the Paris agreement — doesn’t need a global consensus. If the majority of countries want to develop roadmaps away from fossil fuels and deforestation, they can do so. Such roadmaps will not have the legitimacy of the UN regime, but as guides to national and business implementation they won’t need it.

That is why Brazil’s announcement at the end of COP30 that it would assemble a “coalition of the willing” to develop a roadmap process for the fossil fuel transition — and a parallel one for deforestation — is so significant. For if the world is to transition away from fossil fuels, it is not the producers who will lead the charge. It is all those countries that consume fossil fuels and must find ways of consuming less. Fossil fuel supply will decline when demand falls.

This is not a straightforward prospect. As the International Energy Agency’s latest World Energy Outlook reveals, neither the economics nor politics of reducing fossil fuel demand to net zero by around 2050 will be easy. Net-zero electricity is within reach: the declining costs of wind, solar and batteries, supplemented by hydro, geothermal and nuclear make this entirely feasible. The same is true of electric vehicles. But it is not true, yet, in heating and cooling, aviation, shipping or heavy industry. And the fears of workers, communities and nations dependent on fossil fuel production are entirely understandable: a “just transition” for them needs to provide replacement jobs and foreign exchange, not just words.

So the idea of a “roadmap” process, involving technical and economic analysis accompanied by real-world political discussion, is a good one, and it doesn’t need unanimity to happen. Countries cannot go it alone on such a project — innovation needs the incentive of global markets — but if a sufficient “coalition of the willing” wishes to push ahead, the axis of obstruction won’t be able to stop them. Colombia has already offered to host an initial conference for the fossil fuel roadmap in April next year.

Indeed, those lamenting the results of COP30 face an uncomfortable truth. If the fossil fuel producers had been forced to accept the language of “transitioning away from fossil fuels,” they would still not have cut fossil fuel production. Nothing in the words agreed at the UN about global goals can force individual countries to do anything. That is the Paris agreement.

This is not to say the UN regime is redundant. The global goals matter. The five-year cycle of setting and reviewing national climate plans ensures a constant ratchet of global progress. Countries must be transparent about what they are doing. And the responsibility of developed countries to provide financial assistance to developing ones is crucial both in reality and symbolically. But decision-making COPs really aren’t needed in years that don’t end in 0 and 5 (to set plans) and 3 and 8 (to take stock).

Some reformers have suggested the other COPs be abolished, or at least made more low-key affairs in the UN climate headquarters of Bonn. With the locations of COP32 (Ethiopia) and COP33 (India) already decided, that isn’t going to happen.

But the focus of COPs could shift from rulemaking to implementation. Brazil tried to encourage this at COP30: alongside the formal talks it convened more than 350 side events and accompanying announcements on the implementation of climate plans. Organised under the auspices of the ten-year-old “Climate Action Agenda,” the program brought together 482 separate initiatives in the fields of energy, industry and transport; forests, oceans and biodiversity; agriculture and food systems; resilient cities, infrastructure and water; human and social development; and finance, technology and capacity-building.

These initiatives have almost all been organised by coalitions involving some combination of the private sector, national governments, states and cities, international organisations and civil society groups. Nearly 200 formally reported their results through a UNFCCC portal this year, and more than 100 submitted their future plans to accelerate solutions.

But in Belém, as at previous COPs, the “action agenda” felt as if it happened off stage. The main show remained the negotiations. It is this dynamic that needs to change if the Paris agreement process is to shift from rulemaking to implementation. As the negotiating agenda diminishes, the question is whether the Australian–Turkish COP31 can give equal billing to the action agenda.

Could COP31 organise, not just individual side events, but a parallel conference to discuss the possibilities and pitfalls of climate action in the real world? This would offer more — and more interesting — stories for the media to cover. If such a conference were to report into the official COP, with a formal session at which ministers could respond, this could even unify the two sides of the overall event.

The negotiators are likely to resist such a shift. Implementation is not what they do, or in many cases what they know about. And they have already, at COP30, resisted one attempt to bring implementation into the talks.

The fossil fuel and deforestation roadmaps discussed in Belém were not the first suggestions of their kind. COP29 agreed that a roadmap should be produced to show how the world could get US$1.3 trillion of climate finance flowing to developing countries by 2035. That figure had been agreed as the world’s aspirational goal but no one knew how to achieve it. So the COP asked its current and next presidencies, Azerbaijan and Brazil, to produce a “Baku to Belém Roadmap to $1.3 trillion” in time for COP30.

That roadmap was published just before the conference opened. It identifies, over the course of ninety analytic pages, all the different sources of public and private finance that might be mobilised to get to the US$1.3 trillion goal, and sets out a number of short-term actions that could be taken by groups of countries and international institutions to scale up the relevant flows. But it was not discussed at COP30, and was merely “noted” in the final text.

It was the developing country negotiators who primarily objected to the document. As it had not been negotiated, they complained, it had no status under the COP. The process by which it had been written had not been transparent. It discussed sources of finance, policies and institutions that lay outside the competence of the UNFCCC.

Yes, said the Azerbaijani and Brazilian officials, it did. This is because most of the money making up the $1.3 trillion — if such a figure can ever be reached — belongs to private sector firms and public institutions that aren’t members of the UN. If the UNFCCC wants the money to flow, it will have to engage with them, and this is what the Baku to Belém Roadmap proposed.

This is where climate action in the real world — the world beyond the talks — will actually happen. But it is not yet where national climate negotiators are comfortable.

This then is the international climate policy vista revealed in Brazil. Until the next Global Stocktake in 2028 — and probably even then — the UN system won’t make progress on the goal of “transitioning away from fossil fuels.” The Axis of Obstruction countries will do their best to block faster decarbonisation efforts, both within the UN and beyond it. Meanwhile coalitions of willing countries, subnational governments, international institutions, businesses, investors and civil society will continue to accelerate the processes of climate action and implementation.

For Australia’s presidency next year the question will be whether these coalitions and actors can be given equal status with the negotiations, and even perhaps be recognised and legitimised by them. If they can, a new climate regime may come into view just at the point it is required. •

The post Regime change appeared first on Inside Story.

Accordingly, many NGOs — and the UN itself — have been hailing the result of COP30, just concluded in Belém, Brazil, as vindication that the multilateral UN process still works. The conference didn’t break down. There was an agreement.

Yes, there was. But in truth it’s hard not to see COP30 as a failure. The 2015 Paris Agreement sets out a very clear goal, accepted by all 198 parties to the UN Climate Change Convention: to limit global warming to well under 2C relative to preindustrial levels, and if possible to no more than 1.5C. But the world is not on track to meet these goals, and COP30 has done nothing about it.

In fact the conference has revealed something more serious than this. There is now a powerful and organised resistance in the international community to deeper action on climate change. It is not about the science: outside the United States, this is not in dispute. It is about what the science means for the world’s consumption of fossil fuels. COP30 saw a determined effort on the part of Saudi Arabia, the United Arab Emirates and their Arab Group allies, accompanied by Russia, India and China, to block agreement on any mention of fossil fuels or the need to shift away from them.

A large majority of countries came to Belém determined that the international community should acknowledge the Paris temperature goals are in grave danger. The Agreement requires countries to publish new climate plans every five years, and this was one of those years. With almost all large economies having done so, though, a large “emissions gap” remains between expected emissions and the levels required to limit warming to 1.5 or 2C. The UN judges that the world is heading for 2.3–2.5C of warming this century. These are levels that will cause ecological and economic devastation everywhere, and extinction for low-lying island nations in the Pacific.

That the world faces more than 2C of warming isn’t proof the UN regime has failed. Before the Copenhagen COP of 2009, the projection was around 6C of warming. Before Paris in 2015, it was around 4C. So huge progress has been made: emissions growth has been drastically slowed as a result of the global rollout of renewable energy over the last fifteen years following UN agreements on national targets and plans. But the majority of countries wanted the COP to acknowledge that it was not enough, and to commit the international community to doing more.

A specific proposal came to embody this idea. In his speech opening the conference, Brazil’s president Luiz Inácio Lula da Silva called for the COP to agree to a “roadmap on transitioning away from fossil fuels” and a comparable roadmap to halt deforestation. He was stating the scientific fact that the world must wean itself off oil, gas and coal over the next three decades if it is to meet the UN climate goals.

But Lula was also acknowledging that we don’t know how to do this yet. Many renewable technologies are still too expensive, and for fossil fuel–producing countries and regions the economic and social consequences of declining production are likely to be harsh. The same is true for countries with rainforests being cut down to provide land for growing food. Both oil and gas and agriculture are major sources of jobs and exports for countries — like Brazil — still trying to end absolute poverty and hunger.

So the proposal for a roadmap based on technical expertise, economic analysis and discussion among consumer and producer countries was attractive. By the middle weekend of the COP more than eighty countries were pushing for it to be included in the final text.

The phrase “transitioning away from fossil fuels” is totemic. Two years ago, in Dubai, COP28 concluded dramatically with this phrase agreed as the new global goal. The UN’s press release hailed it as “the beginning of the end of the fossil fuel era.” But since then Saudi Arabia and Russia have ensured the phrase has never again been used in any international forum, and they refused to allow it at COP30.

Whatever compromise language the Europeans and Latin Americans tried — “a fossil fuel roadmap which did not mention either fossil fuels or a roadmap,” as one analyst put it — was greeted with the same absolute rejection. Applying pressure to a number of poorer African and Asian countries, the Saudis and Russia gathered a large enough opposition to ensure the proposal could not achieve consensus.

So there is no mention of either roadmaps or fossil fuels in COP30’s final text. The Brazilians have announced they will convene a coalition of countries to develop roadmap processes over the next year; but a voluntary initiative carries no weight in the UN process.

The final agreement does acknowledge the emissions gap, though not with any sense of alarm. And it launches two new initiatives, a Global Implementation Accelerator and a Belém Mission to 1.5, to speed up the execution of existing plans and encourage new ones. But even the most Panglossian of observers knows that these are just UN-speak for more consolatory talking shops.

The other key demand of developing countries was more money for climate adaptation. As extreme weather events increasingly batter vulnerable countries, they need more resources to help them cope. Specifically they wanted current levels of adaptation finance to be tripled by 2030. They didn’t get this, but the text does recognise the need for a tripling by 2035, and most developed countries acknowledged afterwards that they are now effectively committed to it.

Elsewhere COP30 agreed a new “global goal on adaptation,” but it has been widely rejected as incoherent after the Saudis inserted material contradicting the experts who had worked on it for two years. Ater the gavel had come down on the final plenary session on Saturday afternoon, several countries said they could not accept it. Others attacked the failure of the COP to recognise the urgency of the emissions gap and the need to transition away from fossil fuels. At one point the Brazilian chair was forced to adjourn the meeting to address their concerns in private.

In truth, there is a much deeper story than one climate conference. Saudi Arabia, the United Arab Emirates and Russia now collaborate closely in the “OPEC+” group of major oil producers. Their goal is to maintain oil price stability as a means to greater economic certainty; just this month they decided to pause planned increases in oil production for next year. They see action on climate change as a long-term threat to their core economic interests: if projected global demand falls, both output and price will fall too.

For their part, China and India have become Russia’s largest oil and gas purchasers since its invasion of Ukraine, with preferential price terms, both on the officially recorded market and in the “dark” trading of unregistered Russian tankers. India has recently reduced its imports in response to US sanctions, but it was little surprise to find all three countries united in Belém.

Indeed, it’s arguable that the COP was not the most important climate summit of the last few days. Even in a week that culminated in the G20 Leaders’ Summit in Johannesburg — another critical gathering of global governance boycotted by the US — the key meeting was surely Tuesday’s remarkably friendly White House encounter between Donald Trump and the Saudi prime minister Mohammed bin Salman. Alongside new US arms sales and Saudi investment in the American economy, the COP must surely have been discussed. As Saudi Arabia maintained its hard line in Belém, the two men will have found common cause.

Here we can see emerging the new contours of international climate relations. Inside the UN process Saudi Arabia and Russia collude with allies to block progress on transitioning away from fossil fuels. Outside it, the US under President Trump does all it can to obstruct and undermine the multilateral process and to bolster the expansion of fossil fuel production. Most of the rest of the world can only watch on, united in desiring a different future, but increasingly forced to seek progress in “coalitions of the willing” outside the formal UN process.

Next year’s COP will be presided over by Australia — though in a messy compromise between the two countries contending for the honour it will actually be held in Turkey. The schism in global climate politics revealed in Brazil this week will surely make Australia’s negotiating task even more difficult. But that may no longer be the point. If COP31 can prioritise implementation and investment over the search for further textual agreement it may make greater progress; and in doing so help the world navigate the new geopolitical terrain. •

The post Not so good COP appeared first on Inside Story.

Sadly, they would be wrong. About 400 kilometres west of here the Amazon completes its nearly 7000 kilometre journey from the high Andes across northern South America by splitting into multiple smaller rivers. Belém sits close to the end of the southernmost of these, the Pará, where it meets the even smaller Rio Guamá coming in the other direction.

Never mind, the Amazon rainforest is very close, and the intrepid can take a five-day cruise upriver to the larger city of Manaus, capital of the state of Amazonas, which really is in the heart of the rainforest.

Belém, capital of Pará, was not everyone’s choice to host COP30. Not merely because it is far away (three and a half hours by plane) from Brazil’s main population centres (and airports) Rio de Janeiro and São Paulo, but because, though around two and half million people live in its wider metropolitan area, it doesn’t have nearly enough hotel rooms to accommodate the 50,000+ people who nowadays attend COPs. Country delegations and business representatives have complained they could find nowhere to stay, or that prices have been hiked to unaffordable levels. In the end the authorities managed to hire some cruise ships for the official delegations and enterprising entrepreneurs converted old shipping containers into windowless pods for the NGOs. Anyone with a half-decent apartment has rented it out and left town.

The Brazilian government claims it chose Belém to draw attention to the climatic threat to the whole world posed by the Amazon’s continued (though now slowing) deforestation. Locals will tell you that the governor of Pará, Helder Barbalho, is an important Workers’ Party player and a possible successor to Brazilian president Luiz Inácio Lula da Silva, and the COP venue the result of a private political deal.

Whatever the truth (and both could be true), Belém is an appropriate host city. It is not a bad thing for the numbers at COPs to be limited — two years ago Dubai’s COP28 attracted over 100,000 attendees — and many would say that if the hotel price mechanism is the way to do it, so be it.

Belém is typical of many cities in the developing world. At its centre stands its colonial legacy: an old town of charming seventeenth-century Portuguese buildings and two beautiful churches, the Basilica of Our Lady of Nazareth of Exile and Our Lady of Grace Cathedral. It has a traditional Catholic culture, which every October is celebrated in the five-hour procession of the “Círio of Nazaré” (otherwise known as the “Christmas of the Amazon”) in which thousands of local people follow a statue of the Virgin Mary being carried through the streets. But its population is multiracial: mainly descendants of the Portuguese, enslaved Africans and indigenous forest peoples, and their many mixed offspring.

Belém (Portugese for Bethlehem) became rich as the centre of the sugar trade, a product of Brazil’s vast slave plantations. Later it shifted to the export of rubber, and now of aluminium, iron ore and timber. As its airport posters indicate, it is trying to diversify into tourism, while at the same time coping with an urban expansion that puts pressure on its transport systems, air quality and poverty levels. It is in growing cities like this all over the world that we will discover whether net zero goals are indeed compatible with equitable economic development, and whether human societies can genuinely adapt to the climate change that is now inevitable.

Before COP30 formally begins on Monday, President Lula invited the world’s leaders to a summit this week to recommit to action on climate change. Acutely aware that Donald Trump is leading the counter-movement, both to expand the production and use of fossil fuels and to undermine the multilateral UN process, Lula and the UN secretary-general Antonio Guterrres wanted to get the rest of the world to stand up against him. They didn’t quite succeed.

In all, 144 countries sent ministers to the summit, a very impressive total. (The UN climate convention has 198 members.) But only around thirty were heads of government, and perhaps another thirty deputy heads. Donald Trump stayed away, of course, but so did the leaders of China, India and Indonesia, all countries with large and still rising emissions.

Perhaps surprisingly, since Australia is bidding to host next year’s COP31, so did Anthony Albanese. Luckily for him, President Erdogan of Turkey, Australia’s rival for the privilege, was also a no-show. “Perhaps they cut a deal,” said one wag. British prime minister Sir Keir Starmer came, left after one day, and failed to bring any media with him. Facing criticism at home that Labour’s climate policies are worsening the cost-of-living crisis (and that Starmer himself spends too much time overseas), one commentator observed acidly that “they obviously didn’t want the British public to know he’d been here.”

The summit itself was a slightly underwhelming event. President Lula’s main national objective was to get other countries to support his “Tropical Forest Forever Facility,” or TFFF, a bold plan to create a US$125 billion endowment fund to support countries (such as Brazil) committing to halt deforestation. The aim is to get governments, the private sector and philanthropies to invest in the fund, which in turn will invest in high-growth stocks around the world. The profits will be shared between the fund’s investors and countries that can show they are halting deforestation.

Having put US$1bn of Brazil’s own money into the fund, Lula will have been delighted he secured support from several other donors. The TFFF was endorsed by fifty-three countries, including all the major rainforest ones, and initial contributions now total US$5.5 billion of the core $25 billion goal, including $3 billion from Norway, $1 billion from Indonesia, $500 million from France, an as-yet-unspecified commitment from Germany and smaller sums from Portugal, the Netherlands and others.

Other sessions of the summit discussed how to combine poverty and hunger reduction with environmental sustainability — this is Lula’s overriding obsession — along with the clean energy transition and overall global emissions reduction. But Brazil did not seek agreement on a summit communique and didn’t issue one at the end.

Much to other countries’ surprise, and in some cases dismay, Brazil merely published a series of statements on the issues discussed, some signed by groups of participating countries, others just by Brazil. Apart from the TFFF, the statements included a “Belém Declaration on Fighting Environmental Racism,” a “Call to Action on Integrated Fire Management and Wildfire Resilience” and a “Belém Declaration on Hunger, Poverty and Human-Centered Climate Action.” President Lula did issue a general “Call of Belém for the Climate” asking other countries to step up their efforts, but it was in his name only.

So Lula and Guterres failed to secure a clear public statement from those 144 countries that — unlike Trump — they still believe in climate science, still believe in multilateral cooperation, and still specifically believe in the Paris agreement and its temperature goals.

It isn’t clear why they didn’t seek such an agreed statement: whether they thought it was too logistically difficult to negotiate, that not everyone would sign, or simply that it wasn’t necessary. But several experienced diplomats and politicians here believe it was a missed opportunity to give the global media a very clear story: that the vast majority of the world remains committed to climate action, and that Trump is isolated. It is notable how little coverage the summit’s conclusions have had in the world’s main media outlets.

That story will now have to be provided by the COP itself. This year it has three main agenda items, two of which are not actually on the agenda at all.

First, it must deal with the global “emissions gap.” This is the difference between two emissions numbers. The first is the level of global emissions in 2035 that climate scientists say will be necessary to put the world on a path to the overall warming limits agreed in Paris: well below 2ºC compared with pre-industrial times, and ideally no more than 1.5ºC. The second is the sum total of emissions that countries project for 2035 in their new national climate plans, the so-called “Nationally Determined Contributions,” or NDCs. There is a large gap between them.

COP30 is one of the five-yearly moments when — as stipulated by the Paris agreement — all countries must submit a new NDC, stronger than the last. But not all countries have done so. By the end of October, the UN climate secretariat was forced to admit that fewer than a third, only sixty-four, had submitted new NDCs, and this was not enough to make credible projections of global emissions in the target year of 2035.

The UN Environment Programme was less shy. Its annual Emissions Gap Report projected that countries’ new plans, if fully implemented, will put the world on a projected path to 2.3–2.5°C of warming. This compares to 2.6–2.8°C based on previously announced policies: a small improvement, but not much, and inevitably reduced by the US’s current stance and policy reversals.

Does this keep alive the Paris goal of limiting warming to 1.5°C? To get onto a 1.5°C pathway, says UNEP, would require a further 55 per cent reduction in annual global emissions by 2035 compared with 2019 levels (35 per cent for a 2°C pathway). As it notes, the size of such cuts, the short time available to deliver them, and the challenging political climate, make 1.5°C almost certain to be exceeded within the next decade. But UNEP also points out that this doesn’t mean the goal should be abandoned. Global average temperatures were always likely to overshoot 1.5°C of warming, and would then need to be returned to that level by 2100 by serious (and as yet highly uncertain) investment in removing carbon from the atmosphere. This prospect, it says carefully, remains “within the realms of possibility — although doing so will be extremely challenging.”

You might have thought that the emissions gap would be the key item on the COP30 agenda — and most countries in the world would agree with you. But a powerful bloc, including China, India and Saudi Arabia, is insisting that there is no provision in the Paris agreement for a collective discussion of NDCs. They are called “Nationally Determined” for a reason. They argue (almost certainly correctly) that the system of “global goals but nationally chosen targets” was precisely the compromise that made the Paris agreement possible.

Most other countries think this is ridiculous. If a global climate conference can’t discuss the emissions gap, what is its point? So we can expect this argument to take up a lot of the opening day on Monday, when the conference agenda must be agreed before the proceedings proper get started. As the COP presidency, Brazil must remain studiedly neutral between country positions. But it will surely try to steer this issue towards the climate ministers when they arrive for the second week (the first is just officials). And they will probably succeed, since almost all the ministers will want to discuss the emissions gap and what can be done about it.

Some ideas exist already. President Lula has himself proposed that the UN should produce a “roadmap for the transition away from fossil fuels.” This is a bit of a gauntlet thrown down to Saudi Arabia and Russia, who since 2023 have blocked all international forums from using this phrase, even though it was agreed at COP28 and is officially the world’s aim. “This issue is going to make the COP quite spicy,” grinned one delegate.

Also not on the official agenda is a second report, the “Baku to Belém Roadmap to $1.3 trillion.” This is the document mandated by last year’s COP29 in Baku to get itself out of a tricky negotiating hole. The Paris agreement said the world had to agree a “New Collective Quantified Goal,” or NCQG, for climate finance: that is, the sums of money that should be provided to developing countries to help them reduce emissions and adapt to climate impacts. Last year, at COP29, the developed countries, who have the leading responsibility, said they would provide at least $300 billion annually by 2035 from public resources (including some mobilised from the private sector). But this was far less than the developing countries wanted, and that expert analysis suggested they needed. So the COP also agreed an aspirational goal of some $1.3 trillion a year in total financial flows to developing countries by 2035, without assigning anyone the responsibility to make sure it happened. Instead they asked the two COP presidencies Azerbaijan and Brazil, to produce a “Roadmap” showing how the $1.3 trillion could be raised, and to report it to COP30.

The Roadmap was published on Wednesday. It is a comprehensive examination of all the different sources of public and private money that could conceivably flow to developing countries over the next decade (a total sum, it notes, many times larger than $1.3 trillion) and the different fields in which it would need to be invested. It makes a strong case that emerging and developing countries will get stronger growth through a low-carbon and climate-resilient economic development path than by continuing to rely on fossil fuels. It sets out nearly fifty measures which, were they taken by governments and financial institutions (both public and private), would start to get serious monies flowing.

But this report, too, is not due to be discussed by the COP. Because it was inserted into the final agreed text in Baku by ministers very late in the negotiations, it was neither fully understood nor accepted by the official negotiators. As it has been produced in a highly unorthodox way by two COP presidencies, rather than negotiated by all 198 UN parties (though Brazil and Azerbaijan extensively consulted countries and others), some are saying that the most that can happen at COP will be for the report to be “noted.”

Again, though, this view seems unlikely to prevail. Ministers from developing countries are desperate to ensure that there is more money available for climate-positive development over the coming decade. They will want to discuss the Roadmap and how the measures in it can be implemented. Expect this, too, to happen in the second week.

The third key issue for the COP is on the agenda. That’s an agreement on the “Global Goal on Adaptation,” another requirement the Paris agreement put on the future negotiating table. With their uncanny ability to justify their own existence, country negotiators have been talking about what such a goal might look like for eight years, yet have still not reached a conclusion. But there is quiet confidence in Belém that Brazil will apply some gentle (or maybe not so gentle) pressure to get at least one unequivocal win out of its conference.

There’s also talk of another triumph the Brazilians might pull off: ending the conference on time, at 6pm on Friday 21 November. COPs never finish at the timetabled hour: even though they have two weeks to come to agreement, the negotiators always leave at least one issue to the very end, and then beyond. Recent COPs have continued well into the Saturday and even Sunday before dramatic last-minute resolutions. With much less on the negotiating table this year, observers are wondering whether Brazil can do the unthinkable. Not getting the world to act faster on climate change, but to stop talking about it at the scheduled time. •

The post For whom will Belém toll? appeared first on Inside Story.

The IMO is the United Nations agency responsible for the safety and security of shipping and the prevention of the marine and atmospheric pollution it causes. For more than a decade it has been working, somewhat sedately, on a policy to cut the maritime sector’s greenhouse gas emissions. (Shipping contributes just over 2 per cent of global carbon emissions, rising year on year.)

In the past twelve months the IMO had finally reached agreement on two linked measures: a global fuel standard requiring ships gradually to use less-polluting fuels; and a pricing mechanism for the remaining emissions to provide a further incentive to reduce them. The revenues would go to help green the shipping companies, and assist developing countries. The measures had won the support of the global maritime industry, as well as almost all of the IMO’s 176 nation state members.

But not all. At a special environment committee meeting called to ratify the proposal this month, the United States, Russia and Saudi Arabia opposed the measures and called for the vote on them to be postponed. From the White House Donald Trump made clear his views: “The United States will NOT stand for this Global Green New Scam Tax on Shipping…” he declared on Truth Social. “We will not tolerate increased prices on American Consumers OR the creation of a Green New Scam Bureaucracy to spend YOUR money on their Green dreams.”

But it was inside the IMO’s headquarters that Trump really made his presence felt. As delegates considered the motion to delay the decision, US negotiators openly threatened them. A vote against the United States would lead to tariffs being imposed on their countries, they warned, and the individuals themselves would be denied visas to enter the country.

The Trump administration’s bullying tactics were widely decried; but they proved effective. Before the meeting everyone assumed the carbon reduction measures would pass with a large majority. But the meeting ended, as the United States wanted, with the vote put off for a year. It was clear that many countries had changed their positions in the face of the American threats. Industry leaders put a brave face on it, insisting that they would bring the measures back to pass in 2026. But others warned that Washington would only redouble its threats to ensure the policy is killed off.

The dramatic scenes at the IMO opened a new front in the technological struggle that has defined global climate politics for the last two decades: that between fossil fuels and clean energy.

Over the past ten years, clean energy — wind, solar, hydropower and geothermal sources, together with electric vehicles, electric heating and cooling, battery storage and energy efficiency — had finally gained the ascendancy. As a result of huge cost reductions, renewables are now expected to meet over 90 per cent of the growth in global electricity demand over the next five years. Last year Britain became the first major economy to phase out coal-powered generation altogether (a fitting milestone, as it was also the first country to introduce it, in 1882). Globally, perhaps more remarkably, this year or next will see renewables surpassing coal as the world’s primary source of electricity.

Electric car sales in 2024 exceeded seventeen million globally, making up over a fifth of all cars sold. The market has seen extraordinary growth; 3.5 million more electric cars were sold in 2024 than 2023, a number larger than all the electric cars sold in 2020. In China, electric cars accounted for almost half of all car sales last year.

Meanwhile the global battery market is advancing rapidly as demand rises sharply and prices continue to decline. In 2024, the average price of a car battery pack fell below US$100 per kilowatt-hour, the key threshold to compete on cost with petrol-driven rivals.

Politically, too, the tide seemed to be running out on fossil fuels. In 2021, COP26 in Glasgow agreed that coal-fired power should be “phased down,” and twenty-four countries and a number of leading car manufacturers announced they would end the sale of petrol-driven vehicles by 2040. Two years later, in Dubai, COP28 agreed that the world needed to be “transitioning away from fossil fuels” altogether. The official UN press release declared that this represented “the beginning of the end of the fossil fuel era.”

The processes by which clean energy has begun to out-compete fossil fuels have provided a classic example of the technological innovation and “creative destruction” analysed by this year’s winners of the Nobel Memorial Prize in Economic Sciences. Jan Mokyr, Philip Aghion and Peter Howitt were jointly awarded the prize this month in recognition of their historical and theoretical work explaining how, through innovation, capitalist economies change their industrial structure and thereby develop.

Up to now the role of governments in this process has been largely to encourage and support the insurgent technologies. Wind and solar power began their modern ascent in the 1990s, when Germany first introduced a “feed-in tariff” to subsidise them. The EU followed, and then other countries (including many American states), with mandates requiring electricity producers to use a minimum proportion of renewables.

Companies responded by innovating, improving the new technologies’ performance and lowering their costs. This allowed policymakers to raise the targets. When China started manufacturing and exporting renewables at scale in the 2010s, costs fell even more dramatically. In an effective virtuous circle, the targets were raised again. Today solar and wind power are cheaper than coal almost everywhere in the world; policy is no longer needed.

In vehicles, rising fuel-efficiency standards imposed by governments to control air pollution (and then carbon emissions) first just improved the performance of petrol-driven cars. But around twenty years ago technological innovation brought electric vehicles, or EVs, into the mix. As the standards have been raised and EV costs have fallen, creative destruction has taken its course. On a lifetime cost basis, EVs are expected to become cheaper than internal combustion engine vehicles by 2030.

When Donald Trump was elected president — claiming climate change was a “scam,” pulling the United States out of the Paris Agreement and promising to “drill, baby, drill” in his quest to boost the American oil industry — many observers doubted whether US policy would in reality change that much. The green technology subsidies of Joe Biden’s Inflation Reduction Act were bringing too many new jobs to Republican districts; wind- and solar-powered electricity was so much cheaper than coal; the global oil price was not high enough to incentivise new drilling in the Arctic or national parks. For Trump to bring climate change into the culture wars was one thing, such observers supposed (your own correspondent included); actively damaging the American economy was surely another.

But we underestimated him. For Trump, climate change is a war on two fronts: against liberals and their values; and against China. He has proved himself amply able to sacrifice American businesses and employment in pursuit of his twin aims.

Trump has added a new dynamic to the creative destruction process. He is using the power of the American state, not to support the new technologies, but to promote the old. On his first day in office, he signed an executive order to eliminate EV mandates, and in his landmark “Big Beautiful Bill Act” ended the tax credits that had done much to stimulate EV production and sales. The Environmental Protection Agency proposes to rescind its key 2009 finding that greenhouse gases pose a threat to public health. If it does so, vehicle makers will no longer be required to measure, control or report their greenhouse gas emissions at all.

Last month, meanwhile, the US government said it would open thirteen million acres of federal lands for coal mining and provide $625 million to recommission and modernise coal-fired power plants. It has frozen permits for offshore wind projects, ended clean energy tax credits and blocked wind and solar developments on federal lands. This month the administration cancelled $7.6 billion in grants that supported hundreds of clean energy projects in sixteen states (all of them run by the Democrats). Although the Inflation Reduction Act has not been formally repealed, most of its green technology provisions have been terminated.

Energy demand in America is now soaring as the exponential growth of AI data centres sucks in ever more electricity to power them. Just a few years ago Google, Microsoft and Meta all committed to achieve net zero power consumption by 2030, and Amazon by 2040. But these targets are now under threat. US coal consumption, long thought to be in terminal decline, is now set to rise by 7 per cent next year. As one environmental analyst put it, “it’s a steampunk dystopia — bloated, coal-fired data centres in an ever-warmer world.”

Trump is not limiting his fossil fuel drive to the US. He is also using trade and defence deals to pressure countries in Europe and Asia to buy more American gas under decades-long contracts. In its bid to reduce the tariffs Trump imposed, the European Union has committed to import up to A$1.15 trillion of US energy — mostly liquefied natural gas, or LNG — by 2028, more than four times its current imports. Similarly, Indonesia has signed up for A$24 billion in US energy imports. Japan is negotiating a similar deal. Australia is next in line.

Why is Trump doing this? His ideological antipathy to environmentalism and environmentalists is clear. But economically, his target is China. Over the past decade, China has become the global superpower in the manufacture of green technologies. It now controls more than 70 per cent of global solar, wind and battery manufacturing. Chinese-made electric vehicles are now much cheaper — and higher-quality — than Western brands: BYD this year overtook Tesla as the world’s largest electric and hybrid vehicle manufacturer.

As global demand for renewable energy and EVs rises, the Chinese economy grows stronger. By launching an assault on clean energy both domestically and overseas, Trump is trying to limit China’s global dominance.

He is already having some success. Major car manufacturers in Europe, including Audi, Volvo and Porsche, have announced they are slowing their shift to EVs or even abandoning them altogether. Most major US banks (including JP Morgan Chase, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs) have weakened or got rid of their green investment policies, and internationally the 150-stong Global Net Zero Banking Alliance has shut down.

Lobbied on all sides by worried manufacturing industries facing higher energy costs and Chinese competition, the EU is engaged in a painful process of weakening its carbon targets and regulations. Inspired by Trump, and exploiting concerns about inflation and the cost of living, right-wing parties have targeted European countries’ net zero goals and policies. Public support for climate action in Europe remains high, but governments are increasingly nervous. Having already delayed its EV targets, the British government is considering pushing back its flagship pledge to achieve net zero power by 2030.

In the long term, few analysts believe the global transition to clean energy can be derailed. Climate impacts are so severe and evident, and the costs of clean energy falling so rapidly, that both politics and economics will demand an end to fossil fuel use. But how far away the long term is remains unclear. It’s long been understood that the oil, gas and coal industries would work hard to resist the transition, and governments throughout the world have become familiar with their lobbying and public communication tactics. But as clean energy firms have expanded, a counter-lobby has grown up to challenge the claim that fossil fuels are needed to provide jobs and energy security. This technological and political struggle always looked like being the key conflict of global climate policy. But in President Trump one side has acquired a new weapon. •

The post Trump vs. Earth appeared first on Inside Story.

But British politics is in turmoil. No fewer than eight political parties — one of which has not even been formed yet — are vying for power across England, Scotland and Wales. (Northern Ireland has its own political system.) Political journalists have had to criss-cross the country to report on formerly marginal party conferences and their surprisingly large numbers of new supporters.

Dominating the headlines is Reform UK, the latest vehicle for Brexiteer-in-chief Nigel Farage, former leader of the Brexit Party and, before that, the UK Independence Party. Reform has been top of UK-wide opinion polls for six months now, leading Labour by ten to fifteen percentage points (27–35 per cent to 20–22 per cent). This is unprecedented: no third party has topped the polls outside a general election since the Social Democrat Party of pro-European Labour rebels in 1982, and never a party of the far right. But Farage has an extraordinary ability to command the media — both the right-wing newspapers (the Mail, Telegraph, Sun and Express) that still set the political agenda for the BBC, and social media, of which he has become a deft exponent.

From being a single-minded critic of the European Union, Farage has evolved into a sub-Trumpian far-right politician of the type familiar in the rest of Europe. He rails against net zero and climate policies, attacks diversity, equity and inclusion programs, and refuses — echoing Trump — to say whether paracetamol is safe for pregnant women.

But Farage’s main focus now is immigration: he has said Reform would deport 600,000 alleged illegal immigrants and end the right of legal migrants to settle in Britain with their families. Excluding EU nationals (for whom such rights are guaranteed under the Brexit arrangements), these UK residents number around 400,000: typically doctors, nurses, care workers, hospitality staff and others who came in response to labour market shortages and have made the country their home.

In the past, Farage has been careful to cultivate a certain traditional British decency; but his new stance leaves little unspoken. He is tapping into a widespread and growing public anxiety about immigration, fomented by the regular arrivals of small boats on England’s southern coast carrying asylum seekers across the English Channel from France.

Originating mainly from Afghanistan, Iraq, Eritrea and other conflict-ridden countries, these would-be migrants — largely young men — have been housed in hotels in towns across the country while their asylum claims are processed, which often takes a year or more. This has caused resentment and hostility among local populations, leading both this summer and last to demonstrations and in some cases violence. The issue has been whipped up on social media by nativist and racist influencers spreading disinformation and conspiracy theories.

All this came to a head last month at a rally of more than 100,000 far-right activists and supporters in London under the slogan “Unite the Kingdom.” Nationalist speakers from across Europe were joined in Trafalgar Square by Elon Musk, beamed in from the US to warn that “violence is coming… you either fight back or you die.” It was quite a shock to liberal and multicultural Britain to discover that so many people could be organised in such a blatantly provocative manner, deliberately (and successfully) stoking fear among the non-white population.

Farage kept his distance; but there is no doubt that he has been emboldened by Reform’s dominant position in the polls. Winning 14 per cent of the vote in last year’s general election — though only five seats in parliament, courtesy of the UK’s first-past-the-post voting system — the party’s polling support has since grown sufficiently for it to be favourite to form the next government. Given its extremely thin cadre of competent politicians — two of its five MPs have already left or been thrown out, though they have been replaced by two Tory defectors — this is a prospect many sober observers regard as alarming.

For the Tories it could be fatal. Their new leader Kemi Badenoch, elected by the membership last year, has decided that she needs to fight Reform on its own ground. At this week’s party conference she announced a plan to deport 150,000 illegal immigrants a year using a new police force modelled on Trump’s heavily criticised Immigration and Customs Enforcement, or ICE. A Tory government, she declared, would leave the European Convention on Human Rights (which would mean the UK joining Russia and Belarus as the only non-signatories) and repeal the Climate Change Act, bedrock of the UK’s cross-party climate policymaking for nearly twenty years.

The Conservatives continue to slide in the polls, however. From their wipe-out 24 per cent vote in the 2024 general election, they are now at a disastrous 20 per cent or less. The public shows no willingness to forgive their chaotic rule from 2017 to 2024, which gave the country five prime ministers and a botched Brexit. Some of their voters have turned to Reform; some to the centrist Liberal Democrats. Badenoch is widely seen as a failure who will be deposed soon.

But if Reform has effectively replaced the Tories as the main opposition party, Labour is feeling equally threatened. Many of Reform’s new supporters have come from across the aisle, threatening formerly safe working-class Labour seats in the Midlands and North of England. In these “red wall” constituencies, where manufacturing and mining industries once provided jobs for life but boarded up shopfronts now stand testament to longstanding decline, Reform draws on widespread disillusionment and anger.

While London and the southeast of England have benefited from globalisation and economic growth in the past thirty years, these places have felt abandoned. And the politicians responsible, Labour included, all look alike: metropolitan elites who no longer understand or represent them. In the most recent large-scale opinion poll calculating the likely results of a general election held today, 276 Labour seats were projected to fall to Reform.

To the dismay of many in his own party, Labour prime minister Sir Keir Starmer has met the challenge of Reform by agreeing with them. In a major speech in May, the prime minister said immigration in the last decade had done “incalculable damage” to the country, and warned Britain was at risk of becoming “an island of strangers,” a remark he later said he regretted. (It was widely noted to be an echo, whether accidental or deliberate, of the language used by a notorious former Tory minister, Enoch Powell, who was expelled from the Conservative Party in 1968 for his racist anti-immigrant rhetoric.)

At its party conference last week Starmer finally found the words to attack Reform, declaring that the country faced an “era-defining” choice between Labour and the populist right; between “decency or division, renewal or decline.” Yet at the same time Labour also took aim at the settled immigrant population, announcing that migrants will now have to live in the country for at least ten years (up from five) before they can apply to stay, and then only if they have never claimed welfare benefits and have done voluntary work in the community. For Starmer’s conference speech, peppered with appeals to patriotism, party members in the audience were issued with little Union Jacks and English, Scottish and Welsh flags to wave at appropriate moments.

But Starmer’s attempt to “out-Reform Reform” seems to be proving no more successful than the Tories’. His problem is that, for every voter toying with Reform who might be attracted back to Labour by the government’s tough language on immigration, more are leaving in the other direction. Labour is losing support both to the Liberal Democrats — who won a record seventy-two seats at the 2024 general election and are now neck and neck with the Tories in the polls — and a newly resurgent Green Party.

The latter had a particularly strong conference season, electing a charismatic new leader, Zack Polanski, on an “eco-populist” platform of unashamed support for migration, nationalisation of major utilities, a wealth tax and stronger environmental policy. Polanski is positioning the Greens firmly on the left of the political spectrum and appealing to disaffected Labour members to join them. Already up to 12 per cent in national polls, they could well supplant Labour in a number of cities where young socially liberal graduates struggle to find decently paid jobs and affordable rents, and disillusionment with current politics is rife.

But there is another challenger for their votes. Former left-wing Labour leader Jeremy Corbyn, now expelled from the party, is in the process of setting up a new one. Provisionally called Your Party, it brings together other former Labour MPs and the independents who won seats in the election on pro-Palestinian platforms. Corbyn declared that 750,000 people had signed up for membership in its first month, but just a few weeks later the party had already had its first split, its founding MPs falling out over both policy and leadership issues.

The new party has still not held its promised first member conference, but Corbyn’s name recognition means that it cannot be ruled out as a serious threat to Labour’s urban support. In a recent poll, one in five Britons said that they would consider voting for the new party, including one in three young people.

All this has left the Labour Party in a serious funk. No newly elected government has ever seen its poll ratings fall as far and fast as this one, and few prime ministers have been as personally unpopular as Keir Starmer. (His net approval rating is now minus 44 per cent.) On the doorstep, Labour activists report a startling dislike, frequently contempt, for the prime minister. At Labour’s party conference the fractious mood spilled over into outright rebellion.

The popular Labour mayor of Greater Manchester, Andy Burnham, a cabinet minister under Tony Blair and Gordon Brown, roamed the fringe meetings and gave newspaper interviews criticising Starmer’s leadership and making clear that, given a chance, he would like the top job. In an upcoming party election for deputy leader, Labour members are almost certain to choose a close supporter of Burnham’s over Starmer’s candidate, an ominous warning to the prime minister.

Starmer can take comfort from the fact that Burnham, who is not a MP, can’t currently stand for the leadership (and Starmer supporters pack the party’s National Executive Committee, which chooses parliamentary candidates, so he can easily be blocked from running). But discontent with Starmer within his own party is now out in the open, and an alternative leader awaits.

These rumblings will almost certainly come to a head after next May’s elections for the devolved parliaments in Wales and Scotland, and in many English local councils. If the polls remain largely unchanged — and the government still has to get through what will almost certainly be an extremely unpopular and manifesto-breaking budget in November, when a large fiscal hole will have to be plugged by raising taxes — the party is heading for an almighty defeat.

The bloodiest carnage looks as if it will be in Wales, where Labour has led the devolved government since it was founded in 1998. Traditionally its main challenger has been the small but vigorous Welsh Nationalist party, Plaid Cymru. No longer: current polls have Reform and Plaid neck and neck on around 30 per cent, with Labour far behind on 14 per cent. The elections could give Nigel Farage his first serious taste of government, and a sickening humiliation for Labour.

In the Scottish parliament, where the Scottish Nationalist SNP has been the governing party since 2007, Labour won a majority of Westminster seats in the 2024 general election. But here too its popularity has since plummeted. From a 35 per cent vote share at the election, Labour now polls at around 23 per cent. The SNP remains on around 31 per cent, and is projected to be the largest party in the new parliament. Reform has more than doubled its vote share from 7 per cent to 16 per cent.

And in the English local elections, also next May, Reform could top the poll, taking further seats and councils from both Labour and the Tories.

What happens then? Constitutionally, nothing: Keir Starmer still has a huge majority of 148 seats in parliament, and he doesn’t have to call a general election till August 2029. He has plenty of time to get the economy moving, see inflation come down and improve public services, a combination that in normal times would be enough to ensure victory for a first-term government. His problem is that these do not feel like normal times. •

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Oddly, though, and little noticed, another dynamic has emerged in the six months since Donald Trump returned to the White House. This is the phenomenon of global governance without US participation, and it has been on vivid display at the Fourth UN Financing for Development Conference, or FfD4, in Seville, Spain, this past week.

These conferences don’t happen very often. A forum for the international community to review the progress of the Sustainable Development Goals and discuss new ways to finance their achievement in the Global South, the last one, FfD3, was in 2015.

Until three weeks ago, the negotiations for FfD4 had been fractious and protracted. Developing countries were angry at overseas-aid cutbacks by many of the world’s richest nations — notably the United States (which has abolished its aid agency, USAID) but also Britain, France and others. In turn, the developed countries insisted that developing nations should raise more resources from their own populations, both in taxes and savings. They wanted the private sector to be more involved in development; the poorer countries countered that global capital is not interested in their economies.

Negotiations seemed deadlocked. And then a strange thing happened. Having tried and failed to get the goal of “sustainable development” — a mainstay of the global consensus since 1992 — deleted from the text, along with all mention of climate change (ditto), the United States decided to withdraw altogether from the negotiations. Its delegation walked out.

The reaction of the remaining 192 countries was swift, and perhaps unexpected. They almost immediately agreed on a compromise text drawn up by the conference chairs (Mexico, Nepal, Norway and Zambia) and the UN secretariat. The Compromiso de Sevilla is an artful summary of a new global consensus (or at least, a consensus minus one) about how financing can be found for investment in health and education, sanitation and electricity, gender equality and environmental protection.

The Compromiso’s core principle can be described as “all of the above.” The world needs more grant aid and more business sector investment; higher domestic taxes and larger international flows; more lending and more debt relief. It contains a wealth of proposals in all these areas, and others, along with a broad commitment to making the “international financial architecture” fairer and more inclusive of countries in the global South.

No country is entirely happy with it. But the American withdrawal forced the remaining delegates to realise that — as one European put it to me — “we have more in common with one another, despite our differences, than we now do with the US.”

Critics of the agreement have not been slow to criticise. The text includes no new obligations on rich countries to provide more development assistance. Most of the world’s financial governance — in the IMF and World Bank, and in the frameworks for international tax cooperation and debt resolution — remain dominated by the developed countries in general and the United States in particular. The world’s financial system still rests on the US dollar, leaving developing countries at the mercy of American interest rates.

But another interesting thing also happened in Seville. As well as unanimously adopting the Compromiso de Sevilla, the conference launched the Sevilla Platform for Action, an array of more than 130 initiatives to expand and enhance development finance. These are supported not by the entire UN membership but by various “coalitions of the willing,” smaller groupings of countries (often from both North and South) in many cases alongside international institutions.

So, for example, forty-four African countries have signed up to a plan to modernise their tax collection systems. A coalition of seventy-two countries, the “Pact for Prosperity, People and the Planet,” has set up an expert group to examine whether post-crash financial regulation is preventing investment in emerging market countries. Spain and the World Bank will host a project developing standardised procedures for “debt for development swaps,” in which debt is bought back to release funds for investment in specific fields, such as nature, climate action or education. Even if only some of them lead to significant change, these initiatives offer an answer to the claim that FfD4 was all hot air.

The temperature in Seville this week has admittedly been sweltering, hitting a high of 41C on Tuesday. But in the (air-conditioned) halls and meeting rooms, the political temperature has been noticeably moderate. The mood has been one of cooperation and constructive debate: a search for common solutions and achievable commitments. “It’s amazing how much you can agree on when you don’t have to include the US,” one delegate observed.

The question of how to exercise global governance without the United States now turns to the G20. Since it was founded in 1999, the group of the world’s largest economies (now twenty-one of them, since the accession of the African Union in 2023) has often been dominated by the United States and its interests.

While the US hasn’t formally withdrawn from the G20, American officials have not been taking part in this year’s meetings, hosted by South Africa. The next ministerial-level meeting, of G20 finance ministers, is in Kwazulu-Natal later this month. I was told that the America embassy in Pretoria booked an entire hotel for the US treasury secretary Scott Bessent and his delegation. But with less than a month to go the embassy had no idea whether he or they intended to come. As for whether Donald Trump will attend the leaders’ summit in Johannesburg in November, no one knows.

And all this poses another question. The United States is due to hold the presidency of the G20 next year. Can a country that has stopped attending the G20 chair it?

As the current presidency, South Africa is pondering how it can secure unanimous agreement at its November summit (as the G20 requires) without its largest member. Canada, this year’s host of the G7, may be able to offer some advice. When it presided over the two-day G7 summit last month, Trump stayed only for the first twelve hours; the second day was just the “G6.” No general communiqué was therefore agreed. Individual pre-negotiated statements were issued on a slightly random list of specific issues that had US support: the Israel–Iran conflict, “transnational repression,” artificial intelligence, critical minerals, migrant smuggling, wildfires and quantum technology. For the rest, Canada issued a “chair’s summary” setting out the other issues the leaders (or at least, most of them) had discussed.

As a way of coping with the semi-participation of the United States, this method is about the best that can be done. But it doesn’t stop Trump from getting his way. A week ago — outside its formal meetings — the G7 agreed to exempt American companies from the global minimum corporate tax rate it had negotiated in 2021. The tax, a path-breaking measure aimed at preventing multinational corporations from moving their accounting profits around the world in order to pay the lowest tax rates, had incurred Trump’s ire. He had threatened a “revenge tax” on companies from the other G7 nations if US companies weren’t exempted. So the G6 caved in. “That’s fifteen years of progress abandoned, just like that,” a developing country official lamented in Seville.

Could the United States similarly force the scrapping of previous G20 agreements it no longer supports? Diplomats I spoke to in Seville thought probably not: by not participating in the various G20 working groups this year, the Americans are widely felt to have forfeited their right to influence the final outcome. And there are other member countries of the G20, notably China and Brazil, who are not so willing to cave in to Trump’s threats. But equally, it could mean that no communiqué is issued at the summit this year, or only a very skeletal document, with a chair’s summary having to suffice to reflect the overall discussion among the leaders.

As the nations of the world learn to govern their shared problems dealing with an unstable and unpredictable Washington, they are effectively making it up as they go along. But there is one major summit this year where the outcome can be fairly confidently predicted.

In November Brazil will host the latest UN climate change conference, COP30, in the Amazonian city of Belém. Having withdrawn from the Paris climate agreement, the United States will definitely not be there. That means we can be pretty sure what will happen.

No other country in the world rejects climate science as America now does. No other country formally eschews action to tackle rising emissions. So, at the leaders’ summit that opens COP30, Trump will be conspicuously absent. But for that very reason we can expect almost every other world leader to attend. They will be there to reaffirm their belief in international cooperation on climate change, and to commit to working together to tackle it. As in Seville this week, they will be there, in other words, to insist that there is still an “us” in “We the peoples,” even if there is no US. •

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The issue is welfare spending. Since its landslide election victory a year ago, the Labour administration has been in a fiscal bind. It inherited a mess from the previous Conservative government: a £22 billion shortfall in the in-year public accounts, taxes at an all-time high, government debt at nearly 100 per cent of GDP and borrowing at the limits of market tolerance. A huge tax-raising budget last November, the largest in modern times, looked to have relieved the problem. But in the first few months of this year weak growth and the prospect of Trumpian tariffs blew apart Labour’s plans, and chancellor of the exchequer Rachel Reeves was forced to find more money to fill the fiscal hole.

Ask any Treasury to find £5 billion this year and every year — with “raise taxes again” and “borrow some more” not judged to be acceptable answers — and just one response will be forthcoming. Only welfare spending offers up such sums for immediate cuts. This is partly because welfare spending is assumed to be generally unpopular with the public. And it’s also because — unlike cutting expenditure on, say, education, health or policing — it doesn’t lead to unionised public servants losing their jobs. It simply makes welfare recipients poorer. And how much power do they have?

More than Starmer and Reeves bargained for, it turns out. Labour’s plans were singularly harsh. To find their £5 billion, they decided to reduce eligibility for disability benefits. Under the current system, disability is assessed on a range of criteria — such as how much assistance a person needs to perform everyday tasks including washing and shopping — and claimants qualify for benefits according to how practically disabled they are. The government proposed to tighten the criteria so that, for example, someone unable to wash themselves below the waist would no longer qualify unless they were also severely disabled in some other way. It also planned to reduce the rate of the incapacity benefit paid to people deemed unable to work for health reasons, and to cut support for their carers. Between 800,000 and 1.2 million people would have lost support of between £4200 and £6300 a year by 2029–30.

The government claimed it was reforming an “unsustainable” welfare system. The overall cost of the benefits paid to working-age people (that is, not including pensions and child-related payments) is projected to rise by more than half in the next five years, from just under £50 billion in 2024 to more than £75 billion by 2030. That would take the benefits bill from 1.7 per cent of GDP to 2.2 per cent, around the size of current spending on defence. Any government, Labour said, would have had to make cuts.

The rising welfare bill mainly reflects a dramatic increase in the number of people of working age who are not working or looking for work. More than a fifth of working-age adults in the UK — 9.2 million people — are now deemed to be “economically inactive.” This is 700,000 more than before the Covid pandemic. The reasons are complex and not fully understood: it is partly to do with older workers taking early retirement, partly to an increase in long-term sickness and disability, and partly down to a rise in the number of “NEETs”: young people not in education, employment or training. The government has set out various plans to tackle these problems.

But the disability benefit cuts were not among them. As disability rights groups quickly pointed out, eligibility for those benefits has nothing to do with fitness for work. Cutting them would not incentivise people to look for employment; on the contrary, it is often only the financial help they receive — for example, for mobility — that enables a disabled person to hold down a job. The government’s proposed changes were not “reforming the system.” They were simply saving money. And doing so on the backs of some of the poorest and most vulnerable people in society.

For many Labour MPs this was simply unconscionable. They did not enter politics to do this. The government announced its proposals in March; by last week more than 120 Labour MPs had signed a parliamentary motion that would have killed the legislation. One frontbencher had already resigned and several more were threatening to. Starmer claimed that MPs’ criticisms were just the usual “noises off,” and blithely insisted that the plans would go ahead. And then suddenly on Thursday night he caved in. The benefit cuts would be abandoned for current recipients. New claimants would be paid less, but only after full consultation with disabled people’s organisations.

And how would this be paid for, given the centrality of the planned cuts to the government’s fiscal sums? It could not say. We shall have to wait till the budget next October to find out. But with the savings now estimated as only £2 billion a year, not £5 billion, it looks fairly certain that either or both of the two previously unacceptable answers — higher taxes or more borrowing — will need to be deployed.

Major U-turns are never a good look for a government’s reputation for competence. But this is Starmer’s third in as many months. He had already reversed Reeves’s highly unpopular abolition of the pensioners’ winter fuel payment for all but the poorest. And he had gone back on a decision not to order a public enquiry into the sexual abuse of vulnerable girls by gangs of men in some of Britain’s poorest towns. Such an inquiry was not necessary, he had previously said, as other inquiries had already been held; but there will now be one.

Even before this latest U-turn, Starmer’s approval rating had fallen to minus 46. In the most recent surveys of voting intentions, Labour is down to around 23 per cent, from the 34 per cent it won in last year’s election. Top of the polls, on around 27 per cent, is Reform UK, the right-wing populist party headed by veteran Brexiteer Nigel Farage. It is of little consolation to Labour that the Conservative Party is doing even worse, barely reaching 17 per cent.

What has gone wrong for Starmer? Labour MPs are offering three explanations, none of them giving much comfort to the beleaguered PM.

The first is that he and his advisers have become too obsessed with countering the threat from Reform. The new party is gathering most of its support from former Tory voters. But a proportion are switching from Labour, particularly in the party’s former industrial and working-class heartlands. These voters, it is believed, are anti-immigrant, anti-woke and anti-welfare. So Labour should be too.

Starmer’s Labour critics think this analysis is misguided. The Labour-to-Reform switchers may be cultural conservatives who don’t like immigration, but they mostly remain quite left-wing on economic issues. And quite a few of them have family members who are disabled or long-term sick, who care for them, or are otherwise dependent on the welfare system. These voters didn’t support the benefit cuts. And neither did those who are abandoning Labour to its left — to the Liberal Democrats and Greens — rather than its right. Labour MPs warn that focusing entirely on attracting potential Reform voters is making Labour deeply unattractive to a much larger cohort of voters in its new heartlands in metropolitan and middle-class areas.

The second criticism made of Starmer cuts even deeper. His MPs are asking what he actually believes in. This is not just because of the U-turns. It is because Starmer seems to find it very difficult to articulate it himself. A dull public speaker, the prime minister has failed to craft a consistent or compelling message about what his government is for. It has some distinctive policies — a higher minimum wage and more secure employment rights, an industrial strategy, an effort to build more affordable homes, a commitment to net zero. But Starmer offers no vision or philosophy that unites these policies, and no soundbites or slogans that imprint them on voters’ consciousness.

And then there’s the third criticism. This is the one you hear most insistently from his despairing MPs. Starmer is just not very good at politics. An MP only since 2015, with the training and instincts of the lawyer and civil servant he once was, Starmer simply doesn’t know how to listen to voters, how to keep his own MPs on board, or how to craft a communications strategy. The disability benefits fiasco demonstrated all these failings. His supporters worry that it wasn’t a bug in the way his government works, but a feature. •

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US treasury secretary Scott Bessent may only have had to walk a few hundred metres from his office to meet his fellow finance ministers from around the world, but he hadn’t bothered to attend the last such gathering in February, so there was no guarantee he would attend this one either.

As it turned out, there was no need to worry. Bessent not only came, he also gave an important speech setting out the new administration’s approach to international economic governance. And it was not the scorched-earth approach many had feared.

The United States would not be withdrawing from the IMF and the World Bank, as some had believed it might. On the contrary, Bessent said, the Trump administration would seek to use these institutions to promote its America-first objectives. So the IMF should “call out” China for its “globally distortive policies and opaque currency practices” and it should stop focusing on “climate change, gender, and social issues.” The World Bank should not prioritise renewable energy but invest in nuclear power and gas as well — and it should stop lending to China.

Bessent’s speech had a near-universal reaction from those attending the Washington gatherings. “A huge sigh of relief,” one World Bank executive confided to me. These were the kinds of things you’d expect any normal Republican treasury secretary to say, I was told; they would mean some shifts but not a fundamental overturning of either institution’s policies. China was due to “graduate” from World Bank eligibility soon anyway; new nuclear plants are not economically viable, so the Bank’s approach to energy investment will not, in practice, need much revision. If Washington wants these institutions to talk less about climate change, that can be done. But climate risks are real economic risks, so investment to mitigate them will continue.

Bessent’s speech even held out a faint hope of progress. He asked the IMF to bring borrower countries and their creditors together to deal with “debt distress” — the crisis faced by the many lower-income countries more or less unable to pay their debts. His call echoed the words of the IMF itself, whose managing director Kristalina Georgieva used her own remarks at the Washington meetings to argue that some poorer countries need urgently to restructure their debts — that is, to get some kind of debt relief.

What Bessent didn’t say — but Georgieva did — is just how much worse the Trump administration’s trade policies have made these countries’ economic circumstances. In its annual World Economic Outlook, issued last week, the IMF downgraded its growth forecasts for the entire global economy and for almost every individual country. It blamed the extreme uncertainty caused by Trump’s on-again-off-again tariff announcements. And it pointedly observed that the countries that will be hardest hit by what it was not shy to call the US-induced “trade war,” alongside the global slowdown and the reductions in overseas aid accompanying it, will be the poorest and most vulnerable.

It’s worth recalling the extent of the tariff increases Trump imposed a month ago — increases that, though suspended, may yet be restored in July. Based on the administration’s trade deficit formula, almost universally derided by economists, they include tariffs of more than 40 per cent on some of the poorest countries in the world, such as Lesotho, Madagascar, Myanmar and Syria. Overall, says the UN’s trade and development agency UNCTAD, twenty-eight of the low-income countries that face higher tariffs each contribute less than 0.1 per cent to the US trade deficit.

While the tariffs will therefore make no material difference at all to the US balance of payments, they will devastate these countries’ economies. Lesotho has a large relative trade surplus with the United States because it has a per capita income of just over US$1000 a year, and so it imports very little. But over the last two decades — supported by US tariff exemptions — it has developed a vibrant textile industry exporting Levis and Wrangler jeans to the United States. Those exports now contribute more than 10 per cent of the country’s entire annual national income. With the United States imposing a tariff of 50 per cent, up to 30,000 people working in the jeans factories face losing their livelihoods, and the country its largest source of foreign revenue.

Madagascar is in a similar position. Like Lesotho it exports textiles to the United States, along with vanilla (for which it supplies four-fifths of the global market). One of the world’s most climate-vulnerable economies, recently hit by both droughts and hurricanes, it will be catastrophically hurt by a tariff of 47 per cent. Both Madagascar and Lesotho are also suffering the withdrawal of most of the US aid they previously received.

High levels of debt exacerbate many low-income countries’ plight. The IMF calculates that around half of the world’s poorest countries are in, or at high risk of, debt distress. Many borrowed lavishly in the period after the 2008 financial crash when interest rates were low, finding new lenders in the private sector and among Chinese banks alongside more familiar Western government creditors. But post-Covid inflation has pushed interest rates sharply higher. With most poorer countries not yet having fully recovered from the pandemic, and growth prospects looking grim again, the conditions are ripe for fiscal crises.

UNCTAD estimates that more than fifty developing-nation governments — nearly half of them in Africa — are now spending at least 10 per cent of their budgets on debt interest payments. More than three billion people live in countries that devote more funds to debt payments than to health or education.

New finance, meanwhile, has more or less dried up. Net flows have turned negative — that is, more money is flowing back to repay lenders than is coming in for investment. Many developing countries have only been saved from default by emergency IMF loans, with much of that money simply pouring back out again to repay private creditors from the rich countries.

And climate change is making the situation worse. Countries experiencing more frequent and more severe extreme weather events are having to spend more on disaster relief and recovery, and correspondingly less investing in education, job creation and growth. Meanwhile, rising temperatures and erratic rainfall are hitting agricultural production. As climate risks rise and growth prospects decline, borrowing becomes more expensive, reducing investment still further. It becomes a vicious circle.

But both the extent of the debt problem and the role played by its specific climate-related components are receiving increasing recognition, with a number of intense discussions away from the formal meetings in Washington last week.

At the same time as Georgieva was making her call for debt restructuring, World Bank chief economist Indermit Gill was repeating his own. The UN secretary-general’s adviser, former Egyptian investment minister Mahmoud Mohieldin, spoke at a number of meetings consulting on potential debt policy reform. Nobel Prize–winning economist Joseph Stiglitz and former Argentinian finance minister Martin Guzman chaired a meeting of the Vatican’s Jubilee Commission, an enquiry into sovereign debt set up by the late Pope, which is due to report next month. And an expert group established by the governments of Colombia, Kenya, France and Germany issued a major report linking debt to the environmental agenda.

The report, Healthy Debt on a Healthy Planet, sets out a program of reform to tackle what it describes as the “triple crisis” of indebtedness, climate change and nature loss being experienced by many low-income countries. It calls for the IMF and World Bank to incorporate climate and nature impacts more fully in their economic and financial analysis. It proposes new programs of debt relief for the most debt-distressed countries in return for higher investment in climate and nature resilience. And it argues for greater financing of that investment, including “debt for nature” and “debt for climate” swaps and leveraging private capital for climate mitigation and adaptation.

Launched at a packed meeting in the grand surroundings of the Colombian ambassador’s residence, the report offers a challenge not just to the IMF and World Bank but also to the array of finance ministers attending the Washington meetings. South Africa, which currently holds the presidency of the group of the world’s largest economies, the G20, has vowed to make debt relief a priority this year.

Before last week it was widely believed that neither China nor the United States would be willing to make concessions, so little progress would be made. But Scott Bessent’s speech may have changed the game. Attention is suddenly turning east. The developing countries are asking: will China be willing to come to the debt relief table? •

The post Glass half full in Washington appeared first on Inside Story.

“We have a concern that this resolution is a reaffirmation of Agenda 2030 and the Sustainable Development Goals (SDGs),” read the prepared statement. “Agenda 2030 and the SDGs advance a program of soft global governance that is inconsistent with US sovereignty and adverse to the rights and interests of Americans… Therefore, the United States rejects and denounces the 2030 Agenda for Sustainable Development and the Sustainable Development Goals.”

For those not familiar with the SDGs and the Agenda that accompanies them, they are the global targets for the eradication of poverty and hunger, universal education, clean water, gender equality, environmental protection and other development objectives. They were adopted unanimously by all 193 members of the UN in 2015. (Progress has been uneven since, but the goals were strongly reaffirmed at the UN Summit for the Future last year.)

In practice, it’s of little consequence that the United States has decided rhetorically to reject the SDGs. But this unprecedented statement serves as a useful marker of how far Donald Trump’s ideological campaign is reaching into the furthest outposts of American government and policy.

And it accompanies actions with very significant consequences. On Monday secretary of state Marco Rubio confirmed that more than four-fifths — in excess of 5000 — of the overseas aid programs run by the US Agency for International Development were being terminated. USAid itself is to be dismantled and its remaining programs absorbed into the state department. Almost all USAid staff based overseas have been put on paid leave, and 2000 officials in the United States were told their jobs will be eliminated. Rubio’s announcement came a month after Elon Musk declared that he and his “Department of Government Efficiency” had “spent the weekend feeding USAID into the woodchipper.” The USAid website has been taken down.

American NGOs have been explaining what these cuts will mean. USAid spent US$40 billion last year, mainly in seventy-seven low- and lower-middle-income countries, in areas such as maternal and child health, malnutrition, primary education, clean water, malaria and TB prevention and humanitarian disaster relief. Summarily ending these programs will have “terrible” impacts, says Oxfam America, particularly in crisis-torn countries such as Sudan, Yemen and the Democratic Republic of Congo, and those dependent on US aid to fund basic health and education services.

Oxfam has joined a lawsuit with employee unions against the federal government, arguing that closing USAid without congressional approval is unconstitutional. International aid organisations have meanwhile begun axing thousands of jobs funded by the cancelled USAid grants.

The attack on US overseas aid includes funds for developing countries to tackle climate change. Trump’s decision to take the United States out of the Paris Climate Agreement was announced on the day of his inauguration in January. It was accompanied by the “rescinding and revoking” of the US International Climate Finance Plan adopted by the Biden administration, which last year provided $11 billion in grants and loans for emissions reduction and climate adaptation in developing countries. This was around 8 per cent of the global total.

Among other targets the cuts remove US$4 billion from the UN Green Climate Fund, and last week the US announced it is pulling its funding out of the much-trumpeted Just Energy Transition Partnerships, which support South Africa, Indonesia and Vietnam to transition away from coal-fired power. The US has also withdrawn from the board of the UN Loss and Damage Fund.

Its cuts to overseas aid are the starkest indication of the Trump administration’s new approach to global governance, but there are others. A quarter of a century ago the US helped create the G20, the group of the world’s largest economies. Since then it has played a leading role in the forum, helping to coordinate global economic policy and promote US-friendly development in the global South. Last month, though, when the first of this year’s G20 ministerial meetings took place in South Africa, the US stayed away. Rubio explained his absence in a post on X: the G20 presidency South Africa, he said, was “using G20 to promote ‘solidarity, equality, & sustainability.’ In other words: DEI [diversity, equity and inclusion] and climate change.”

It was a surprising argument. In the discourse of international relations, solidarity, equality and sustainability are standard terms, and tackling climate change a universally agreed goal. No other Western country had batted an eyelid at the South Africans’ slogan. But Rubio was making clear that the Trump administration is not going to play the accepted game. The following week the US treasury secretary Scott Bessent refused to attend the G20 finance ministers’ meeting.

The US absence made it impossible to reach decisions at either the foreign or the finance ministers’ meetings. The G20 operates on a basis of unanimity, and the officials the US sent said they were not authorised to take positions. So neither meeting was able to issue the usual agreed communiqué. Instead the South Africans released a “chair’s summary” of what had been discussed. The finance ministers’ summary begins: “Generally, members: 1. Expressed support for the G20 South African Presidency’s theme of ‘Solidarity, Equality, Sustainability’ and discussed international policy cooperation to further promote global prosperity and address key shared challenges.”

It is not, in truth, a big deal that the G20 couldn’t come to any decisions. Much of what it does is to make lowest-common-denominator statements to which its members can all agree, often largely made up of sentences they have accepted previously. (This saves negotiating time.) The world is not generally much affected by them. But it is not always the case, and on those occasions when decisions really do need to be made, the absence of the US could be crippling. This year, for example, South Africa wants to come to an agreement on relieving rising debt in Africa, which is severely hampering many countries’ development. But without the US this will be impossible.

It is not yet clear whether Trump has really decided to boycott the forum. The US is due to hold the G20 presidency next year. But it is hard to see how it can do so if it doesn’t take part this year — especially when its general approach to international relations now stands so far outside the global consensus.

Further questions loom. Could the US pull out of the World Bank, and the other multilateral development banks in Africa, Asia and Latin America and the Caribbean? These are institutions it largely created — the World Bank in 1945, in the aftermath of the Second World War; the others in the 1960s, during the heyday of American power and post-colonial optimism. But today they are bastions of the causes Trump dislikes the most, climate change and gender equality. All of the banks focus a proportion of their anti-poverty work on increasing economic opportunities for women and education for girls; and most now devote at least 40 per cent of their total investments to climate mitigation and adaptation in low and middle income countries. This amounted to US$75 billion in 2023.

There are grounds for thinking the World Bank might be in Washington’s sights. As has been widely noted, the Trump presidency is following much of the blueprint laid out in Project 2025, the plan assembled by the conservative Heritage Foundation. Project 2025 calls for the US to pull out of both the Bank and the International Monetary Fund, arguing that they “espouse economic theories and policies that are inimical to American free market and limited government principles.” (This will come as something of a surprise to their many critics on the left, who see them as too pro-market.)

Project 2025 also says the US should force “reforms and new policies” on the two institutions, which would be difficult if it left them. But others on the right have taken up the idea, describing in detail how the US withdrawal from the Bank could be legally achieved.

The prospect looks sufficiently likely that some of America’s erstwhile allies among the Western powers are actively preparing for alternative scenarios. US withdrawal is one; in another the US might stay in but actively attempt to block World Bank programs, such as on climate, it now opposes. The US has already asked for some such investments to be brought to votes at the banks’ boards, clearly intending to vote against them. At the World Bank this may not be sufficient to stop them being approved; the US, with 16 per cent of equity and voting rights, can be outvoted by other country shareholders. But at the Inter-American Development Bank or IDB, where its shareholding is 30 per cent, the US has an effective veto on lending. It voted last month to oppose the Bank’s nature and climate strategy (forming an unlikely alliance with Venezuela), leaving countries in the region fearful of what will come next.

Perhaps surprisingly, US withdrawal from the World Bank would not have much of a financial impact. Under the Bank’s statutes, shareholders can only withdraw the dollar value of the capital they originally put in, which in the US case is US$3 billion — only around 1.2 per cent of the Bank’s total current equity. That amount would almost certainly be replaced by other shareholders — notably by China, which has long sought greater voting power but has always been opposed by the US.

The Bank would no doubt have to move its headquarters from Washington DC. But its investor status would be unimpaired: the credit rating agency Fitch has noted that even if the US withdrew, the Bank would retain its coveted triple-A credit rating. (In fact, among the major multilateral development banks, only the Inter-American Development Bank would suffer a downgrade if the US pulled out its capital.)

Whatever it decides on membership of these various banks, the Trump administration’s turn against the prevailing consensus on international development and economic governance will inevitably have an impact on relations between the global North and South. Over recent years there has been rising anger in the developing world at the perceived double standards of Western countries. Rich nations that claimed to champion the global poor failed to release their surplus Covid vaccines when the poor desperately needed them. Donors who explained that fiscal realities were forcing them to cut their aid budgets have found apparently unlimited funds for Ukraine. Harsh critics of human rights violations in Africa gave unconditional support to Israel in its war in Gaza.

Unsurprisingly, many governments have found China a more amenable development partner. Over the last decade its Belt and Road initiative has invested the equivalent of more than a trillion US dollars in developing countries across Africa, Asia and Latin America. Most of this has gone on much-needed infrastructure: roads, railways, dams, ports and power supply. China has invested widely in mineral and fossil fuel extraction, and in buying and developing agricultural land. While Western-led development banks and bilateral donors impose onerous environmental and social conditions on their aid, China is much more relaxed. It naturally exacts a diplomatic price, drawing countries increasingly into its geopolitical orbit. But for most of them it has been an acceptable bargain.

America’s withdrawal from international aid will surely accelerate this shift. It was reported last week that more than 700 diplomats at the state department and USAid had written to Marco Rubio warning that the aid cuts will undermine US security, leaving power vacuums in key parts of the world that China and Russia will eagerly fill. “Foreign assistance is not charity,” their letter argues. “Instead, it is a strategic tool that stabilises regions, prevents conflict, and advances US interests.” Trump clearly isn’t listening. But it would be something of an irony if his actions helped make China great again. •

The post Out of the woodchipper appeared first on Inside Story.

And so it proved in Baku, Azerbaijan, on the final day of the UN climate conference COP29. At 5pm on Saturday (as usual, the day after the scheduled close), the poorest and most climate-vulnerable nations walked out of the negotiations. The sum they were being offered by rich countries was an insult, they said, and would leave them defenceless in the face of ever more severe climate impacts. They could not accept it.

Nine and a half hours later they accepted it. The alternative, as it had been all along, was not that they would get more money, but that they would get less. With Donald Trump about to enter the White House, next year had no chance of being better. In fact it would be a lot worse. Outside the plenary hall the small number of NGO protestors allowed in by the Azerbaijani authorities were chanting “No deal is better than a bad deal!” But it clearly wasn’t.

COP29 had been billed as the “finance COP,” and two major issues were up for negotiation. One was “carbon markets,” the system under which countries and companies can buy credits from developing nations to meet their emissions-reduction targets in place of reductions they make themselves. The 2015 Paris agreement allowed the possibility of such credits. But anxiety about their environmental integrity and social impact had prevented an official system being created. (When an airline claims that it has paid for some trees to be planted in Africa to offset its aircraft emissions, what does this mean on the ground — and in the atmosphere?)

After nine years of negotiations, though, COP29 finally came to an agreement, and an estimated US$10–40 billion carbon market will soon be in prospect. It will certainly make it cheaper for the airlines and other companies, and developing countries hope it will provide them with new sources of finance for afforestation projects and technologies such as renewable cookstoves in rural areas.

But the issue that was always going to dominate the endgame in Baku was the money provided directly by rich-country governments. That such money is owed was first agreed in the 1992 UN Framework Convention on Climate Change, which established the multilateral climate regime. Developed countries had caused (and were still causing) climate change, through the carbon dioxide and other greenhouse gases their economies had emitted since industrialisation. But the severest impacts of rising temperatures were going to occur in the tropical areas of the post-colonial global South. So justice demanded that the developed countries pay the developing ones to help them decarbonise and adapt to the already changing climate.

But how much? In 2009, at the ill-fated COP15 in Copenhagen, the developed countries said they would pay US$100 billion a year by 2020. They did not negotiate this number, they simply committed to it, and it was subsequently included in the Paris agreement. But this wasn’t just for public funds: the number also included the private sector finance that such funds “mobilised,” for example when public funding for a renewable energy project is used to reduce the risk for, and therefore to attract, private capital. Since such capital tends to flow only to richer “middle income” countries such as India and Brazil, this has long been a bone of contention for poorer developing nations.

In accordance with their commitment, developed countries did ramp up their financing after 2009, but didn’t quite reach the $100 billion goal in 2020, causing more resentment. By the time they did get there, in 2023, any gratitude for their largesse had run out — and so had the commitment. A “New Collective Quantified Goal,” or NCQG, had to be negotiated to start from 2025.

By the time countries arrived in Baku a fortnight ago, they had spent three years discussing what the amount and the scope of the new sum should be. But they had made very little progress. Developing countries cited the official UN estimate that decarbonising their economies, and adapting to increasingly severe climate impacts, would cost them up to $950 billion a year by 2030. Other estimates were higher. So they came to the conference demanding that developed countries provide $1.3 trillion per year in grant-based funding, by 2030 or 2035.

This was never going to happen. Developed countries insist they face tight budgetary constraints, with their citizens complaining about the cost of living and in many cases turning to right-wing parties opposed not only to climate policy but also to providing any form of foreign aid. The developed countries refused to say exactly how much they would offer, for fear of being bargained upwards under months of pressure; but it was obviously nothing like US$1.3 trillion.

And they wanted something in return. The 1992 convention insists that the responsibility to assist developing countries rests on the group of countries identified as “developed” at the time: those of Europe, North America, Japan, Australia and New Zealand. The Paris agreement “encouraged” richer developing countries to contribute too, but they didn’t share in the obligation.

For the new goal, the developed countries said the “contributor base” needed to be widened. This was no longer 1992. Large and rich “developing countries” — China, Saudi Arabia and the Gulf states, Singapore, South Korea — should be obliged too. The latter two countries had already quietly said OK, but China and the petro-states were holding out. Despite their evident interest in receiving more money, the legal principle was supported by the entire developing country bloc. (Chinese and Gulf state investment in their economies may also have had something to do with it.)

So how would this all play out in Baku? Badly, as it turned out. In a move that annoyed and frustrated almost all parties, the Azerbaijani presidency of the COP decided to try to stitch the deal together themselves rather than, as would normally happen, allow the country groups to negotiate directly with one another. A confused and disgruntled hiatus fell over the second week of the conference. “I’m waiting to negotiate!” complained one head of delegation in her morning media briefing as the presidency received submissions from parties and considered them on their own behind closed doors.

Australia’s Chris Bowen and other ministers who’d been asked to put different elements of the deal together protested that their work had often been ignored. Countries met one another in informal bilaterals and small groups but were at no time brought together to negotiate the key finance issues directly. By the time Azerbaijan issued what was meant to be its near-final agreement text on Friday, many hours of negotiating time had been lost. And no one was happy with its conclusions.

Indeed, there were dark mutterings about the outsize influence Saudi Arabia was having on the process. At every turn, delegates said, the Saudis were trying to block agreement, notably by deleting all references to fossil fuels (the topic of the big breakthrough at COP28 last year) but also by obstructing progress more generally. The Guardian revealed that one of the key negotiating texts produced by the presidency had been amended by the Saudis before being released. The German foreign minister Annalena Baerbock made her views clear. “We are in the midst of a geopolitical power play by a few fossil fuel states. We will not allow the most vulnerable… to be ripped off by the few rich fossil fuel emitters who have the backing, unfortunately, at this moment of the president [of COP29].”

As the conference went into extra time on Saturday, three major issues were still in dispute. First, the size of the new finance goal. By this point the developing countries had realised that they were not going to get US$1.3 trillion in firm commitments. So they had changed the nature of the target. If it couldn’t be guaranteed now, it should be the aspirational goal for 2035 instead. The developed countries swallowed hard and said yes, clearly hoping that future governments would do the aspiring.

Second, a clever — but slightly obscure — deal was reached between the United States and China on the contributor base. China continued to insist that anything it did was voluntary, not an obligation. But it was willing to have its contributions to spending by the World Bank and regional multilateral development banks “voluntarily” counted as part of the developed countries’ total.

Third and most contentious was the actual sum being committed by developed countries. To the fury of developing country delegates, they continued to hold this number back almost to the very end. When it was finally put on the table on Friday, the figure was $250 billion a year by 2035. “Is this a joke?” raged the chair of the least-developed countries group. Someone calculated that by 2035 the 2009 figure of US$100 billion might be worth after inflation a little under US$200 billion. In real terms this was not much of an increase at all. The anger was palpable. The number was rejected out of hand.

On Saturday afternoon a new text was issued. The developed countries had raised their offer to $300 billion. But that was the highest they could go. If they thought it was clever negotiating tactics to issue a low number late and then be pushed only a little bit upwards, they were wrong. $300 billion was nowhere near the “compromise” figure the developing countries had been expecting.

In what was meant to be the final plenary, all of those countries said $500 billion was the minimum they could accept. The small island developing states, or SIDS, and the least developed countries, or LDCs complained that their specific demand — to have a proportion of the funds reserved for them, the poorest and most climate-vulnerable countries — had been ignored altogether. And then they stood up and walked out.

The meeting was adjourned. The developing countries were furious. The talks looked as if they would collapse. The gap between the parties was surely too large, and the time in which to bridge it too short. This was already Saturday evening, and many delegates had flights booked for the early hours on Sunday. If enough left, the meeting would not be quorate.

Experienced hands started suggesting that the whole conference could be adjourned and reconvened in January before Biden left office, when tempers would have cooled and maybe the developed countries would have had time to raise their offer. The media were thrilled. “Talks in crisis!” they gratefully filed.

The presidency asked parties to come together. How could the gap be bridged? The developed countries insisted they could not increase their $300 billion offer. This had been negotiated with their finance ministries and another negotiation at this hour was impossible. They were asked if it could be “at least $300 billion.” Not possible, they said.

Colombia’s outspoken environment minister Susana Muhamad got together with Ali Mohamed, Kenya’s climate envoy and chair of the African group. They proposed a “roadmap” to get from the $300 billion commitment to the $1.3 trillion aspiration: a concrete plan that could give them confidence that the developed countries were serious about the latter. We could accept a “work programme,” responded the EU.

The LDCs and SIDS demanded that their reserved proportion of finance had to go in. The other developing countries, anxious not to limit their own access to the money, said no.

Hours passed. At half past midnight delegates, media and NGO observers still standing were called back to the plenary hall. Some minor decisions were approved. The meeting was adjourned. Ministers and negotiators gathered urgently in huddles on stage to examine and fine-tune new text. It looked like an agreement might be close. Then it didn’t.

Finally, at 2.30am, the chair called the conference to order. The presidency had published a new text on the NCQG. He invited the conference to consider the document. And then suddenly he said, “it is so decided” and brought his gavel down. There was a short, stunned silence, and then the room burst into applause. A deal had been done after all.

The new text revealed what had happened. The $300 billion number had become “at least $300 billion.” Countries had agreed to develop a roadmap to the $1.3 trillion. The SIDS and LDCs had not won their reserved proportion, but there was a new goal to triple the money going to specific UN climate funds aimed at them.

COPs do not end when agreement is reached. Countries are given the opportunity to make statements about the deal. The developing ones lined up to say how much they objected to it.

India declared that it had indeed tried to lodge a formal objection before the gavel but had been unconstitutionally ignored by the presidency. It was particularly angry about the clause on counting multilateral development bank flows that derived from developing countries’ capital. This was a clear breach of the UNFCCC principle that it was developed countries that had the obligation to provide finance. It was effectively an accounting trick to reduce the amount owed by the rich nations.

Panama’s special representative for climate change, Juan Carlos Monterrey Gomez, expressed the views of most the room. “1.5C [the UN’s target limit for global temperature rise] was at the intensive care unit,” he said. “It feels like the bed just broke and it fell on the floor. So we’re probably not going to be able to reach 1.5C based on this very low level of finance being provided by the developed world. That means death, that means misery, for our countries.”

He went on: “Developed nations always throw text at us at the last minute, shove it down our throat, and then, for the sake of multilateralism, we always have to accept it, otherwise the climate mechanisms will go into a horrible downward spiral… This is the only space that we have to negotiate and to work towards our common goals. We accepted the text because we could not leave Baku without a text. But we’re not satisfied whatsoever.”

Gomez’s impassioned remarks captured well the current political fragility of the UN climate regime. The spectre of Donald Trump hung heavy over the conference hall. Everyone came to Azerbaijan aware that he is not the only right-wing politician around the world who would be delighted if the multilateral process broke down. There’d no longer be any need to pass difficult decarbonisation policies at home. No more obligations to provide money to poorer countries overseas. By coming to an agreement, however bad, delegates had kept the COP regime alive.

In fact, it turns out that they have done more than that. They have given the next COP a purpose. COP30, to be held next year in Belem, Brazil, has been widely hailed as the “big one”: the “COP of COPs,” as Brazil’s environment minister, Marina Silva, described it, with all world leaders invited. This is because 2025 marks the next moment in the five-year Paris agreement cycle when countries must announce their new, stronger climate targets for 2035. These will tell us whether the world has got back on track to meet its internationally agreed climate goals.

Except this won’t, in fact, happen at the COP. Most larger countries will announce their “Nationally Determined Contributions,” or NDCs, by June or July next year. So we will know what they add up to in aggregate several months before COP30 even begins. And it is unfortunately the case that no one expects them remotely to add up to an emissions trajectory consistent with limiting warming to the UN’s 1.5C or even 2C goals. They will do well to be on track for 2.5C of warming.

And they will barely be discussed at COP30. The Paris regime does not allow for NDCs to be reviewed by other countries, let alone for them to be raised at a COP. The clue is in the name. National climate targets are the responsibility of each country, and it alone. A COP can ask countries as a whole to raise their ambition. But last time this happened, at the equivalent moment in 2021, only one subsequently did so. That was Australia, because it had held an election in the meantime and had a new, more climate-ambitious government.

So what is COP30 actually for? Two weeks ago, before the Baku meeting started, it looked like world leaders would be heading to Brazil to preside over the failure of the global climate regime — the moment when it became clear that 1.5C is out of reach, and 2C probably too. That did not look like something most would wish to do.

But now they have a reason to go. The “roadmap” to the $1.3 trillion goal adopted this week must be prepared, it says, in time for COP30. If leaders in Belem can agree on a realistic and ambitious pathway to over a trillion dollars of climate finance every year by 2035, they will have provided the means to raise the ambition level of the NDCs. We know, they will be able to say, that we are not on track to the 1.5C and 2C goals. But the new financial package we have agreed can help pay for more ambition in the future. We have not failed. A safe climate is still possible.

In this sense COP29 has performed half the job. It has kept the multilateral climate show on the road. World leaders will have to apply the brakes on global warming properly next year. •

The post Neither triumph nor Trumped appeared first on Inside Story.

It turns out that the answer — comically or tragically, according to taste — is no. The big advance at last year’s COP28 was that countries committed to “transitioning away from fossil fuels.” After more than a quarter of a century of climate talks this was a real breakthrough: so much so that the UN’s official press release hailed the agreement as “the beginning of the end of the fossil fuel era.”

At this week’s G20 summit you would never have known that happened. The climate change section of the twenty-two-page Rio communique repeats various COP28 commitments — a trebling of renewable energy, for instance — but not the commitment to transitioning away from fossil fuels. Most countries wanted it in. Russia and Saudi Arabia refused. In the end the others had to be content with a general endorsement of the COP28 agreement as a whole.

How can this happen? How can countries agree to something in one multilateral forum and reject it in another? The answer tells us something about how climate change has become a contested arena of global governance.

Russia and Saudi Arabia make up one-tenth of the G20’s membership. In a decision-making process requiring unanimity, they can block agreement. In the nearly-200-strong UN Framework Convention on Climate Change, though, they and the other recalcitrant petrostates make up around one-fiftieth of the membership, and they can more easily be defeated by the other 98 per cent — which is exactly what happened at last year’s COP.

What makes this interesting is that it represents two opposing visions of how the world should make decisions about “global public goods.” These are things, such as a safe climate, from which all the world’s people benefit, and they can only be secured if all countries act together. (The protection of the oceans and biodiversity are other critical environmental examples.)

On the one side is the vision underpinning the G20. The world’s largest economies should make the decisions about climate because they are responsible for over 80 per cent of the world’s greenhouse gas emissions. It is what they do that really matters. Since all the big countries are anxious not to be outcompeted by the others, only if all of them agree to act will each feel able to do so. If excluding smaller countries looks unfair, well that’s just realpolitik.

On the other side is the vision underpinning the UN. Climate change affects all countries, so all of them should make the decisions together. It has a particularly severe impact on the least-developed countries and small island states, which are most vulnerable to climate change yet have done least to cause it. That is fundamentally a question of justice, which makes it imperative that smaller countries are part of the decision-making process.

As climate action becomes more urgent, the tension between these visions is coming to a head. As COP29 here in Baku is proving once again, the UNFCCC is a desperately unwieldy body. Encompassing so many different countries with such vastly different circumstances and national interests, its negotiations can be tortuous. Some of the complexity is removed by organising the countries into groups, but then recomplicated by some countries belonging to more than one group. (Many African nations belong simultaneously to the Africa group, the Least Developed Countries group and the overarching “G77 and China” group.) A bewildering array of technical processes on different aspects of climate action is not helped by overlapping mandates. The language in which they are expressed is painfully jargon-ridden, making it largely incomprehensible to the journalists who follow it, let alone to a layperson.

As a result, the annual COPs, or “conferences of the parties,” have become theatrical combat zones in which previous agreements are frequently challenged and battles refought, culminating every year in a tense “endgame” stand-off in which the negotiations almost break down and are then rescued in a last-minute deal long after the conference is meant to have ended.

And beyond the negotiating rooms the COPs have got larger and larger, as the entire global “climate community” — businesses, investors, NGOs, academics, lobbyists and media — comes to town to network with one another, do deals and promote themselves. Around 65,000 people are registered for Baku’s COP; last year, in the more attractive location of Dubai, it was almost 100,000.

It is no wonder that many people are walking away from the circus. This year they were joined by some of the UN’s own luminaries. In an open letter published on the eve of the conference, former UN secretary-general Ban Ki-Moon, former UNFCCC executive secretary Christiana Figueres and other leading climate figures called for reform of the whole COP process. No longer should countries not committed to the transition from fossil fuels be allowed to host the negotiations, they said. (All of the last four hosts have been oil-producing states.) The focus should now be on implementation of commitments, not more rulemaking, with proper accountability for country pledges and tracking of promised finance. The involvement of businesses — particularly fossil fuel companies — should be reduced, with scientists given more prominence.

Some of these things are conceivable; others (such as the choice of hosts) almost certainly not. But another suggested reform is actually one of the critical topics of the Baku negotiations.

This is the question of whether Saudi Arabia and other rich oil states, along with China, should continue to be counted as “developing countries.” Under the UNFCCC rules, they still are. The original UN treaty was signed in 1992, when the world divided fairly obviously into the industrialised “developed” countries (Europe, North America, Japan, Australia and New Zealand) and everyone else. (Oddly, Turkey was also counted as “developed,” a categorisation it has been contesting ever since.)

Back then, China’s per capita income was a little over US$1000. It is now around $25,000. Saudi Arabia’s is now over $55,000, and the United Arab Emirates nearly $85,000. (The US figure is $82,000, Australia’s $66,000.) Meanwhile China has become the world’s largest producer of greenhouse gases — overtaking the European Union, it was revealed this week, in cumulative historic emissions.

In these circumstances, the developed countries argue, the binary division of the UN climate regime into “developed” and “developing” countries has outlived its usefulness.

The Paris climate agreement, signed in 2015, partially acknowledged this. As recounted by former US climate envoy Todd Stern in a candid new book about how the agreement was achieved, breaching the binary division involved many years of difficult negotiations. But in the end it was agreed that the responsibility to produce a national emissions reduction plan should be an equal obligation on all countries, irrespective of income.

What could not be agreed in Paris, however, was that the obligation to provide finance to the poorest countries to tackle climate change should also extend beyond the developed world. Instead, that responsibility remained firmly with the advanced economies whose historic emissions were the cause of the climate crisis. When the Paris agreement reiterated that $100 billion in climate finance should flow to poorer countries each year (a figure first agreed in 2009–10), the obligation remained very much rooted in the binary division of nations.

That is being contested in Baku. The Paris agreement set an end date of 2025 for the $100 billion commitment, so COP29 is negotiating a new finance objective, elegantly called the “New Collective Quantified Goal,” or NCQG. Its price tag is one focus of the negotiations; the other is who should pay it. For the developed countries the answer is clear: they are happy to continue paying, but only if the obligation is widened to include Saudi Arabia, the UAE, other rich oil states and China. The criterion should be ability to pay, or “fair shares,” not what kind of country you were in 1992.

They point to a telling precedent. At this week’s G20 summit South Korea announced a significant pledge to the World Bank’s fund for the world’s poorest countries, the International Development Association. Korea was once one of IDA’s recipient countries. But it has grown rich enough over the past thirty years to “graduate” into the donor category. The developed countries argue the same principle should apply within the climate regime.

The Saudis and China reject this out of hand. This is not because they don’t provide assistance to poorer countries. On the contrary, speaking in Baku last week Chinese vice-premier Ding Xuexiang pointedly declared that, since 2016, China has “provided and mobilised” approximately US$24 billion to support other developing countries in addressing climate change. As others noted, this would make it the fifth- or sixth-largest provider of climate finance, after Japan, Germany, the United States, France and Britain.

China’s announcement was telling. It confirmed predictions that the election of Donald Trump would see China stepping into the breach to claim global leadership on climate change. Moreover, its language precisely mirrored the way the Paris agreement defines the obligation on developed countries. But China was absolutely unequivocal: as stipulated by the agreement, these were “voluntary contributions.” Only the developed countries had legal obligations to pay up.

As the Baku negotiations reach their conclusion, it isn’t clear how the impasse between developed and developing countries about who should pay will be resolved. Over in Rio de Janeiro, though, the developed countries, China and Saudi Arabia were reaching agreement on how the money should be delivered.

Expertly marshalled by President Lula of Brazil, the G20 leaders committed to making the World Bank and the regional multilateral development banks in Africa, Asia, Latin America and the Caribbean “better, bigger and more effective.” Endorsing a detailed reform “roadmap” for the MDBs drawn up by their finance ministers, the leaders committed more broadly to “accelerate the reform of the international financial architecture so that it can meet the urgent challenge of sustainable development, climate change and efforts to eradicate poverty.” This should include reform of the International Monetary Fund, action to support heavily indebted developing countries, and measures to help mobilise more money from the private sector.

Herein lies the paradox of the global climate regime. The UNFCCC insists that it is the only legitimate body to agree on the climate finance goal. But it is effectively only the G20 — the major economic powers — that can decide how that goal is reached. Or perhaps it’s not a paradox, but simply a sensible division of labour between the two competing principles of justice and realpolitik. •

The post Who governs the climate? appeared first on Inside Story.

Yet it is also true to say that Trump’s impact on the global climate, and on international climate diplomacy, may not be as bad as some have feared.

It is worth rehearsing the context. This year will almost certainly be the hottest on record. At a likely 1.55C above the pre-industrial (1850–1900) baseline used by climate scientists, it will break the record set by last year’s average of 1.48C above. When the 2015 Paris Climate Agreement set 1.5C as the limit towards which the international community should aim, a 1.0C rise over pre-industrial levels had only been breached once before, in 2010.

This unexpectedly rapid increase in global temperatures has made climate impacts noticeably more severe. Eastern Spain’s recent floods, in which more than 150 people died, were caused by an entire year’s rainfall in less than twenty-four hours. A nearly year-long drought has dried out Zambia’s hydroelectric dams, plunging the country into electricity blackouts. Wildfires in South America have exceeded all previous records, with even the wet Amazon ablaze.

More broadly, global greenhouse gas emissions continue to rise by around 2 per cent a year. This has left atmospheric concentrations at levels last seen three to five million years ago, when the temperature was 2–3°C warmer and the sea level was ten to twenty metres higher than now.

That’s the bad news. The good news is that green technologies continue to power ahead. Global clean energy investment increased by 17 per cent to $1.77 trillion last year. Investment in electric vehicles has overtaken that in renewable power, with newer fields such as hydrogen, energy storage and carbon capture all seeing rapid growth. At the same time, though, energy analysts are warning that new data centres needed to power artificial intelligence are generating major increases in IT sector emissions.

In the field of climate diplomacy, 2025 is another critical year. Under the Paris Agreement countries must publish their new and stronger climate targets for 2035. Last time round, in 2020–21, these added up to considerably less than the global total required to hold emissions to the 1.5C target limit or even the looser 2C one. Last month the UN Environment Programme reported that the “emissions gap” had widened further.

Even if countries meet their most ambitious targets, emissions cuts by 2035 will be less than a third of those required to have a reasonable chance of meeting the 2C limit, and only a fifth of those required for 1.5C. Countries have huge ground to make up in the plans they are required to set out in the first half of next year.

Curiously, those plans are the one thing countries will not be discussing in Baku. In UN-speak, they are “nationally determined contributions,” or NDCs, and the clue is in the name.

Countries are legally bound to publish an NDC, but the Paris Agreement leaves the contents entirely up to them. Even though the aggregate total of emissions resulting from all NDCs is extremely unlikely to achieve the agreement’s own 2C or 1.5C goals, the principle of national sovereignty prevents them being discussed by anyone else. The fate of the world’s climate rests not on negotiations between states, but on how the largest emitting countries make economic, energy and environmental policy at home. This is where Trump’s climate impact will really be felt.

How will the path of American greenhouse gas emissions differ under a Trump presidency from a Kamala Harris one? And what impact will that have on other countries’ willingness to cut theirs?

Trump’s views are clear. In September he described climate change as a “scam” even as Hurricane Helene was leaving a trail of destruction along the eastern US seaboard. In his first term he severely constrained the work of the Environmental Protection Agency, whose anti-pollution regulations will gradually cause most coal-fired power stations to close. This time round he says he will permit oil and gas drilling in Alaska, end the requirement that more than half of all cars sold in 2032 are electric, and repeal Joe Biden’s Inflation Reduction Act, which has moved hundreds of billions of dollars into low-carbon manufacturing sectors.

By 2030, according to one analysis, US emissions could be four billion tonnes higher than otherwise under a full Trump program, equivalent to more than a quarter of the emissions of the European Union and Japan combined. Where Harris would have sought to meet the Biden administration’s goal of cutting US emissions 50–52 per cent on 2005 levels by 2030 (en route to net zero by 2050), a Trump presidency could see them fall only 28 per cent.

In practice, though, the new president’s impact may not be as large as this. US emissions are not primarily determined by federal policy. Energy is mainly the responsibility of states, most of whom have strong green energy mandates. Energy markets have hugely favoured renewables over the last decade. In 2023 renewable energy and energy storage accounted for more than three-quarters of new capacity, taking renewables to around 25 per cent of US power generation. Wind and solar installation dominate not just in California but in oil-rich Texas. As former EPA head Gina McCarthy said this week, “the shift to clean energy is unstoppable.”

Electric vehicle regulations do come from Washington, and Trump says he wishes to “save” the American auto industry from them. But President Biden’s tax incentives are benefiting both consumers and producers, and US manufacturers need to compete in international markets where demand for electric vehicles continues to accelerate. In this area as in others, it is not self-evident that Trump will do what he promises. (And it has not gone unnoticed that one of his chief backers is the world’s most famous electric car manufacturer.)

As for Trump’s commitment to expanding the oil and gas industry — “drill baby, drill,” he delights in urging — more sanguine observers note that global conditions will determine whether new licences lead to an increase in production. A glut of new oil coming onto a global market in which demand is expected to peak by 2030 would not benefit US producers, whose costs are higher than in other countries.

Perhaps the greatest uncertainty relates to President Biden’s radical Inflation Reduction Act, which channels huge investment incentives and tax breaks — an estimated $493 billions’ worth in its first two years — to low-carbon manufacturing and its products. Although Trump has lambasted the IRA and said he will repeal it, many commentators doubt he will go ahead. The IRA is already estimated to have created around 150,000 jobs, of which two-thirds are in Republican congressional districts. Plenty of Trump’s own supporters in Congress are likely to lobby to keep it in place.

Trump’s anti-climate rhetoric is plain, but there is reason to think it may not be matched by his policies over the next four years.

Internationally, Trump will almost certainly withdraw the US from the Paris Climate Agreement, as he did four years ago. There is even talk that he might pull the US out of the original 1992 UN Framework Convention on Climate Change, though that would be a much more complicated task and would face legal challenge. But how far would these actions reduce the international effort to tackle climate change?

American withdrawal would unquestionably be destabilising for the UN process. The US would presumably not submit an NDC next year, and for the next four years it is likely to provide little in climate finance to developing countries. Hopes had been high that a Harris presidency would inject new funds into the World Bank, significantly increasing the finance available to poorer countries; it’s hard to now see that happening.

But a US withdrawal is unlikely to slow other countries’ pursuit of their own climate commitments. Four years ago, when Trump was first elected, this was the fear. Climate change is a “collective action problem”: if one country isn’t willing to bear its share of the global burden, why should others? But this line of reasoning no longer applies. Countries are cutting their coal use because they want to get rid of urban air pollution. They are installing renewable energy because it is cheaper. They are investing in public transport and cycling because this makes their cities function better. They are slowing deforestation because its environmental and social impacts are disastrous.

These “co-benefits” of climate action have given most major economies domestic economic and political reasons to pursue climate policies. Indeed, it is because few have been willing to go further than domestic benefits that climate policies have been inadequate to achieve a 1.5C or 2C global trajectory. But that also means few countries are likely to change their climate policy commitments just because the US — for the next four years at least — is no longer in the game.

China is the key factor here. Gone are the days when Beijing would have calibrated its own domestic emissions reduction plans according to what Washington was doing. The Chinese government is planning for national emissions to peak by 2030 because it is in its interests to do so, and a US retreat from climate policy will make little or no difference.

More than that, China will almost certainly see an opportunity to parade its global leadership. Already the world’s largest supplier of wind and solar equipment and electric vehicles, along with the critical minerals needed by them, it will be able to say it now leads the world in tackling climate change. As the US pulls back, China is likely to increase its already considerable investment in Africa, Latin America and Asia with the claim that it is now among the world’s major providers of climate finance.

More widely, US withdrawal will strengthen the position of the BRICS grouping in climate diplomacy and beyond. Driven by China, Russia Brazil, India and Saudi Arabia, the alliance has expanded to ten countries, with another two dozen in the queue to join. Its meeting last month in Kazan, Russia, made clear its ambition to create a comprehensive alternative power bloc to the Western alliance. That claim will look stronger with the US led by Donald Trump. As host of the all-important COP30 next year, Brazil will be pushing the BRICS into more progressive positions on climate change and will see China as its key ally.

Paradoxically, it’s possible that Trump’s election may even help COP29. The big issue in Baku over the next two weeks is the negotiation of a new goal for climate finance, the sums richer countries will pay poorer ones over the next decade to help them reduce their emissions and cope with climate impacts. After three years of negotiations, developed and developing countries still differ starkly over the the amounts required, and who should pay them. In the run-up to the conference there have indeed been genuine fears that it may not be possible to reach agreement at all.

But a looming Trump administration may concentrate minds. Both developed and developing countries may feel it is imperative to do a deal with the Biden administration, while it’s still around, for fear of a worse outcome if the issue is left to next year. The sum of money agreed to may be smaller than it would otherwise have been — the EU will certainly not want to be on the hook for the missing American amount — but the likelihood of agreement may just have gone up.

The first few days of COP29 will see speeches from assembled heads of government. Rather than pulling back, expect them to proclaim their redoubled commitment to multilateralism and to stronger international cooperation on climate change. They won’t mention Trump. But they won’t have to. •

The post A shift in the climate for COP29 appeared first on Inside Story.

This weekend the tide seemed to have turned. The second round of voting in France produced an unexpected victory for the left alliance, with Le Pen’s party coming third. And in Britain, Labour was celebrating a landslide election win.

The scale of Labour’s success can hardly be exaggerated. Of 650 seats in the House of Commons, Labour now has 412, with an overall majority of 174. The Conservatives have been reduced from 372 seats to 121, their fewest ever. Just five years ago Labour collapsed to its lowest seat total, 201, since 1935. It now has its second-highest ever, exceeded only by Tony Blair’s 1997 victory. (He won 418 seats and a majority of 179.)

How did this happen? There are two different kinds of answer.

The first is straightforward. After fourteen years in government, after the chaos of Brexit, Boris Johnson and five prime ministers in seven years, the public wanted the Tories out. The polls settled eighteen months ago into a fifteen- to twenty-point lead for Labour, and refused to budge. When Rishi Sunak called the election the Tories were on 23 per cent. After a six-week campaign their share of the final vote was 24 per cent.

The second reason is Britain’s first-past-the-post voting system, which gives the seat to the candidate with the highest number of votes in each constituency. This can lead to huge disproportionalities between votes won and seats gained.

Labour’s landslide was achieved with just 34 per cent of the national vote: only one point more than it got in 2019, when it won fewer than half the number of seats and fell to a crushing defeat. The difference lies entirely in the collapse of Conservative support. In 2019 the Tories’ vote share of 44 per cent bagged them 365 seats. Their near-halving in support this time round translated into the loss of over two-thirds of these.

The Conservatives were undone by a highly efficient pincer movement. Attacking its right flank was Reform UK, the latest incarnation of the UK Independence Party and the Brexit Party, whose relentless exploitation of anti-European and anti-immigrant grievance catalysed the 2016 referendum vote to leave the European Union. Under its populist leader Nigel Farage, Reform picked up 14 per cent of the national vote. This only translated into five seats — including one for Farage, at his eighth time of asking — but by splitting the conservative vote in a swathe of leave-voting constituencies in the midlands and north of England it provided Labour with around 150 gains.

On the Conservatives’ left flank, meanwhile, the centrist Liberal Democrats focused their campaigning on Tory constituencies in the south of England, many of which had voted against Brexit, and won seventy-one of them. In these seats the Labour vote was negligible, indicating widespread “tactical” voting to oust the Tories.

In the cities, Liberal Democrats returned the favour, lending their votes to Labour. The result is that (beyond outer London) there is now not a single Conservative seat in any major British urban area. There are none in Wales, and only five in Scotland. In the latter, the big shock was the collapse of the Scottish Nationalist vote: the party that still runs the Scottish government lost thirty-nine of its forty-eight Westminster seats, almost all of them to Labour.

The first past the post system threw up two other remarkable outcomes. With the overall result a foregone conclusion, many people felt empowered to vote for minor parties. The Green Party won four seats, quadrupling its representation in parliament, and five Labour candidates were defeated by independents — including the party’s former left-wing leader Jeremy Corbyn — standing on pro-Palestinian platforms against Labour’s perceived stance on Gaza.

This all resulted in a remarkable election night. Every ten minutes or so the coverage was punctuated by the sight of another Conservative cabinet minister or MP losing their seat, sparking cheers among Labour supporters gathered across the country. The loudest celebration was saved for Liz Truss, whose disastrous forty-nine-day premiership in 2022 drove the final nail into the coffin of the Tories’ electoral chances. Having subsequently tried to resurrect her career by founding a populist political grouping and publishing a book entitled Ten Years to Save the West, Truss was ousted from her constituency in Eastern England by a record-breaking twenty-six-point swing to Labour. As one wag gleefully put it, Truss could not even save South West Norfolk, let alone the West.

The British system of transferring power is swift. Rishi Sunak conceded defeat in the early hours of Friday morning, and went to Buckingham Palace at around 11am to tell King Charles. A few minutes later the monarch received Labour leader Sir Keir Starmer and asked him to form a government. By midday Sunak had departed 10 Downing Street and Starmer had moved in.

Starmer lost no time in putting his stamp on the new government. Graciously acknowledging Sunak’s achievement in becoming the UK’s first British-Asian prime minister, he nevertheless made it clear that Labour would be very different from the Tories in office.

“Public service is a privilege,” he said, “and your government should treat every single person in this country with respect… From now on you have a government unburdened by doctrine, guided only by the determination to serve your interest… [Y]ou have given us a clear mandate and we will use it to deliver change: to restore service and respect to politics, end the era of noisy performance, tread more lightly on your lives and unite our country.”

Commentators noticed immediately how relaxed and confident Starmer seemed. A stiff and rather stilted speaker when campaigning, he appeared to inhabit his new office with ease. At a press conference on Saturday morning after chairing his first cabinet meeting, Starmer looked thoroughly in command. As several people noted, this is not his first management job: he spent five years running the Crown Prosecution Service before becoming an MP. A technocrat rather than an ideologue, Starmer set out his plans as if chief executive of the company. They would be exactly as advertised in the campaign.

If Starmer looked at home in his new role, his cabinet looked like the country they will serve. Gone are the public schoolboys and second-job moonlighters of the Tory years. Ninety-two per cent of Labour’s cabinet were educated at comprehensive state schools. Half of them are women. In Rachel Reeves the UK has its first female chancellor of the exchequer, or treasurer; in David Lammy a Black foreign secretary. Deputy prime minister Angela Rayner was a teenage mother who left school at sixteen and worked as a carer before becoming a trade union official.

In his press conference Starmer warned that, though his government would immediately get to work on the task of “national renewal,” the public should not expect everything to change overnight. Undoing the damage of Tory rule, as he had emphasised during the campaign, would take ten years.

The challenge his government faces is making enough progress in the first five of these to be re-elected next time round. He will have a lot of marginal seats to defend. And he doesn’t just have to clear up the Tory legacy of austerity and Brexit. He must somehow reform a British economic model which has been underperforming in critical ways for forty years.

Over the past two years, Starmer and Reeves have insisted that Labour would not spend its way out of trouble. With national debt at close to 100 per cent of GDP, the tax take at a seventy-year high and borrowing costs still at their elevated post-Truss level, Labour tied itself to an ultra-orthodox set of fiscal rules. Despite collapsing public services and rising child poverty, it insisted that spending will be tightly controlled and working people’s taxes will not be raised.

There will be no resource bonanza for the National Health Service to cut waiting times for the more than six million people now on its non-urgent operation list. There will be no mass rescue of local authorities and universities heading for bankruptcy; no major influx of money to employ more teachers or police officers or sort the backlog in the courts; no big pay rises for public sector workers — including doctors and nurses — who have been on strike. With just a few exceptions, the government will only meet the demands for higher spending when economic growth allows.

Labour’s priority, the new prime minister insisted again in his press conference, was creating wealth. Only that would allow them to spend it.

But restoring economic growth will not be easy. Since the financial crash of 2008, Britain’s growth rate has averaged 1.3 per cent, the lowest of any G7 country. Last year it grew just 0.1 per cent, and the IMF forecast is for 1.5 per cent in 2025. Annual productivity growth has been just 0.5 per cent, much less than in the United States, France or Germany.

The core problems are easily identified. Investment, both public and private, has been consistently and significantly lower than in similar economies for several decades. And Brexit has reduced the overall level of GDP, economists estimate, by somewhere between 4 and 8 per cent, with both exports and imports down 15 per cent.

The British economy is good at creating jobs — 74 per cent of working age adults are in employment — but many of them are insecure and low-waged. Almost a million people are now on “zero-hours” contracts, unsure how many hours they will work each week. Around 15 per cent of the labour force is notionally self-employed, though many of those are in practice contracted employees without full employment rights. Around a million people of working age (22 per cent of the labour force) are now economically inactive, most of them due to sickness and disability.

Despite all the anti-migrant rhetoric of the Conservative government, high vacancy rates have drawn in migrant labour in record numbers: net inward migration was 685,000 last year. With a rapidly ageing population, migration is likely to continue at high rates. Yet a tight labour market has not reduced poverty: 11 per cent of workers, and 4.3 million children, live in a household in poverty. Last year 3 per cent of all Britons used a charitable food bank.

In a small number of economic sectors — finance, professional services, aerospace, life sciences, the creative industries — Britain remains a global powerhouse. But wealth is concentrated around London and the southeast: in every other part of the country, productivity is below the national average. The economy runs a persistent trade deficit, made possible only by capital inflows through which foreigners buy up the most desirable businesses and property.

Over-concentrated in lending overseas and for real estate, British banks and pension funds are notoriously loathe to invest in British firms, the most successful of which regularly get bought out and/or move to America. British capitalism has become almost as fond of share buybacks as its American cousin: supported by the Bank of England’s money-creating “quantitative easing” program, the stock market and property market have boomed over the past decade, making shareholders and homeowners unprecedently wealthy even as wages and salaries have stagnated. Real average household incomes are lower today than in 2007.

So the British economic model has deep structural flaws. Yet from this relatively unproductive and deeply unequal base, the British political system and its public expect to have European-style public services while refusing to pay European levels of tax. There is much gnashing of teeth in the media at the 37 per cent share of national income now taken in tax, but this compares with more than 42 per cent in most European economies.

This is the economic legacy Keir Starmer and his chancellor Rachel Reeves are now inheriting. In reality, it has been bequeathed as much by the last Labour government as the more recent Tory one — though the latter alone is responsible for Brexit. From 1997–2008 the New Labour governments of Tony Blair and Gordon Brown benefited from a decade of booming globalisation, the information technology revolution and unsustainable debt; but they did not much reform the underlying British economic model. The question now is whether the even newer Labour government of Starmer and Reeves can do so.

And herein lies the paradox for Britain’s new rulers. To win power Labour has presented a determinedly conservative economic face. Starmer went out of his way to distance himself from his predecessor Jeremy Corbyn’s radical policy stance — even going so far as to expel Corbyn from the Labour Party (for insufficient condemnation of anti-Semitism within the party.) He has continuously emphasised how much he has changed his party, stressing its new moderation. Indeed, Reeves has insisted, not only is Labour no longer the old bastion of high spending, taxation and borrowing, it is now the party of “sound money,” an ancient monetarist trope.

Growth will come, says Reeves, not from higher borrowing and taxation but from supply-side reforms. On the one hand, fiscal and monetary stability will encourage business investment; on the other, Labour will reform the planning system to unblock new infrastructure and housing. The new government also plans modest reform of the skills training system, an expanded childcare package to enable mothers (in particular) to return to work, and a rather ill-defined industrial policy, by which the state will co-invest with private capital in growing businesses and new technologies, especially green ones. A new publicly owned energy company will accelerate investment in renewable power and electricity storage to meet Britain’s net zero targets.

It’s possible that all this will work. During the recent years of instability many firms have said they have been holding off new investments; many will now be given the green light. There is certainly a lot of goodwill towards the new government from the business community. But planning reforms are notoriously difficult to get through a parliament of MPs whose constituents don’t want new building near their homes. Previous governments have many times tried to strengthen skills training without much success.

Even with Labour’s intended improvements to workers’ rights — alongside the expected (but gradual) impact of artificial intelligence — it will take an unprecedented effort to shift the economy towards a high-wage, high-productivity labour market. The present model serves too many businesses too well.

And there is no reason to think that either British or foreign capital will simply fall in behind the new government’s growth ambitions when there remain better prospects elsewhere. With both the United States and the European Union now embarked on high-spending industrial strategies aimed at the new green sectors and at reducing dependence on Chinese supply chains, Britain risks being left behind, an observer not a member of the new global economy’s most powerful blocs.

In his election night victory speech, Keir Starmer acknowledged the threat of the far right, in Britain and more widely. The only way of defeating it, he said, was for progressive governments to show that politics could deliver economic and social benefits for those left behind by globalisation and austerity. The ethno-nationalists were feeding off grievance, some of it justified. People had lost faith in politicians and governments and taken refuge in populist rhetoric based on conspiracy theory and xenophobia. The only answer was for governments to genuinely improve people’s lives. That was Labour’s mission.

It is a noble and practical goal. But the British economy’s longstanding structural weaknesses will make it a difficult one to achieve. Starmer and his new government therefore face a hard question. Given those weaknesses, will their modest policy prospectus generate sufficient economic growth to enable that goal to be met? And if it does not, are they willing to be bolder and more radical in policy than they have so far promised? •

The post The progressive challenge appeared first on Inside Story.

Mind you, the election date itself caught them by surprise. Faced with polls putting him up to twenty percentage points behind Labour, prime minister Rishi Sunak was widely expected to wait until October or November before going to the country. Even his own troops were shocked when he announced last week that the date would be 4 July. And the first few days of the campaign have betrayed a party far from ready. A hastily arranged set of public events for the PM has not gone well: having made his initial announcement drenched by pouring rain — with no one apparently able to locate an umbrella — a visit to the shipyards in Belfast where the Titanic was built looked particularly unfortunate. (The memes are already doing the rounds.)

Dismayed Tory MPs are saying openly that Sunak seems to have given up, simply wanting to get out as soon as he can. And many of them are following suit: nearly eighty have announced they won’t be standing for re-election. There is dark talk that if Sunak campaigns as badly as this for the next six weeks the Conservatives could suffer a near-wipeout on the scale of the Canadian election of 1993. That saw the ruling Progressive Conservative Party reduced from 169 seats to two.

Labour hates this kind of talk, of course. For them the biggest risk is being unable to get their vote out because people think the result is a foregone conclusion. The party’s campaign team gave a slide presentation to the shadow cabinet recently highlighting multiple cases when big polling leads were blown during election campaigns — with the Australian election of 2019 being one of the examples. They are desperate to warn against complacency.

Yet their anxieties, though understandable, are unconvincing. Labour has not only been at least fifteen points ahead of the Tories in the polls for almost eighteen months, it is also ahead on every single salient election issue apart from defence. And the Labour leader, Sir Keir Starmer, is preferred to Sunak on every measure of leadership.

Yet there is something odd about this. Starmer is ahead of a deeply unpopular prime minister. But his own approval ratings are net negative, somewhere between –17 per cent and –31 per cent. Compare this (for example) with the +22 per cent Tony Blair enjoyed in advance of the 1997 election. The public clearly prefer Starmer to Sunak and they are ready to give him the keys to 10 Downing Street. But they are by no means convinced of his qualities.

So who is Sir Keir Starmer?

The “Sir” makes Starmer sound like an aristocrat or political grandee. But that’s not at all the case. His knighthood was reward for his five-year stint as director of public prosecutions, the country’s leading prosecuting lawyer. And getting that job was by no means an obvious career outcome. Starmer, the first (and only) member of his family to go to university, started out as a human rights lawyer, notably defending prisoners facing the death penalty in Caribbean countries and working pro bono for two young anti-McDonalds campaigners in the 1990s.

Born in 1962, he grew up in a working-class household. His father was a toolmaker, his mother a nurse who later suffered serious ill-health. They were not well off. A talented teenage musician, he chose to study law rather than music, attending Leeds and Oxford universities. He rose swiftly to become a Queen’s Counsel and head of his legal firm. He wrote legal opinions against the Iraq war and co-authored books on human rights law.

Starmer only became an MP in 2015. Coupled with his civil service legal role this gives him the most obscure political pedigree of anyone who has aspired to lead Labour. As an MP he had no time to make an independent mark: he was immediately promoted to the front bench by then leader Jeremy Corbyn, first with an immigration brief and then — after the European Union referendum in 2016 — as shadow Brexit secretary.

In that role he had the near-impossible task of managing a divided Labour Party through the tortuous parliamentary process by which Britain left the European Union. The party’s members had almost universally voted to remain in the EU; but many of their voters had opted to leave. An impossible task ended with Labour’s catastrophic defeat to Boris Johnson in the general election of 2019.

This personal history means there is almost no public record of Starmer’s political views before he was elected Labour leader in the wake of that defeat. To a remarkable extent we really don’t know what he believes in.

(We know more about his abilities as a soccer player. In an unusual foray into investigative journalism your correspondent has played against him. I can report that he is a fine midfield general, the fulcrum of his team, and a natural leader. Indeed, he was not only his team’s captain but also, until recently, the organiser of their weekly game.)

The problem of Starmer’s lack of political background has been compounded by his record since he became leader. Starmer stood for the leadership on a left-wing platform that persuaded many Corbyn supporters to support him. But in the four years since he has abandoned almost every radical policy position he took then. It has made him an implacable foe of the left and provided an easy attack line for the media. How can the voters trust him if he is willing to say one thing to get elected and then something completely different once in office?

Starmer has a ready defence. Over the last four years the British economy has suffered the Covid pandemic and Ukraine energy shocks and been trashed by Liz Truss. So the country can simply no longer afford to get rid of student tuition fees or renationalise the water companies, and abolishing the House of Lords will have to wait.

In truth, Starmer has been following a ruthless electoral strategy. To return from its disastrous electoral performance in 2019, when the party fell to its lowest number of parliamentary seats since 1935, Labour needed to win back two groups of voters. In its former heartlands in the midlands and north of England, it had to appeal to people in working-class communities who had been gradually abandoning the party over two decades, and after voting Leave in the EU referendum had defected to Boris Johnson in 2019. Meanwhile in the south of England and in smaller towns Labour had to persuade Conservative Remain voters that, after the left wing Corbyn experiment, the party could once again form a moderate government they could trust.

It was not rocket science to work out what was required. Starmer first took on Corbyn. After the former leader said that claims of anti-Semitism in Labour had been exaggerated, Starmer had his party membership suspended. Corbyn will now fight the election as an independent. Hundreds of other left-wing party members were also effectively purged, many on somewhat dubious grounds, including well-known MPs with long track records in the party. Starmer wanted to show that Corbynism had been decisively expunged.

He then took aim at the party’s policies. Labour has a long history of being painted by the Conservatives and the media as over-fond of taxing and borrowing. Starmer was determined to take this accusation off the table. So out went any commitment to public spending that could not be funded by an identifiable tax rise on somebody unpopular.

Labour said it would increase the windfall tax on oil and gas companies, remove charitable tax status from private schools, and abolish loopholes allowing wealthy foreigners to avoid UK tax. But that was it: Labour supported the general income tax cuts introduced by Rishi Sunak and has ruled out any other tax rises. As it did so, its spending ambitions were shrunk to match.

Most notably, Starmer abandoned what had been the party’s flagship policy, a pledge to spend an annual £28 billion investing in renewable energy, home insulation and other net zero climate measures. A bold commitment that had given Labour a distinctive appeal to younger and greener voters, the climate policy had come under attack by the Conservatives for necessitating an increase in government borrowing. Starmer felt vulnerable to the charge: after a painful reconsideration, the policy was watered down to less than £5 billion a year.

Labour’s package of new rights for workers underwent the same fate. After intense lobbying by business interests, many of its provisions — such as abolishing “zero hours” contracts and ending the practice of “fire and rehire” in which workers are sacked and re-employed on worse terms — became merely commitments to consult, or get-out clauses added. The policy now had “more holes than a swiss cheese,” said one union boss.

Starmer’s approach has in reality been very simple. Familiar to Australian readers, it is known to electoral analysts as a small-target strategy: give your opponents and the media as little as possible to attack. In Labour’s case this means not making big spending commitments; not raising taxes; not looking too pro-welfare; not looking too pro-union; looking very pro-business; matching every government policy on crime, immigration, tax cuts and defence. Like a Roman phalanx turning itself into a tight circle with its shields on the outside, Labour has ruthlessly closed every possible chink of weakness.

The result, inevitably, has been a significant lessening of ambition. Labour’s electoral promises have been reduced to small spending pledges on health, education, anti-social behaviour and immigration control, backed by an extremely cautious fiscal stance almost identical to that of the Tory government. Writing in the Conservative Daily Mail, shadow chancellor of the exchequer Rachel Reeves proudly boasted Labour was now the party of “sound money.”

Two distinctive policies remain. Labour is committed to reducing the UK’s power sector emissions to net zero by 2030, and will set up a publicly owned energy company to help it do so. And as part of a more active industrial strategy it will establish a sovereign wealth fund to invest in new and growing businesses.

Labour’s manifesto has not yet been published, so there could yet be some surprise additions to the policy package. It is mooted that they will extend the vote to those aged sixteen and seventeen. (Sunak meanwhile has pledged to re-introduce national military service for eighteen-year-olds.) There will likely be commitments to increase housebuilding rates and new rights for private tenants. Civil servants will be given a “duty of candour” to prevent the covering up of bureaucratic failures and miscarriages of justice.

But overall the appeal is deliberately minimal. Starmer has taken to warning that not everything will change immediately and expectations should not be too high. Labour will need ten years to really make a difference.

But therein lies the risk. The model Starmer is assumed to be following is that of Tony Blair in 1997. Blair’s “New Labour” similarly made only modest promises to get elected, relying principally on the public having become fed up with the Tory government after a long period in office. Like Starmer, Blair had a significant and longstanding polling lead and faced an incumbent prime minister who seemed capable only of making things worse.

But 2024 is not at all like 1997. Then, the economy was booming. Five years of strong growth had put the public finances in good shape. Globalisation seemed unstoppable and the international community to be growing closer.

Those are not the circumstances Sir Keir Starmer will inherit. The British economy has been flatlining for 15 years, with average wages still below the level of 2007. Its growth rate is anaemic and productivity more or less stagnant. The world is splitting into competitive trade blocs, and after Brexit the UK is in none of them. The tax share of national income is at a seventy-year high, but public spending is still effectively in austerity. In the National Health Service waiting lists are at record levels. Local authorities and universities are going bankrupt.

The list goes on. There is no dividend to be had from a declining defence budget, as there was in the 2000s; on the contrary, geopolitical tensions are causing defence budgets to rise. The climate and environmental emergencies demand radical shifts in energy, transport, agricultural and industry policy. The net zero transition must somehow be managed without causing a wave of job losses akin to the deindustrialisation of the 1980s. Artificial intelligence might be about to destroy a swathe of jobs.

This is as daunting a set of challenges facing an incoming government as anyone can remember. So Starmer is surely correct that Labour will need ten years to make a significant difference. But the problem is, that means they will have to win, not just this election, but the next one, in five years’ time. And to do that they will surely have to make much bolder changes to economic policy and to public services than their current plans suggest.

As Britain’s leading fiscal think tank has warned, Britain’s current public finances are not sustainable. In a context of slow growth, an ageing population, rising child poverty and long public service backlogs, Labour’s present spending plans will make barely a dent in the surface of highly visible problems. The party risks going into an election in 2028 or 2029 with the country feeling little different from today: with simply not enough having been spent or reformed to change people’s lived experiences and their perception of the government’s achievements.

Sir Keir Starmer has so far been exceptionally lucky. In Rishi Sunak he has an opponent who has achieved almost nothing of what he set out to do and who has presided over a toxic mix of policy failure and internal party division. Starmer has been able to watch the Conservatives blow up their own reputation for economic and political competence while needing to offer few alternatives of his own.

But that luck won’t last once he gets to No 10. At that point Britain’s failings will become his responsibility, and their continuation his fault. A volatile electorate propelling him into office in 2024 will certainly be capable of ejecting him again five years later if not enough has changed to justify his premiership.

So the lack of policy ambition in Labour’s current approach could yet backfire. It looks as certain as anything is in politics that Starmer will win on 4 July. But if he sticks to his stated plans, that might not be enough. •

The post Who is Keir Starmer? appeared first on Inside Story.

To political commentators, the link between the two stories was irresistible. “A complete sh**show,” said the wags on social media. They were not referring to the Thames.

The Tories’ by-election defeat, in the seaside resort of Blackpool in the northwest of England, saw a twenty-six percentage point swing from the Tories to Labour, the third-largest since the second world war. It is the fifth time in the past eighteen months that Labour has won a seat from the government on a swing of more than twenty points. On the same day, the Tories lost hundreds of seats to Labour in a string of English local council elections (which are also contested between the national parties).

These figures spell impending electoral disaster for Sunak. UK-wide opinion polls have had Labour at least fifteen points ahead of the Conservatives in an unbroken stretch going back eighteen months. The most recent large poll puts Labour on 45 per cent and the Conservatives on 26 per cent. Repeated in a general election this would give Labour a huge parliamentary majority of 142. In a 650-seat House of Commons, Labour would win 468 seats, more than doubling the number it won in the last election in 2019. The Tories would be reduced from the 365 they won then to just ninety-eight.

The British system allows prime ministers to call an election whenever they want, as long as it’s within five years of the last one, so the date has not yet been set. In theory, Sunak could wait until January next year. But everyone assumes the vote will be held in October or November.

Few political commentators expect the polls to change very much between now and then, but the PM will want to hang on as long as possible simply in case something turns up. The kind of landslide projected by the polls is unlikely — they always narrow during the election campaign — but the bookies don’t have very much doubt about the outcome. Labour is 8/1 on to win an outright majority, and the Tories 33/1 against.

How did it come to this for Rishi Sunak? Britain’s first non-white prime minister, the country’s youngest for over two hundred years, he was hailed as his party’s saviour when he was selected by Conservative MPs in October 2022 to clear up the mess left by the shortlived Liz Truss. But this “safe pair of hands” started dropping catches almost as soon as he took office.

Sunak quickly set out five goals for his government and asked the British public to judge him on their achievement or otherwise. One of them, to halve inflation, looked plausible. Never mind that the government is not in charge of inflation (that is the Bank of England’s job); all the economic forecasts were predicting that inflation would decline rapidly as global energy prices fell. Britain’s inflation rate is indeed now down from the 11 per cent when Sunak took office to 3 per cent today.

It was the other goals that raised eyebrows. We will “grow the economy,” said Sunak, “and cut the debt.” But Britain’s growth prospects didn’t look good, and that would have implications for debt.

Overall the British economy grew by only 0.1 per cent in the whole of 2023, and in the last six months of the year it actually shrank, sending it into a “technical recession.” The OECD now predicts that next year Britain will have the worst-performing economy of the G7 group of major industrialised countries. The Bank of England’s fourteen successive rises in interest rates — its method of tackling inflation — have of course contributed to this, ensuring that both business and consumer spending has been highly constrained. And public debt, in turn, has not come down. At 98 per cent of GDP, government debt is higher than when Sunak took office.

If Sunak’s economic goals looked puzzlingly difficult to achieve, his social policy ones seemed positively self-harming.

The first of these was to cut waiting lists in the National Health Service. With an ageing population, high post-Covid sickness rates, widespread staff shortages, nurses and doctors striking for higher pay, and funding settlements consistently lower than required to keep pace with demand, Britain’s health system has been under severe stress over the last few years. More than 7.5 million people are waiting for non-emergency treatment in England alone, up from a little over two million when the Conservatives took office in 2010, and 300,000 more than when Sunak became prime minister. Around a quarter of a million people have been waiting for over a year. Yet the government has no plan that might reverse these trends.

Sunak’s final pledge was to “stop the boats.” Over the past few years, increased surveillance of ferries and lorries crossing the English Channel has forced would-be migrants and asylum seekers trying to reach Britain to make the journey in small boats, often overcrowded and unsafe. Since 2018 nearly 120,000 people have entered by this route, and at least seventy-two have drowned trying to do so. The government has pledged that it will cut off this option.

But this has proved impossible. As of mid April, 6265 people had crossed the English Channel in small boats since the start of the year, a figure nearly a quarter higher than in the same period in 2023. As an English-speaking country where many migrant communities are already settled, Britain remains an attractive destination for the many Afghans, Iranians, Turks, Eritreans, Syrians and Iraqis fleeing persecution or destitution in their own countries. Other, safer routes (except for those from Hong Kong and Ukraine) have largely been closed. Britain is providing France with funds and security personnel to prevent the crossings, but success has been limited.

When they get to Britain these migrants are detained, mostly in town centre hotels where they often attract hostility from the local populace. Roughly 45,000 asylum seekers are now in such accommodation around the country, at an estimated daily cost of £8 million. To ease the pressure the government has commandeered disused military bases and chartered a huge barge moored off the southern English coast; but the key problem is a backlog of well over 100,000 unprocessed asylum cases. A majority of claims take more than six months to be assessed. When they are, around two-thirds of claimants are granted refugee status.

Two years ago, faced with public — but especially media — concern about the cost and perceived disruption to local communities of these numbers, the government came up with a new plan. Rather than process all asylum seekers in Britain, some would be deported to Rwanda to have their claims dealt with there. (If successful, they would then acquire refugee status in Rwanda, not Britain.) The Rwandan government offered to take around 1000 asylum seekers over a five-year period, for which it would be paid £370 million. The government claimed that the threat of being sent to Rwanda would prove such a deterrent to would-be migrants that the small boats would stop.

But there were two problems. The first was the idea of deterrence. If people were willing to risk their lives taking an inflatable dinghy across one of the world’s busiest shipping lanes, they seem unlikely to be put off by the small possibility that they would be among the few such arrivals sent to Rwanda.

The second was the law. When the plan was challenged, the UK Supreme Court ruled that it was unlawful, because Rwanda was not a safe country. Inadequacies in Rwanda’s asylum system meant that refugees might be returned to the countries from which they had fled — an action explicitly prohibited by the European Convention on Human Rights, to which Britain is a signatory.

But the government would not be deterred. Last month it passed a new Act declaring that Rwanda is a safe country, whatever conditions might prevail there, and compelling the courts to disregard any British or international laws (such as the Refugee Convention) that might block such deportations. As a long list of judges and members of the House of Lords complained, it is a novel use of the law to claim that a fact is not a fact when the government finds it inconvenient; and a dangerous one to override human rights protections put in place for just such a purpose.

But the Rwanda policy had become too much of a totem for Rishi Sunak to permit such legal niceties to stand in its way. Never mind that (as one Tory critic put it) the £370 million cost for a thousand asylum seekers deported would have made it cheaper for them all to be put up at the Ritz; this was the emblematic policy by which the PM would make good on his promise to “stop the boats.” Even if not a single boat is actually stopped, the theatrical arrest of a few hundred migrants in front of the media this week reveals the political intent. The live TV pictures planned for when the first flight to Rwanda takes off will be proclaimed as the PM’s pledge-keeping triumph.

Sunak’s problem is that there is little evidence that Rwanda will help him win the election. The British public are divided on it, with the latest polls showing around 40 per cent in support and 40 per cent opposed. And the fact that the supporters are overwhelmingly Conservative voters reveals the policy’s real electoral purpose.

For the Conservatives will not only be fighting Labour in the general election. They now also face a growing threat from their right, in the form of Reform UK, the new name for the Brexit Party that led the Leave campaign in the EU referendum of 2016. Reform UK will stand candidates in both Tory and Labour seats, but its larger threat is to the Conservatives. As the English local elections this week proved, there are not enough disgruntled voters to give Reform candidates any parliamentary seats; but Britain’s first-past-the post voting system means they could take enough votes from the Tories to hand victories to Labour, particularly in the “red wall” constituencies in the English North and Midlands that Boris Johnson famously won in 2019. Sunak hopes that his hardline stance on immigration can pull some of these voters back the Conservatives’ way.

This is not the only policy he hopes can do this. In recent weeks he has set out a whole series of pledges aimed at protecting his right flank. Adopting the classic “wedge” strategy made famous by Australian election guru Lynton Crosby — Sunak’s chief political strategist is Crosby protégé Isaac Levido — the Conservatives are trying to separate the Labour Party from its working-class supporters by appealing to some of the latter’s culturally conservative values. So in recent weeks Sunak has promised to increase defence spending, attacked the “sicknote culture” that allegedly allows people to claim they are too mentally distressed to work, and permitted exploration for oil and gas on sites earmarked for offshore wind turbines.

It is a rather crude, sub-Trumpian approach, but it is one that gets Sunak approving headlines in the Daily Mail and Daily Telegraph and helps ward off attacks from his own MPs. Its only failing is that it has not moved the needle of the opinion polls at all. A year ago Sunak’s approval ratings stood at minus 17 per cent. Today they are minus 40 per cent.

The difficult truth confronting Rishi Sunak and the Conservative Party is that the British public seems to have made up its mind some time ago. It wants a change of government. After fourteen years of Tory rule, Britain often feels like a country where nothing works any more.

It’s not just the long NHS waiting lists or the schools literally collapsing due to faulty concrete used in their construction. It’s not just the economic cost of Brexit, becoming more apparent every month as the labour force shrinks and British exporters give up in the face of new bureaucratic obstacles to trade. It’s not just the underfunding of local authorities, which has led all of them severely to cut services and several to declare themselves bankrupt. It’s not just the 440,000 backlog of unheard cases in the law courts, or the failing privatised railway companies, some of which even a Conservative government has had to take back into public ownership. It is all of these, and the more general sense that the government has simply run out of steam. The cost of living crisis — high prices, high taxes, high rents, high mortgage costs — has left the public out of love with their masters. Sunak’s performances in the House of Commons and in the media have become increasingly tetchy as his poll numbers fail to improve and his backbenchers grow more rebellious.

The cancelled swimming race in the Thames provided more than a fitting metaphor. The water company in question, Thames Water, was privatised by Margaret Thatcher in 1989 and its debts cancelled. After paying out £7.2 billion in dividends to its shareholders since then, its debts today total £15.6 billion and it has recently defaulted on payments. Meanwhile it has pumped at least seventy-two billion litres of sewage into the Thames since 2020 and been fined £35.7 million for pollution incidents in the last six years. Today it is close to bankruptcy, and the government has made contingency plans to renationalise it. Both its end, and the government’s, look nigh. •

The post Down the drain appeared first on Inside Story.

During the preceding two days an agreement had by no means been guaranteed. After two weeks of negotiation, the core issue, on the future of fossil fuels, was deadlocked. On the one side were around one hundred small island states, developing countries and EU members, plus Australia, insisting that fossil fuels must ultimately be phased out. Anything less would be “signing our death certificate,” as Samoan natural resources and environment minister Cedric Schuster put it. On the other side were the petrostates and China. Rallied by an instruction from the secretary-general of OPEC, subsequently leaked, they were determined to hold out against any language committing the world to ending fossil fuel production. This would spell, they claimed, their own economic demise.

There are three ways for negotiators to overcome polarised conflict of this kind, and all three were duly used in the final text.

First, find another verb. If “phased out” is not acceptable to one side and “phased down” to the other, the negotiators will have tried alternatives. “Eliminate,” “end the use of,” “take urgent and rapid action towards the alternative”… Ultimately, it was “transition away from” that proved acceptable to all sides. The key sentence in the final agreement reads:

28 (d): Transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.

Linguistic style is not a COP concern.

Second, include several subtly different paragraphs covering the same topics. That way the different sides can each find some text to suit their needs. Immediately before the clause above is this one, which makes essentially the same point, but not quite:

28 (c): Accelerating efforts globally towards net zero emission energy systems, utilizing zero- and low-carbon fuels well before or by around mid-century.

And a little later:

29: Recognizes that transitional fuels can play a role in facilitating the energy transition while ensuring energy security.

In UN-speak, “transitional fuel” means gas, so this clause gives comfort to the gas producers, whatever else is included about transitioning away from fossil fuels.

Third, employ “constructive ambiguity.” Find terms that can mean different things to different audiences, allowing each to claim that it says what they want it to. The key term here is “energy systems.” This is ambiguous: does it just cover power, heating and cooling, which is what most people would say constitutes a country’s “energy system”? Or does it include energy used in transport?

The uncertainty is critical, because if transport is not included, this is not a fossil fuel phase-out. In particular, it would let the oil producers off the hook, since oil is the primary transport fuel. Expect the petrostates to argue that that is indeed what it means — and they will point to a separate clause about transport to support their case. (Why have one of those if this already includes transport? But see point two above.) Meanwhile the advocates of phase-out will say that this is evident nonsense.

If the agreed text can be read in different ways, what does it mean? There isn’t in fact much doubt about this, as the Saudi minister’s expression revealed. The UNFCCC’s official press release spelled it out: the agreement “signals the beginning of the end of the fossil fuel era.” The petrostates had their interpretable clauses — “a litany of loopholes,” said the Alliance of Small Island States — but Team Phase-out had definitely won.

Does it matter, though? There’s a good case for saying no. This text is not binding on anyone. It is the outcome of the Global Stocktake, or GST, an assessment process mandated by the 2015 Paris agreement to guide the national targets and plans that will actually do the emissions cutting. On the Paris five-year cycle, these Nationally Determined Contributions, or NDCs, must be delivered in 2025. The GST text is meant to be heeded when countries set out those plans, but in truth it can be ignored if they so wish. The new NDCs will be for 2035 and 2040, some time before phase-out is meant to happen.

But there’s another way to look at it. Odd as it sounds, this is the first time that any UNFCCC text has mentioned fossil fuels. They’ve been the effective elephant in the room. Every other kind of goal has been used: a temperature limit (2°C above pre-industrial times, then 1.5°C); an emissions target (net zero by 2050); a renewable energy aspiration (the COP28 text specifies a tripling by 2030). COP26, two years ago, finally managed to single out (unabated) coal, and called for its phase-down. But the petrostates had always resisted the naming of fossil fuels as a whole.

This really is where the rubber hits the road. It simply isn’t possible to limit warming to 1.5°C, or cut emissions to net zero, without more or less eliminating the production and consumption of all fossil fuels. It’s only “more or less” because some can be abated through carbon capture and storage technologies, or biological sequestration, or — though we don’t know how to do this at scale yet — the direct drawing down of carbon from the air. But the essential point stands: a safe climate means pretty much phasing out fossil fuels.

In this sense the real impact of the COP28 agreement will not be so much on the immediate behaviour of fossil fuel producers as on the longer-term global debate about energy policy. It will become harder, in short, to argue for an expansion of fossil fuel exploration and mining. If the world has agreed to phase out fossil fuels, how can a new coalmine, or a set of new oil and gas drilling licences, be justified?

Phasing out may not mean the immediate abandonment of fossil fuel production — on the contrary, the COP28 call is for a “just, orderly and equitable” transition — but it surely cannot mean finding and extracting more of the stuff. As the International Energy Agency has made clear, currently exploited reserves hold more than enough carbon to meet the global carbon budget allowable for a 1.5°C world. There is no space for any more.

Of course, changing the debate doesn’t guarantee that the case will be won. But UN textual agreements could never do that. The Paris agreement itself can’t do that — it is founded on the principle of national sovereignty over climate policy. (That’s why there is an “emissions gap” between the aggregate of national emissions commitments and the total that would be needed to limit warming to 1.5°C.) But the terms of the debate do matter. Before 2013 there was no articulated concept of “net zero” emissions. But within eight years every major economy was committed to a net zero target. In very few major countries can an electable politician say they’re not in favour of reaching net zero. In time, the phase-out of fossil fuels may come to have the same political power. And that will then change how fossil fuel policies are made.

The focus in Dubai was all on the production side because the producers were in the room. Fossil fuel phase-out is going to be genuinely difficult for many countries, particularly those highly dependent on coal, oil and gas for export revenue. Australia provides a case in point. Poorer countries in this group — Nigeria, Angola, Mozambique — will demand that the developed world help them make the transition; they were angry there was not more in the COP28 text obliging this. But the real work of phase-out is going to be done on the demand side. Consumers are going to require less.

This is already happening. From the start of the Industrial Revolution, Britain spent nearly 250 years burning coal; today it has more or less been eliminated from the UK power grid. Around 80 per cent of all global investment in electricity production now goes to renewables, grids and storage. In Europe electric heat pumps are beginning to make inroads into gas-based heating systems. On a lifetime basis electric vehicles will be cheaper than petrol and diesel ones within two or three years. The first ships to run on green hydrogen and ammonia are now in production. It’s only really in aviation, where biofuels are not yet viable at scale, that it is hard to see how demand for fossil fuels will fall. The transition has already started.

And we know how it works. Scientists and engineers develop new green technologies. They start out being very expensive, so governments subsidise them. As more are produced, innovation and scale reduce their costs. Governments then mandate a proportion of total supply to take a green form. This creates increased demand for the technology, leading to more innovation and economies of scale and a further reduction in costs. As costs fall, government targets can be raised. Gradually a tipping point is hit where the green technology is cheaper than its fossil rival, and the subsidies become unnecessary. As the capital stock gradually turns over, the green transition becomes complete.

This is precisely the story we have seen in solar and wind power and batteries, where since 2010 costs have fallen around 85 per cent, 55 per cent and 85 per cent respectively. A similar fall in costs can be seen in electric vehicles, and heat pumps will follow. There is a virtuous circle connecting policy, innovation and scale.

The real question, however, is of speed. Had the world started acting seriously on climate change when it was first understood in the 1990s (the initial assessment report of the Intergovernmental Panel on Climate Change was published in 1990), a gradual path could have been followed to a low-carbon future. But it has really only been since 2008–10 that climate policy around the world has become serious. Atmospheric concentrations of greenhouse gases are therefore much higher than they would otherwise have been, and we need to get to net zero more quickly.

This tardiness has made the required trajectory of emissions reduction very steep: the IPCC calculates that, for a 1.5°C pathway, emissions in 2030 need to be cut to around half of their 2019 levels. In turn this has made the politics of transition much more difficult. It would have been hard to replace a coal, oil or gas industry over a period of fifty years. Doing it over twenty-five will stretch governments to the maximum. Many will surely baulk at the prospect.

This then is what the next two years will be about. COP28 has provided the guidance. COP30 in 2025 is when governments must publish their targets and plans. There will of course be a COP between the two: there always is. COP29 will be in the even more improbable location of Baku, capital of Azerbaijan, another oil producer. But it won’t have very much to do. The real focus turns to the city of Belém in northeastern Brazil, gateway to the Amazon, in November 2025. The beginning of the end has begun. •

The post The beginning of the end appeared first on Inside Story.

For Edelman, the global public relations company hired by the United Arab Emirates to support its COP28 presidency, the answer is sixty-four. That’s the size of the company’s team at the UN climate conference, now into its second week in Dubai. (Thirty per cent by 2030 is the UAE’s modest new “clean energy” target.) But the host country is taking no chances: it has also hired communications firm BCW, whose COP team is twenty-five-strong. Yet even these eighty-nine communications specialists were not enough to prevent a PR disaster dominating the media coverage of the COP’s first week.

Sultan Al Jaber, the UAE’s controversial choice to chair the conference — his other job is chief executive of the country’s giant oil company ADNOC — was seen in a leaked video denying that climate science required an end to fossil fuels. In a conversation with former Irish president Mary Robinson, as revealed by the Guardian, Al Jaber lost his cool when questioned about the future of the oil and gas industry. “There is no science out there, or no scenario out there,” he said tetchily, “that says that the phase-out of fossil fuel is what’s going to achieve 1.5°C.”

Unfortunately for Al Jaber, plenty of scientific scenarios say exactly that. In its last global assessment report, the Intergovernmental Panel on Climate Change, or IPCC, analysed hundreds of results from economic climate models in which global warming is limited to 1.5°C above preindustrial levels. When they use realistic assumptions about the proportion of carbon that might be captured and stored or removed directly from the atmosphere, they show that on average coal, oil and gas consumption will have to be cut from 2020 levels by 99 per cent, 70 per cent and 84 per cent respectively by 2050.

Al Jaber’s comments attracted immediate criticism from climate scientists. They were “verging on climate denial,” said Bill Hare, veteran Australian IPCC author and COP-watcher. Johan Rockström, director of the Potsdam Institute for Climate Impact Research, acknowledged that a 70 per cent reduction in oil production didn’t mean bringing it to an end altogether, but stressed the importance of clear messaging: “I cannot see scientifically there being any other communication than that we need to phase out fossil fuels.”

Messaging was indeed Al Jaber’s problem, for the central point of contention at COP28 is precisely what language should be used in respect of fossil fuels. “Phasing out” is the demand of the most climate-vulnerable countries, supported by the European Union. “Phasing down” is the weaker alternative preferred by China, India and Saudi Arabia. (John Kerry, the US climate envoy, was trying “largely phased out.”) As the neutral chair of the conference, Al Jaber is meant to be mediating between these positions, not supporting one of them.

This should have been the point at which the PR people earned their fees. Edelman’s website boasts that crisis management is one of its specialities. But either they’re kidding themselves, or Al Jaber didn’t take their advice. In a hastily convened press conference the following day, the COP president put on another ill-tempered show. Flanked by the chair of the IPCC, Professor Jim Skea — looking decidedly uncomfortable — Al Jaber insisted that “we very much believe and respect the science.” But he could not help himself also attacking his critics. “I am quite surprised,” he said, “with the constant and repeated attempts to undermine the work of the COP28 presidency.”

Al Jaber’s ill-judged remarks and thin political skin are the result of not having to face a free media in his own country. They probably won’t derail the final outcome of the conference, where the search is now on for other forms of words (neither phasing out nor down, but another verb altogether) that can reconcile the opposing positions on the future of fossil fuels. But the episode in many ways exemplified the wider problem at this and recent COPs.

The problem is the focus on glossy announcements that satisfy the PR people but often do little to clarify what countries and companies are actually doing to bring down their emissions or support developing countries to become more climate-resilient.

In the first week of the COP the UAE announced no fewer than ten official declarations, pledges and coalitions in which various combinations of countries and companies signed up to various degrees of commitment to action on climate. These covered Agriculture, Food and Climate, endorsed by 146 countries; Climate and Health, 133 countries; Renewables and Energy Efficiency, 128 countries; Climate Relief, Recovery and Peace, seventy-five; Gender-Responsive Just Transitions, seventy-four; Cooling, sixty-six; Hydrogen, thirty-seven; Climate Finance, a disappointing thirteen; along with an Oil and Gas Decarbonisation Charter (fifty-two companies) and a Coalition for High Ambition Multilevel Partnerships pledge (sixty-five countries).

This was not all. Strangely absent from the official website but much vaunted on the day of launch was a Declaration to Triple Nuclear Energy by 2050 endorsed by twenty countries. And alongside all these the UAE has also announced a raft of other new initiatives: a Global Decarbonisation Accelerator, an Industrial Transition Accelerator, a Coal Transition Accelerator (joining the existing Powering Past Coal Alliance), a Global Education Solutions Accelerator, a Net Zero Mobilization Charter, an Innovate for Climate Tech Coalition, a Charter on Finance for Managing Risk, a Net Zero Export Credit Agencies Alliance, a Roadmap for Islamic Sustainable Finance, an African Green Industrialisation Initiative, a Global Electric Cooling Coalition, a Waste to Zero Coalition, a Buildings and Cement Breakthrough, and a Global Youth Statement.

It’s hard to know what to make of all this. It’s clear that for the UAE this welter of announcements has been a major focus of the overall PR effort. Every day four or five new press releases have landed in the inboxes of the 4000 journalists attending the COP, overwhelming them with new pledges, targets, carefully honed quotes from government and business leaders, and triumphant group photos in front of giant declaratory backdrops. The impression given is undoubtedly impressive, a reflection of a busy year of coalition-building and commitment-cajoling by Al Jaber and his team. Yet at the same time it is almost impossible to know how many of these pledges — particularly the government ones — will actually lead to new policies or spending in the countries that have signed up to them.

The nuclear pledge provides a case in point. The press release trumpeted the commitment to tripling nuclear energy capacity. Both France and Britain signed up. But France’s electricity system is 72 per cent nuclear already, so clearly tripling does not mean “in France.” Britain has nine nuclear power stations but has been struggling since 2007 to build a tenth, which is now due to come onstream in 2027. So tripling is not on the cards there either. It turns out that what these countries have signed up to is an aspiration for other countries to triple their nuclear capacity: not quite as much of a commitment as it looked at first sight.

The financial pledges attached to the announcements are even more obscure. The UAE website boasts a dazzling array of new financial pledges announced at COP: a total of US$6.8 billion for energy, US$8.5 billion for lives and livelihoods, US$1.2 billion for inclusion, and a puzzling US$61.8 billion for “finance.” But whether these sums are really new money or a recycling of old commitments is impossible to know. Forensic examination by NGOs has shown that much “climate finance” is only tangentially related to climate, and internationally comparable accounting is woeful. It is doubtful that most of these COP announcements will buck the trend.

Yet wholesale cynicism would also be misplaced. The reason there are so many initiatives in the UAE’s list is that climate mitigation and resilience are needed in every industrial sector, and there are a lot of sectors. What’s been striking at this year’s COP is the much deeper level of engagement of many business representatives than previously.

In the past many business-led events were largely exercises in self-promotion. There’s been a fair amount of that in Dubai, but also many more events and conference sessions genuinely exploring the challenges of decarbonisation and adaptation in different sectors and countries. Green technologies are advancing rapidly — there have been multiple sessions on the potential of artificial intelligence to support climate action — and investors are pouring in money.

In effect there’s been a parallel conference going on here — while the UN negotiators do their increasingly abstruse thing in the formal sessions, the real world has broken in and is taking over the space. It’s messy, it’s not properly accountable, it’s all still largely voluntary rather than regulated. But it reflects a sea change in the scale and seriousness of business action on climate around the world.

All round the COP conference venue the PR people have put up little slogans and homilies to inspire the delegates. “Let’s lead change.” “The urgency of the climate challenge demands courage, not caution.” “Action inspires hope.” Strangely enough, they might be right. •

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This year, though, the series would have to be pitched as a documentary. COP28 opened on Wednesday in the improbable location of Dubai, where futuristic glass towers and a palm-shaped luxury resort raised from the sea cater for the world’s gas-guzzling classes. Dubai is the principal city of the United Arab Emirates, the world’s eighth-biggest oil producer. The head of the UAE’s state-owned oil giant ADNOC, Sultan Al Jaber, is the person its government has appointed to be president of the UN climate conference. And last week the BBC published leaked briefing notes for Al Jaber’s meetings with twenty-seven countries over the past year revealing that, as well as discussing the COP negotiations, he was pursuing energy investment deals for ADNOC and another UAE investment company he heads, Masdar.

For the climate NGOs this was merely confirmation that the UAE should not have been made host of the COP in the first place, and that Al Jaber was a completely inappropriate person to preside over it. “A brazen conflict of interest,” said Amnesty International, calling for him to resign.

But there was never any chance of that, and most of the country delegates in Dubai have reacted to the revelations with a world-weary shrug. “So the UAE is pursuing its oil interests?” said one. “And your point is…?”

The UAE’s energy interests overseas are large. The Financial Times estimates that it has invested almost US$200 billion in energy projects in the United States, Africa, Asia and Europe in the last year alone. Around half of this is in oil and gas, including for a major expansion of new drilling. This blatantly ignores the International Energy Agency’s warning that meeting the agreed goal of limiting global warming to 1.5°C above pre-industrial times effectively means no more fossil fuel exploration. The UAE’s plans alone will blow the global “carbon budget” out of the water.

The UAE argues that the finger of blame is being pointed in the wrong direction: it is merely responding to demand. On all realistic projections, countries will still be using oil and gas till well into the mid-century, and the UAE’s is the cheapest and among the least polluting.

And look at the other half of the UAE’s energy deals, adds Al Jaber: huge new solar, wind and geothermal investments helping provide power and air conditioning to developing and emerging economies from Azerbaijan to Zambia, China to Turkey. For many poorer countries, the UAE’s investments are critical — and far larger than anything they receive from Western governments or private sector companies. You don’t hear many developing country delegates criticising the UAE here.

Yet the revelations about Al Jaber’s Janus-like activities in the run-up to COP28 can’t be wholly dismissed. The UN rules are clear: the COP president must be neutral and impartial, and must not act to further their own interests. In Dubai over the next two weeks probably the single most contentious issue on the agenda will be the future of fossil fuels.

A distinctive feature of this year’s COP will be the “global stocktake.” This is one of the key processes set out in the landmark Paris climate agreement of 2015. Every five years, the agreement says, countries must take stock of their progress, or otherwise, over the last five, and set out global ambitions for the future. In this way the stocktake should inform the Nationally Determined Contributions, or NDCs, countries must make two years later, in which they must each set out new and stronger emissions reduction targets. The next round of NDCs is due in 2025.

Over the past year the global stocktake negotiations have been fraught. Climate scientists have made it very clear that collectively the world is not remotely on track to hold the global temperature rise to 1.5°C. In its annual report on the emissions gap, the UN Environment Programme observes that the difference between the emissions trajectory the world needs to be on for 1.5°C and the one it actually is on has widened rather than narrowed.

Last year it looked as if countries’ plans would take the world to around 2.6°C of warming; today it is probably 2.9°C. At that level much of the world’s agricultural output and water supplies will be at serious risk of failing, the incidence of extreme weather events regularly catastrophic, and large numbers of species would be wiped out. Countries’ current plans for emissions in 2030, UNEP says, need to be cut by another 42 per cent to be on a 1.5°C-compatible pathway.

The stocktake negotiators have focused on the future rather than dwelling on past and present failures. Everyone agrees there should be more investment in renewable energy: COP28 is likely to set a new goal of tripling global renewables capacity by 2030. That will not be easy: solar and wind power are being installed around the world at record rates, but market forecasts currently expect capacity only to double by then.

The COP will also agree on a doubling in the rate of energy efficiency improvements. Energy efficiency has long been the cheapest way of cutting emissions — the International Energy Agency describes it as the “first fuel” — but has always been something of the Cinderella of energy policy, requiring regulatory tightening in many different sectors. Doubling the rate of global improvement will require accelerated innovation in heat pumps, vehicles, consumer goods and industrial processes.

COP28 may well also reach an agreement on methane. Methane is one of the most potent greenhouse gases, more powerful as a cause of warming than carbon dioxide. It is produced by livestock, by waste disposal and as a by-product of fossil fuel production. Here the UAE is playing up its status as an oil giant. Only a country like his, says Al Jaber, can bring the global oil and gas sector to the COP table. Expect a historic announcement of a new tough methane target for 2030, and the major oil and gas companies — traditional opponents of climate policy, and enemies of the climate movement — pledging their support.

As ever, though, it won’t be the things that everyone can agree on, however important, that will dominate negotiations. The major battle this year will be over what the COP says about the future of the fossil fuel industry itself.

The small island states and other nations most vulnerable to climate impacts are insisting on the science. The goal of 1.5°C means reducing carbon emissions to net zero by sometime before 2050. That means ending fossil fuel use more or less entirely. (“Net” zero allows some residual emissions, but only if they are captured and stored, either by increased vegetation or geologically.) So COP28 should agree that fossil fuels must be phased out.

The European Union, with its strong pro-climate-action lobby, is sympathetic. But for China, India, the United States and Saudi Arabia it is a step much too far. They want the text to say merely that fossil fuels should be “phased down,” not out. They also want this to cover only “unabated” fossil fuels: if coal, oil and gas plants are fitted with carbon capture and storage technology to capture the emissions and bury them underground, then they should be exempt from the phase-down.

With the two groups of countries so far apart, agreeing on the text will be very difficult. So the question being asked is: will the UAE be a neutral and impartial chair of the negotiations on this crucial issue? Many observers think it is hard to believe so. Al Jaber is only COP president for a year; he will be chief executive of ADNOC for much longer. The interests of the UAE are not exactly a secret. So expect another bruising conclusion to the conference, we are told, with NGOs crying foul, and the negotiations running acrimoniously into extra time, as they so often do (last year by nearly two whole days).

But there’s another possibility. Al Jaber is a deal-maker. That’s what he does in the day job, and what he’s been doing at those meetings over the last year. He wants to show that this is what you get with a serious player from a serious oil state. So he’ll find some clever new wording to bridge the gap between “phasing out” and “phasing down,” acknowledging that the use of fossil fuels will no doubt come to an end, eventually, but in the meantime they are needed to help the world’s poor escape their poverty. And then he’ll bring the gavel down on a successful COP before, not after, the scheduled end.

In fact, he’s shown what he can do already. The first day of a COP normally manages to do no more than agree on the agenda — and that often takes hours of wrangling in itself. But the first day of COP28 on Wednesday ended with an unprecedented agreement on one of the most significant issues of the entire two weeks.

Developing countries have been arguing for years for a fund to compensate them for the “loss and damage” climate change is now inflicting on their economies. Last year they won the fund — but it had no money in it, and everyone expected the negotiations about how it was to be organised to last several more years. Yesterday, though, the UAE pulled a remarkable rabbit out of the conference hat. Not just an agreement on the arrangements for the fund, but US$440 million of financial pledges to it — including US$100 million from the UAE itself.

Curmudgeons noted that these sums are not nearly enough — the economic costs of loss and damage already run into the billions, and with the UAE’s oil revenues having soared last year to almost US$100 billion a group of former world leaders led by Gordon Brown urged it only this week to provide US$3 billion for climate change. In comparison, US$100 million is small beer.

But Al Jaber didn’t look too worried at the press conference closing the day. He had pulled off a stunning coup, developed and developing nations alike expressed themselves delighted, and the UAE was in its rightful place. •

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We learned his answer last week. You abandon and attack climate change policy, invent unpopular measures you claim your opponents support, and pledge you will never force such monstrous burdens on hard-working voters.

To the dismay of many in his own Conservative Party but the joy of the right-wing press, Sunak has come out fighting on the territory his predecessors had been careful to avoid. Climate change policy has been the subject of consensus among all of Britain’s major political parties for nearly two decades, giving the United Kingdom an enviable reputation as a global leader not just in emissions reduction but also in making climate policy with public consent.

Sunak has decided to rip all that up. The government is still committed to achieving its statutory target of net zero emissions by 2050, he said in his much-anticipated speech last week, but it isn’t willing to impose “unacceptable costs” on ordinary households to achieve it. It would therefore reverse three key policies introduced by previous Conservative administrations. The ban on new petrol and diesel cars would be pushed back from 2030 to 2035. The ban on new gas boilers (to be replaced by heat pumps and biofuels) would be pushed back to the same date and would no longer apply to poorer households. And landlords would not be required to insulate tenants’ homes. Sunak also took the opportunity to rule out four other policies: taxes on meat, higher taxes on flying, the compulsory separation of household waste into seven different recycling bins, and compulsory car sharing.

As intended, Sunak’s speech caused an immediate uproar. Environmentally minded MPs in his own party condemned the decisions. Green groups proclaimed themselves appalled. Business groups decried the ad hoc changes to regulatory frameworks and warned that investment would fall in sectors generating rising numbers of green jobs.

At the Sun, the Daily Mail, the Daily Telegraph and the Daily Express, meanwhile, there were celebrations. Their collective view was expressed in a triumphant Mail editorial congratulating Sunak for finally “shatter[ing] the cosy consensus, which has let an out-of-touch Westminster elite think it can bully a compliant public into footing a mind-blowing climate bill… This motley assortment of eco-zealots, the liberal Left and posh Tory rebels — egged on, of course, by the BBC — are invariably comfortably enough off to be able to swallow such costs. But for hard-working and practical-minded voters… Mr Sunak’s rethink will make life less tough, less cold and less poor.”

Sunak’s election strategists didn’t write the Mail’s leader, but they might as well have done. The prime minister’s purpose is transparent. He wants to create a clear dividing line between his government and the Labour Party, which has made strong climate policy a central plank of its platform, and in doing so to present the opposition as an out-of-touch elite and his own party as the defenders of ordinary people. He has, in short, decided to drag climate change into a culture-war battle and make that war the foundation of his election strategy.

If this sounds somewhat Australian, it is. Sunak’s chief election strategist is Isaac Levido, protégé of famed Liberal Party election guru Lynton Crosby and architect of Scott Morrison’s 2019 election victory. His strategy for Sunak comes straight from the Crosby playbook: use culture-war framing to drive a wedge between your opponents and their own supporters, forcing them to defend unpopular policies on your favoured territory. And don’t worry too much if this requires a measure of blatant dishonesty.

As many commentators observed — and as a BBC interview with Sunak expertly highlighted — it was the dishonesty that most marked out the prime minister’s speech. Every single policy Sunak claimed to have overturned was falsely described.

Neither the ban on new petrol and diesel cars nor the prohibition on gas boilers would have required consumers to fork out “£5000, £10,000, £15,000” more on their alternatives, as Sunak claimed. Innovation in battery technology has so rapidly reduced their cost that electric cars are expected to be cheaper than their fossil fuel competitors as soon as 2027. In practice, postponing the petrol and diesel ban will have very little effect on consumers’ decisions. In any case, 80 per cent of cars bought each year are second hand, to which the ban would not apply.

Heat pump costs are also falling rapidly — driven by the government’s phase-out plans. Consumers also get generous subsidies to install them, making their actual costs to households far less than Sunak claimed. And the requirement to insulate their homes was not on all property owners, as Sunak implied. It was only on private landlords. So, far from saving money for ordinary households, its abolition will actually leave tenants facing higher energy bills.

As for the four other measures Sunak claimed to have scrapped — from taxes on meat to compulsory car sharing — not one of them was government policy, or had even been considered. Nor are any of them Labour policy. They are all mythic inventions of the tabloid press designed to whip up public anger at the general notion of stronger climate policy. The claim to have got rid of them was pure Crosby/Levido: imply that these “extremist” absurdities are supported by your opponents and only you can save voters from them. Within minutes of Sunak finishing his speech Tory central office had put out social media messages highlighting these apparently abolished policies and linking them to Labour’s green spending plans.

(Within another few minutes a whole series of memes had appeared ridiculing Sunak’s remarks and listing a variety of other policies Sunak had saved a grateful public from, including compulsory badger-racing and limits on the number of invisible friends children would be allowed.)

Rishi Sunak’s new strategy has finally revealed his political character, and it is not what his supporters claimed it would be when Conservative MPs made him — without a contest or a vote — Britain’s fifth prime minister in five years last November. He was intended to represent a return to normality, a sensible hand on the tiller who could steady the country’s rocking ship of state.

After David Cameron (who called an unnecessary referendum on Brexit and lost it), Theresa May (who called an unnecessary general election, lost her majority in the House of Commons and failed to get Brexit through parliament), Boris Johnson (who illegally suspended parliament, oversaw 180,000 Covid deaths, associated with Russian spies, failed to disclose personal loans from party donors, promoted corrupt government procurement, lied to parliament about lockdown parties, tried to overturn rules on MPs’ standards of behaviour, and promoted supporters accused of bullying and sexual harassment) and Liz Truss (who introduced a budget that crashed the pound and sent interest rates soaring, and was forced to resign by her own MPs after only forty-nine days in the job), it was generally agreed that British politics needed something a little more stable. Though he had only been an MP since 2015, the smooth, very rich and apparently sensible former hedge-fund manager Sunak seemed to fit the bill.

But he has struggled to keep the Tories’ heads above water. On the five modest priorities he spelt out at the beginning of the year, he has so far failed to make any progress. Economic growth has been anaemic, with the economy teetering all year on the edge of recession. Inflation has fallen from 11 per cent to just under 7 per cent, but only after fourteen straight rises in interest rates (from 0.1 to 5.25 per cent) which have led to huge increases in monthly mortgage costs for householders. Sunak pledged to bring down National Health Service waiting lists, but instead they have reached a record high, with more than seven and a half million people now waiting for treatment in England, over three million of them for more than eighteen weeks.

Sunak’s most high-profile pledge, to reduce the number of asylum seekers crossing the English Channel in small boats, has also been his most conspicuous failure. Not only have the numbers continued to increase, but each of the measures aimed at tackling the problem (or, to be more precise, aimed at appearing to tackle the problem) has hit the rocks. The courts have prevented anyone at all from being deported to Rwanda, as the government wanted, to seek asylum there. And the hired-in barge moored off a south-coast port, intended to house 500 asylum seekers, had to be closed after a week when Legionella was found in its water supply.

Meanwhile Britain’s privatised water companies have been discharging raw sewage into the country’s rivers and seas, schools have been forced to shut because they contain dangerously unsafe concrete, and the country’s air-traffic control system was closed down by an error in a single flight plan. Callers to radio phone-in programs and newspaper columnists alike lament that nothing in Britain works anymore and the country has gone to the dogs.

All of which has duly been reflected in Sunak’s polling numbers. Labour has been fifteen to twenty points ahead of the Conservatives in national polling for a year now, sufficient to return it to government with a comfortable majority. Sunak’s approval ratings have fallen to minus 30 per cent, with Labour leader Keir Starmer ahead on almost every leadership quality listed by pollsters. Voters now say they trust Labour over the Conservatives on every major issue.

A general election doesn’t have to be called until January 2025, but May or October next year are seen as the likeliest dates. That gives Sunak a year or less to turn his dire fortunes around. After this week’s relaunch and with Levido in charge, we know how he will seek to do it. Reinforced by relentless tabloid attacks on Labour in general and Starmer in particular, the culture-war framing will be used to try to separate the opposition from its traditional working-class base.

This was how the Brexit referendum was won, and it was how Boris Johnson increased the Conservatives’ majority in the general election of 2019. Labour’s heartland voters in towns and cities across the Midlands and North of England were told that the party they and their families had always supported had become detached from their concerns: pro-EU, insufficiently patriotic, too supportive of immigration, soft on crime, uninterested in the armed services, and too London-centric (read, culturally liberal).

With Labour having governed while the post-2000 globalisation was creating an economic boom in London and the affluent southeast, but largely leaving old industrial areas behind, and having then presided over the great financial crash, many of these voters proved ripe to change their allegiance. Johnson’s stunning election victory in 2019 included a whole swathe of former Labour seats thought to be unwinnable by the Tories. That was why, despite everything, Johnson was tolerated for so long by Tory MPs and members: he had won in areas of the country that had not for years, if ever, returned a Tory MP.

It is these “red wall” seats that Sunak must retain in order to have any chance of winning the next election — and equally that Labour must win back if it is to do so. Both parties are focused laser-like on this task. From now until he calls the election we can confidently expect Sunak to attack Labour for its profligate tax and spending plans and economic recklessness, for wanting to rejoin the EU single market, for trying to reduce prison numbers while the Tories want to lock more criminals up, for wanting higher immigration and less defence spending, and — because the party has been taken over by the woke trans-rights brigade — for being unable to define a woman. This week’s climate row-back was just the start.

Will Labour take the bait? On all but one of those issues, it won’t. Over the past year Keir Starmer — also explicitly influenced by the Australian example — has adopted a classic small-target strategy. If you’re this far ahead in the polls, his reasoning goes, and the Tories keep spectacularly demonstrating their own incompetence, don’t blow it by giving your opponents easy wins.

Like a Roman phalanx curling itself into a tight circle with its shields on the outside, Labour has been busy closing off any available lines of attack from the Tories and their media spear-bearers.

On fiscal policy, Labour’s shadow chancellor of the exchequer Rachel Reeves has insisted that Labour will cut government borrowing and only increase spending if it can identify a way of paying for it. And she has since ruled out almost any tax rise, including higher-rate income taxes, the capital gains tax and a wealth tax, that Labour supporters had hoped might allow some spending commitments to be made.

On defence policy, on crime, on immigration and asylum seekers, Labour has attacked the Tory record but has not committed to any significant changes to government policy. On trans rights, Labour has ruled out gender self-identification without a medical diagnosis.

All eyes were therefore on Starmer for his reaction to Sunak’s anti-climate policy speech. Would he take the same approach he had on all the other wedges the Tories had been trying to hammer between him and his voter base? Would he again cleave close to Tory policy and refuse to allow a gap to open up through which he could be attacked?

Signs suggested he might. Reeves had already watered down Labour’s “climate investment plan” to spend £28 billion a year on green infrastructure and innovation: facing rising borrowing costs, she announced that a Labour government would now only get spending to £28 billion by the end of the parliament.

When the party then lost a by-election in London it had been expected to win, amid widespread voter opposition to the (Labour) mayor’s plans to extend a charge on polluting cars, Starmer had a very public wobble, openly questioning the policy. The Tories took their by-election victory as evidence that green policies imposing costs on voters are unpopular and ripe for attack, and Starmer seemed to be drawing the same conclusion. The environmental movement — inside and beyond the party — was alarmed.

They need not have worried. Starmer’s response to Sunak’s anti-green speech was subtle. Refusing to fall into the trap of a debate about the costs of climate policy to ordinary households, he made no public comment at all on the speech apart from a couple of tweets emphasising that Labour’s renewable energy strategy would create jobs, reduce bills and improve energy security. He left it to his shadow climate minister, former party leader Ed Miliband, to castigate Sunak for “not giving a damn” about climate change, describing the PM as “rattled, chaotic and out of his depth.”

Labour would retain the petrol and diesel ban by 2030 and the responsibility of landlords to insulate their tenants’ homes, Miliband said, both of which would cut ordinary households’ costs. (He notably didn’t promise to restore the ban on gas boilers.) As for the four fictional policies Sunak said he was scrapping, Miliband was scathing. Not only had the Labour Party never proposed a tax on meat, he said, but it was not even the policy of the Vegan Society.

Miliband is well known as strongly committed to climate action. Yet it was not he but shadow chancellor Rachel Reeves who was the decisive figure in Labour’s choice to pick up the climate gauntlet Sunak had thrown down. Reeves, who has been assiduously wooing business leaders over the past year, has been struck not merely by how fed up with Tory incompetence they have become, but also by how green they are.

With US president Joe Biden’s Inflation Reduction Act driving record investment into environmental technologies and sectors in the United States, and the European Union’s Green Deal following suit, Labour has made “green prosperity” the centrepiece of its economic and industrial strategies. It will have been delighted at the furious reaction of business leaders to Sunak’s speech. Why get Starmer to attack Sunak when the UK head of Ford will do it for you?

For party members and activists, Labour’s response will have come as a relief. The leadership’s small-target positioning has been deeply frustrating for those who believe the party needs radical policies to tackle the legacy of thirteen years of Tory rule. Starmer’s bland persona and extreme policy caution have left both members and many political commentators despairing that Labour was not offering the public a positive reason to vote for it but rather merely relying on the Tories to mess up. With the NHS, social care, schools, policing and local government all in crisis, but Labour not promising to spend significant money on any of them, they fear the party will succeed in the general election but fail in government.

In this context Miliband’s climate policy platform has offered a ray of hope. He has managed to persuade Starmer and Reeves to support a bold plan to achieve 100 per cent renewable power by 2030, create a new publicly owned energy company, and insulate nineteen million homes over ten years, generating a claimed 200,000 new jobs across the country. Most radically of all, Labour has pledged to end new oil and gas exploration in the North Sea fields, which would make Britain the first major economy to do so.

Labour hasn’t committed to these policies in the hope that the public supports them. It knows the public does: it is one of the consequences of the eighteen-year cross-party consensus on climate policy. Climate change is now ranked third when voters are asked about the biggest issues facing Britain, behind only the economy and inflation. Over half of voters want to see the government take stronger action, with a quarter happy with current policies and fewer than 20 per cent believing the government is moving too fast. These numbers vary little across Labour and Tory supporters and different parts of the country. Red wall voters are as green as people in the rest of Britain.

Tory strategists think these numbers are soft. They point out that the majorities in favour of tougher climate policy fall when voters are reminded that this might involve them, not just other people, paying more. Levido is convinced that continuous campaigning on the cost of achieving net zero for ordinary households will reduce public support even further. If this means making fictitious claims about those costs, or about Labour policy, so be it. He believes the Tories can peel enough voters away from Labour to make the election competitive.

He may be right. And this is what dismays moderate Tories the most about Sunak’s new stance. They know that their own voters care about climate change, and that strong policies will attract business investment and jobs in the new global green economy. But they also know, from Australia, the United States and elsewhere, that mendacious culture wars can be remarkably effective means of undermining voter confidence in political parties and policies of all kinds.

Britain has been spared this kind of social and political division up to now. But it is about to find out what happens when concerns about the future of the planet are sacrificed on the altar of election strategy. •

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The episode rather neatly demonstrated the balancing act Lula is trying to perform on the world stage. He has been assiduously positioning Brazil as an independent global power, seeking to act as a mediator in Ukraine rather than condemning Russia as demanded by the United States and Europe, promoting the non-Western BRICS club of major economies (Brazil, Russia, India, China and South Africa) and flying to Cuba to reiterate Brazil’s role as a leader of the G77 grouping of developing countries.

But he has also just signed a joint declaration with the United States proclaiming the G20 group of large economies the principal forum for multilateral diplomacy and declares himself a global champion of democracy, warning of the perils of authoritarian populism promoting racism and civil violence. (Brazil had its own “invasion of Congress” events in January this year when supporters of former far-right president Jair Bolsonaro stormed parliament and the Supreme Court in an attempt to overthrow Lula’s election victory, a deliberate echo of the events of 6 January 2021 in Washington, DC.)

The jury may be out on whether this balancing act can work, but no one could accuse Lula of passivity in foreign policy. In the past few weeks he has attended the Global Financing Pact summit in Paris, the BRICS summit in Johannesburg, the G20 summit in Delhi, the G77 summit in Havana and the UN General Assembly and Climate Ambition and Sustainable Development summits in New York, and convened his own Amazon summit in Brazil’s northeastern city of Belem. This year Brazil chairs the Latin American trade partnership Mercosur. Next year it will hold the presidency of the G20. In 2025 it will lead the BRICS and will also host the critical UN climate summit COP30.

To appreciate what Lula is seeking to achieve from this feverish activity it helps to understand the man. Now seventy-seven, Luiz Inácio Lula da Silva (“Lula” was an early nickname he later formally incorporated into his official name) has not had the usual politician’s life. Born to poor parents who migrated from Brazil’s northeast to São Paulo in search of work, Lula didn’t learn to read until he was ten. Starting out as a metalworker in the automobile industry, he became a trade unionist, was elected leader of the Metalworkers’ Union at the age of thirty, and then led major strikes and democratic protests against Brazil’s military dictatorship in the 1970s.

In 1980, increasingly identifying as a socialist — neither a communist nor a moderate social democrat — Lula helped form a new political party, the Workers’ Party. Though he was widely mocked for his poor Portuguese, his electrifying rhetoric and brilliant organising skills marked him out. He was elected to Congress in 1986 and subsequently stood as the party’s presidential candidate three times before finally winning in 2002.

In office, Lula immediately set about fulfilling his election promise to attack poverty, establishing the Bolsa Familia system under which mothers received welfare payments conditional on their children staying in school and being vaccinated. Aided by an economic boom, he raised the minimum wage, and expanded primary education and healthcare. Poverty in Brazil fell by more than a quarter in his first term alone. Re-elected in 2006, he turned his attention to the Amazon, succeeding in slowing deforestation for the first time. Brazil’s economy grew and its public debt fell.

When he left office after two terms in 2010 Lula had popular approval ratings of over 80 per cent and the undying enmity of Brazil’s conservative political elite. When the Trumpian populist Jair Bolsonaro became president in 2016, no one was surprised when he used a compromised judicial system to put Lula in jail.

Defeating Bolsonaro in last year’s election was redemption for Lula. But in a deeply divided country — the parallels with the United States are remarkably close — the margin was tiny: 50.9 per cent versus 49.1 per cent in the run-off vote. In the Brazilian Congress, which he does not control, Lula has had to cobble together an unstable multiparty coalition, making his legislative task much harder this time round.

Nevertheless, he has high ambitions. His Ecological Transformation Plan is meant to be a comprehensive economic strategy aimed at greening the country’s industrial structure. He wants to raise agricultural productivity to expand food production while conserving the country’s abundant natural resources. He has committed to ending hunger by extending Brazil’s welfare system, and to ending the illegal incursions into the Amazon forest by miners and loggers that routinely lead to violence against indigenous people. Deforestation is already down by over 40 per cent in less than a year.

Lula’s remarkable ability to build pragmatic political alliances makes it likely that he will achieve much more of his program than his congressional numbers would suggest. But it is on the world beyond Brazil that Lula’s political gaze is now increasingly fixed.

It is not too much to say that Lula wants to redesign the global order. In his speech to the UN General Assembly this week, Lula railed against the increasing inequality of a global economy in which, as he pointed out, the ten richest billionaires have greater combined wealth than 40 per cent of the world’s population, and 735 million people go hungry. He noted that the richest tenth of the world’s population are responsible for almost half of all carbon emissions, but also insisted that developing countries did not want to follow the same economic model. And he decried the erosion of multilateralism — “the principle of sovereign equality between nations” — in global affairs.

Lula’s rhetoric has always been grandiose, even utopian. But he has a remarkable record of making things happen. At the end of this year’s G20 summit in New Delhi, Lula set out his plans for next year’s presidency. Under Brazil, he said, the G20 would focus on reducing global inequality, poverty and hunger; on making the global growth model more environmentally sustainable, in terms of both climate change and nature conservation; and on reform of the way international institutions are governed.

Because he believes it is what will unlock the others, it is the last of these goals that is really in Lula’s sights. Like almost all leaders from the global South, Lula looks at how multilateral institutions work and sees both historical obsolescence and profound injustice.

Almost all the major institutions of global governance have remained unchanged since they were established at the end of the second world war. Eighty years later, despite new economic and regional powers emerging — notably the European Union, Germany, Japan, India and Brazil — the UN Security Council still has only five permanent members (the United States, Britain, France, Russia and China), the great powers that had prevailed in the war. And the World Bank and International Monetary Fund are still governed by their largest shareholders, an even narrower group of Western countries dominated by the United States and the other economies of the G7 (Germany, France, Britain, Italy, Japan and Canada).

All members of the World Trade Organization have equal decision-making power, but partly for that reason it has increasingly been bypassed in recent years by regional and bilateral trade agreements promoted by the United States, China and the European Union. The world’s premier economic advisory body, the Organisation of Economic Co-operation and Development, or OECD, remains in thrall to the free-market orthodoxies of the Western countries that run it.

And the single most powerful institution in the world economy is arguably the dollar, in which a huge amount of global trade and investment is denominated. But this means much of the world is deeply vulnerable to changes in its value, as the last two years of simultaneously rising dollar and US interest rates have shown. The dollar is not even governed by postwar international arrangements: its master is the US Federal Reserve, whose mandate is entirely focused on the US economy.

Lula wants all this changed. This is why he has loudly pursued the development of the BRICS grouping, even going so far as to suggest that it could seek to replace the dollar as a global trading currency. Lula sees the BRICS as a non-Western power bloc to counter the G7, whose cohesion in the decision-making forums of the G20, World Bank and IMF starkly contrasts with differences among the major countries of the global South.

At its recent summit in South Africa, the BRICS group admitted several new members, including the wealthy and increasingly assertive Saudi Arabia and United Arab Emirates, with the aim of extending its reach and influence. But most Western commentators are dismissive. They note that BRICS, unlike the G7, is made up of countries whose economic and political systems are not only fundamentally different from one another but also subject to major tensions and conflicts, especially in the case of superpower rivals China and India. Nevertheless, it is a signal of Lula’s intent that he wants to strengthen an alternative alliance through which to pursue his reform agenda.

Lula’s public statements on Russia and the war in Ukraine should be seen in this light. Like most countries in the global South, Brazil regards the UN Security Council as the proper arbiter of international conflict. If the Security Council assesses and then condemns one country’s aggression, Brazil will also do so. But it has never done so when the Security Council has not come to a judgement — as in the case of Ukraine, because Russia has exercised its permanent member veto.

Talking to Brazilian foreign policy experts in Brasilia and Rio I detected no illusions about Russia’s responsibility for the war in Ukraine. They note simply that the US invasion of Iraq in 2003, supported by almost all other Western states, was also illegal under UN law. And they observe that the West can apparently find fiscally unconstrained sums of money to defend Ukraine while simultaneously claiming it has no money to expand development aid or climate assistance to the poorest and most vulnerable countries elsewhere in the world. “And what did you do during Covid?” one asked me. “When the world cried out for vaccines, you hoarded even your surplus ones.”

Brazilians are enjoying the country’s new prominence on the global stage. Lula gets notably less criticism for his numerous foreign trips than leaders in most other countries. Along the way, he won’t hesitate to criticise the West for its moral failures. But he will also seize the chance to work with it. “Brazil is back!” the president likes to say. Preparing to assume the chairmanship of the largest powers at the G20, he doesn’t intend to waste the opportunity. •

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A few days later president Joe Biden and Indian prime minister Narendra Modi tried a different approach. Modi was given the full state visit treatment: marching troops on the south lawn of the White House, a glitzy (vegetarian) dinner, lengthy talks and a special address to both houses of Congress. The two leaders signed a series of strategic business deals in key fields such as semi-conductors and space technology, and held a joint press conference. (Though if anyone was in any doubt who Modi’s primary audience was, the fact that he spoke in Hindi may have been a clue.)

The Biden–Modi summit communiqué, covering myriad arenas of cooperation and every major global issue, ran to fifty-eight numbered paragraphs: this was clearly not the product of the meeting itself, but of months of prior negotiation by the two countries’ diplomats.

Hard on the heels of these two summits came a third, on Thursday and Friday this week, this time involving not just two leaders but more than forty. Hosted by French president Emmanuel Macron, the “Summit for a New Global Financing Pact” brought together ministers from around eighty countries at the imposing Napoleonic Palais Brongniart in central Paris. And unlike the others, this encounter wasn’t largely for the photographs: over two days the meeting saw substantive and unexpected progress made on a range of issues to do with the financing of sustainable economic development in the global South.

The summit was an ad hoc event, not part of the United Nations, G20 or other regular governance mechanisms. It was proposed by Macron last November following discussions with the prime minister of Barbados, Mia Mottley, on her “Bridgetown Initiative” for global financial reform. Mottley’s plans, first articulated at the COP26 climate conference in 2021, aim to mobilise hundreds of billions of dollars in new public and private financing for climate-related investment.

Unusually, Mottley’s ideas got traction both with developed country heads like Macron and EU president Ursula von der Leyen, and with governments in Africa and among the “V20” group of climate-vulnerable nations. A remarkable consensus has arisen: on the eve of this week’s summit thirteen leaders from across the world issued a jointly written article calling for an urgent scaling-up of financial flows.

The summit filled out some of the detail. In a set of round tables on different topics on the Thursday, followed by an evening dinner for heads of government and two hours of talks on Friday morning, a number of specific proposals were presented and agreed. Well, sort of agreed: with the summit having no formal ability to make binding decisions, the French hosts asked countries to indicate which of the proposals they could support, and then set out in the final communiqué what had been discussed and how it would be taken forward. It was a clever way of preventing the biggest countries exercising veto powers and thereby generating a weak, lowest-common-denominator agreement.

The most significant announcement was that the richest countries had met their promise to reallocate US$100 billion of Special Drawing Rights, or SDRs, to pay for poverty reduction and climate adaptation measures in developing countries. SDRs are the reserve currency used by the International Monetary Fund in times of financial trouble. In 2021, a huge US$650 billion of SDRs were issued to help countries through the Covid pandemic. But the problem was that the IMF constitution requires that SDRs go to countries in proportion to their shareholdings in the IMF, so the vast majority went to the richest countries who needed them least. In October 2021 they promised to give US$100 billion back, to be spent in the poorest countries — but up to now they had not done so.

After months of determined persuasion of his fellow leaders, Macron was able to announce in Paris that the figure had been reached. Only the most churlish of observers pointed out that the American contribution had still to be ratified by Congress, which might never happen.

You wait a long time for US$100 billion, and then two come along at once. Macron was also able to say that the US$100 billion in finance for climate change first promised by the developed world in 2009, and again in the Paris agreement of 2015, was also going to be achieved this year. A long time overdue, it was nevertheless a welcome statement that the developed world would (eventually) keep its promises. As several emerging economy leaders noted, those countries’ previous failure to do so has been a trust-depleting blight upon international relations for a long time.

Four issues dominated this week’s summit discussions. The first was reform of the World Bank and its regional counterparts, including the Asian, African and Inter-American Development Banks. Using capital provided by the richest countries, these banks provide low-interest (“concessional”) and commercial loans to emerging and developing economies, aimed especially at poverty reduction. But in recent years the banks have been heavily criticised as too slow and cumbersome, applying too many conditions and making overly cautious decisions, especially in comparison with the huge scale of lending now being undertaken by China.

Perhaps surprisingly, the United States has led the calls for reform. In Paris, treasury secretary Janet Yellen repeated her demand that the World Bank “evolve,” particularly by providing more money for climate investment. She found a willing partner in the bank’s new president, former Mastercard CEO Ajay Banga, whose commitment to reform has been widely welcomed. Banga’s new definition of the World Bank’s purpose — “eliminating poverty on a liveable planet” — provided a neat acknowledgement that climate change and wider environmental sustainability must now be incorporated into everything it and the other multilateral development banks do.

But this was not enough for the African leaders present. Noting that the World Bank’s lending to the poorest countries will fall this year because much of it was “front-loaded” to deal with the crises of the last two, they called for an immediate increase in contributions from the developed nations. In pointed asides, several noted that when it came to Ukraine, the West has been able to find apparently unlimited sums of money for arms and aid without any budgetary constraints. Why not similarly for Africa?

In response, Yellen did promise new funds from the United States, and Banga said the World Bank would seek to squeeze more out of its balance sheet. But the kind of quantum leap in funding demanded by Africa will only come through a recapitalisation of the bank: that is, an injection of new equity by its major shareholders. The United States won’t commit to that now. But the word on the grapevine is that Biden is open to the idea if Banga can prove he can deliver reform.

And that in turn would open up another front: reform of the bank’s governance structure. Today, Western developed countries own just above 50 per cent of its shares, thereby maintaining control of an institution they have long regarded as theirs. But a new capital injection would also bring in more money from China and India, and thereby tip the balance of shareholding away from Western control. This is of course precisely what the global South would like to see, and equally precisely what makes the US most nervous. So we can expect some serious negotiation about this over the next year.

The second major agenda item was debt. The IMF estimates that around two-thirds of the lowest-income countries are now in “debt distress” or at risk of it, meaning that they are close to defaulting on the international loans they have received from richer countries, international institutions and private lenders. The rise in US interest rates over the last year has seen many of them spending over half of their government revenues on debt service payments, with devastating impacts on health and education budgets. It is clear that their debts need relieving, but talks with the most affected have failed to yield much progress over the last two years.

So it was welcome news that two of the most heavily indebted countries, Ghana and Zambia, had now reached agreement on debt restructuring packages. Separately, the Ivory Coast and France announced a “debt reduction and development contract” to convert a portion of the former’s debts into grants for poverty reduction and education.

At the same time, a number of countries and multilateral development banks announced that they would start using “natural disaster clauses” in their debt contracts. Pioneered by Grenada and Barbados, such clauses allow debt service payments to be suspended for two years when a borrowing country is hit by an extreme weather event such as a hurricane or major flooding, thereby releasing much-needed cash for clean-up and reconstruction efforts. With such events occurring ever more frequently, the widespread use of these clauses could prevent billions of dollars leaving vulnerable countries just when they most need the money.

Another initiative emerged during the summit when presidents Gustavo Petro of Colombia and William Ruto of Kenya proposed the establishment of an expert review of the relationship between debt, nature and climate. The two leaders expressed concern that debt repayments were forcing countries to destroy rainforests and other biodiverse habitats. The review will examine proposals such as “debt for nature” swaps, in which creditors cancel debt in return for verifiable conservation efforts, and debt linked specifically to the achievement of climate action plans.

The third main issue was climate finance. In preparing the summit, France had called for a number of taxes to be considered as new sources of funding. But in the pre-summit negotiations, taxes on aviation, fossil fuels and financial transactions were ruled out. This left just one new tax on the table, a proposed levy on carbon emissions from shipping. Countries agreed to ask the International Maritime Organization to examine how such a levy could work. To the disappointment of some, though, the text failed to mention the possibility that some of the revenues could be used to compensate countries for the climate-related loss and damage they are experiencing. With the last round of climate talks having agreed a fund for this purpose but no money, this idea is likely to gather increasing support over the next year.

Fourth, the summit discussed how more funds can be provided by the private sector. For many years the holy grail in this field has been the mobilisation of private capital for clean energy and environmental conservation. With government budgets highly constrained, this was felt to be the only way in which the dollars flowing to developing countries could rise “from billions to trillions.” But these sums have so far proved elusive: asset managers have perceived the risks as too high and the rewards too few.

So in Paris countries welcomed an idea developed by Barbados’s economic adviser, Avinash Persaud. Persaud proposed a special facility to insure foreign investors against the risk that the returns they make could fall if the local currency declines in value. He pointed out that such risk can often be the difference between a renewable energy or agricultural project in an emerging economy looking profitable or not; he estimates that his proposed scheme could release tens of billions of new investment.

These discussions proved the value of summits in which leaders don’t turn up mainly for show but actually engage with the substance. Negotiations on the final communiqué had, of course, been taking place behind the scenes for several weeks. But they continued long after the meeting was due to close, as developing country leaders insisted that the wording on the urgency and scale of the funds required should be strengthened, and developed ones sought to limit the commitments they were being pushed into making.

It was not till late on Friday that the French government issued the final documents. They included, in addition to a statement of principles and decisions, a detailed roadmap setting out how each of the policy proposals discussed could be taken forward over the next eighteen months, at future meetings such as September’s G20 Summit in India, the World Bank Annual Meetings in October and the climate COP28 in Dubai in November–December.

No one came away from Paris thinking the job was finished. By 2030 the world will need to invest around US$2.4 trillion every year in sustainable development, of which around US$1 trillion will have to come from international flows. The world is still well short of such figures. But there was also little doubt that the summit had given new momentum to these efforts. This was perhaps best symbolised by an announcement on the sidelines of the event that a new Just Energy Transition Partnership, or JET-P, had been agreed between a range of Western countries and the government of Senegal, led by president Macky Sall.

JET-Ps are the new hope for development and climate financing: national plans for clean energy and industrial development backed by new public and private investment, both domestic and international. Three JET-Ps were announced last year, in South Africa, Indonesia and Vietnam, all committing to phasing out the use of coal-fired power. In Senegal the plan involves — controversially — exploiting new gas reserves, but for the first time that will happen under an explicit commitment that these will subsequently need to be phased out again as the country aims for net-zero emissions.

In the long term this will be the real test of whether the summit was worth it. Can enough money be invested to give developing countries a new path to prosperity, one that doesn’t involve trashing their natural environments as the now-rich countries largely did at the same stage of development? Will financing partnerships like JET-Ps see emerging economies find a role supplying minerals and goods for the green industrial transitions that are now a central aim of economic policy in the United States, the European Union and China?

We shall discover the answers over the next decade. In the meantime attention will shift across the Atlantic. Under its new, outspoken president, Luiz Inácio Lula da Silva, Brazil will host next year’s G20 Summit, where the decisions made in Paris will be brought back for a progress report and new commitments. Fittingly, this will coincide with the eightieth anniversary of the Bretton Woods summit in 1944, when the present global financial system was designed.

That meeting set a high bar. The usual summit handshakes and photo opportunities make it easy to be cynical. But sometimes meetings like these do actually change the world. •

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Taking place in the airy World Conference Centre in the former West German capital, the official title of the conference is the fifty-eighth meeting of the Subsidiary Body for Scientific and Technological Advice, and the fifty-eighth meeting of the Subsidiary Body for Implementation, both of them subsets of the better-known UN Framework Convention on Climate Change, or UNFCCC. The delegates’ task is to take forward the agreements made at the twenty-seventh meeting of the Conference of the Parties, COP27, which took place in Sharm el-Sheikh, Egypt in November last year, and prepare the 28th meeting, scheduled for Dubai in the United Arab Emirates this coming December.

If all this sound complicated, that’s not the half of it. The conference agenda sets out the many different negotiating tracks that previous COPs have set in train. It is a bewildering array of numbers, concepts, processes and former host cities.

Along with the second Glasgow Dialogue on Loss and Damage, there’s a meeting on matters relating to the Santiago Network under the Warsaw International Mechanism, also covering loss and damage; the seventh meeting of the Paris Committee on Capacity Building; the eighth meeting of the Katowice Committee on Impacts; a workshop under the Glasgow–Sharm el-Sheikh Work Programme on the Global Goal on Adaptation; not to mention a meeting on the as-yet-unlocated “rules, modalities and procedures for the mechanism established by Article 6, paragraph 4, of the Paris Agreement and referred to in decision 3/CMA.3.”

It is easy to be cynical, of course. But the negotiating agenda is not simply a make-work scheme for government officials. It reflects the reality that tackling climate change is a complex and multifaceted task involving not just every country in the world but also many different kinds of policy.

Debate in developed countries focuses mainly on climate “mitigation” — how to reduce greenhouse gas emissions by decarbonising energy, transport, industry and agriculture. But the primary issues are different for poorer countries experiencing devastating floods, droughts and hurricanes, and changes to food production and water availability from rising temperatures. They are more interested in how to adapt to the changing climate and whether they will be compensated for the loss and damage they suffer — with both issues requiring the rich world to make good on its promise of financial and technical assistance. A complicated negotiating agenda is a small price to pay if it leads to any of that support being delivered.

Yet the question remains whether it will be. Although the Bonn conference continues the official UN process, it is in many ways not even the most important climate negotiation at the moment. Just two weeks ago the richest countries, meeting at the G7 summit in Japan, declared that this year they would finally reach the US$100 billion in annual climate financing they first promised at COP15 in Copenhagen fourteen years ago. And in two weeks’ time French president Emmanuel Macron will host an even more significant summit in Paris.

Macron’s aim is to establish a new financial pact between the global North and South to guarantee finance for environmentally sustainable and climate-compatible development. In Bonn, government officials are discussing processes and modalities intended to govern finance and other forms of assistance to countries in the global South. But in Paris, heads of government will be agreeing on actual money for renewable energy, adaptation and disaster prevention, potentially in the hundreds of billions of dollars, via bilateral aid, World Bank lending and private sector finance. You could be forgiven for thinking that the official UN talks are a bit of a sideshow.

Not that controversy will be absent in Bonn. The fact that this year’s COP will be held in a Gulf oil state is the main focus for climate activists. With the UAE having helped water down COP27’s position on the phasing out of fossil fuels, the appointment of the chief executive of the Abu Dhabi National Oil Company as president of COP28 looked to many like a deliberate provocation. Sultan Al Jaber is in fact an experienced climate negotiator who, as former head of UAE’s investment fund Masdar, developed the country’s extensive global portfolio in renewable energy. But it was inevitable that his appointment to chair the UN climate talks would attract criticism.

Pointing out that Al Jaber’s company is hugely expanding its oil and gas production, the campaigning group Oil Change International has described his appointment as “a truly breathtaking conflict of interest… tantamount to putting the head of a tobacco company in charge of negotiating an anti-smoking treaty.” More than 130 members of the US Congress and European Parliament have signed an open letter calling on him to be removed as COP28 president. His presence, they said, reflected the “undue influence” of fossil fuel companies over UN climate talks and “risks undermining the negotiations.” The fact that a UAE official was recently found to have edited Al Jaber’s Wikipedia page to remove such criticisms has only added fuel to the fire.

Al Jaber himself will brush off the controversy: as a close ally of the ruling family his position isn’t in jeopardy. But other countries will hope the furore embarrasses the UAE sufficiently to provoke some compensating action. The country has been making huge windfall profits from higher global energy prices in the past two years. What better way to demonstrate its commitment to the climate than by providing a few tens of billions of dollars in financing for the most vulnerable countries?

Elsewhere there is talk about reforming COPs themselves — not least in the United Nations, where the gulf between the linguistic complexity of the negotiating agenda and the practical requirements of dealing with climate change has not gone unnoticed. In quiet meetings behind the scenes this year the organisation has been canvassing views on how to bridge the gap.

It is not as if the rest of the world is absent from UN climate meetings. On the contrary: nearly 50,000 people are estimated to have attended COP27 last year, most of them representatives of businesses, investors, international organisations, NGOs and research institutes. These people come to the annual COPs to participate in a global climate conference and expo, with literally thousands of events and meetings alongside the formal negotiations.

Most of these attendees are focused on how to make progress in the real world: the new technologies being developed to cut emissions, the policies required to incentivise them, the financing available for investment, the research and data needed to monitor both the climate and climate actions, and the political campaigning to pressure corporations and politicians.

It’s in these spheres and among these kinds of players that climate action is really occurring, not in UN negotiations. The Paris Climate Agreement has been signed, and its detailed rulebook completed. Important issues are still to be resolved, not least on finance. But observers generally acknowledge that the focus of attention at COPs should really be on the real-world action, not the talks.

Up to a point, the UN already recognises this. Alongside the negotiations it convenes a wide range of partnerships between companies, countries, cities and researchers to develop and disseminate climate solutions. These cover technologies, business models and policies in a range of nine fields from energy to oceans, transport to land restoration. The question being posed for COP28 is whether this so-called Marrakech Partnership for Global Climate Action could move closer to centrestage.

Could a parallel conference be organised, alongside the negotiations, to present and discuss climate progress in the real world? Might this provide a forum where some of the major industries, companies and financial institutions that have made ambitious-sounding climate commitments over recent years — commitments critics often describe as little more than “greenwashing” — are called to account? As several observers have noted, this would be particularly appropriate for COP28, which will feature a “global stocktake” of action and inaction over the past eight years.

Typically, the question of whether COPs could be made more relevant to the real world won’t be on the negotiating agenda in Bonn over the next two weeks. But as ever in these thirty-year-old talks, it is as much what goes on in the corridors and during the time-outs that matters. There are six months still to go before the world reassembles in Dubai. It’s still possible that when it does so, it will find itself at a somewhat more useful gathering. •

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Admittedly, he would barely have had to open his mouth to be seen as an improvement on his predecessor, Trump appointee David Malpass. Never popular, Malpass made something of an ass of himself last September when he appeared to deny the existence of global warming. He lasted just five more months before resigning, a year before the end of his term.

The system under which the United States appoints the president of the World Bank while Europe gets to choose the president of the International Monetary Fund is routinely denounced by developing countries. It is a postcolonial carve-up without justification in the modern age, except for the fact that the United States and European countries are the two organisations’ largest shareholders.

Banga’s positive reception can be put down to two factors: he is a genuine financier with a solid strategic and managerial record at Mastercard, and he grew up in India, where he is still regarded as one of their own. He spoke last week at a number of public and private events on the fringe of the spring meetings of the bank and the IMF. His audiences included finance ministers from well over a hundred countries, along with businesspeople, academics and representatives of NGOs, philanthropists and the financial media.

To wander among the packed fringe meetings in Washington, as I did, was to be given an education in global development policy, with topics ranging from renewable energy to emerging market currency risk, humanitarian assistance to climate-resilient agriculture, low-income country indebtedness to girls’ education. In these fields and others, the World Bank spends around US$100 billion annually via a combination of commercial loans to middle-income countries, low-interest loans to poorer countries, and grants.

The bank is the largest in the network of “multinational development banks,” or MDBs, that lends resources from developed to developing nations: the others include the Inter-American Development Bank, the African Development Bank, the Asian Development Bank and the much more recently established Asian Infrastructure Investment Bank, in which China is the major shareholder.

Banga is arriving just as reform of this system is in the air. Last year US Treasury secretary Janet Yellen called on the bank to prepare a “roadmap” for change, with the aim of clarifying its mission and streamlining its procedures. As a draft of the roadmap was published in advance of the spring meetings, other voices sought to widen the agenda further. On a state visit to China, French president Emmanuel Macron called for a “new global financial pact” to revise “the financial terms of international solidarity, whether it concerns debt issue or mobilisation of the World Bank and IMF, to address both inequalities and the consequences of climate change.” He confirmed that Paris would host a summit in June to pursue these issues.

Three principal problems underlie calls for reform of the World Bank and MDB system. The first relates to changing conditions since the institutions were designed in the decades after the end of the second world war to help the developing world out of poverty. This remains their core mission, but in recent years new challenges have become increasingly pressing.

As resource depletion and habitat destruction gathered pace, the banks were forced to redefine themselves as champions not merely of economic growth but of “green growth.” As continuing income and gender inequalities disfigured many countries’ development records, “inclusive growth” became the mantra. Now, accelerating climate change not only threatens to overwhelm past growth but also demands a new form of development altogether, one that is both resilient to rising temperatures, and decarbonised.

It was Malpass’s inability to grasp these challenges that eventually did for him. But the necessary reorientation of the World Bank won’t be straightforward. The poorest countries know how damaging climate change is for them, but they warn that a greater focus on tackling carbon emissions will inevitably reduce funding for education, health and other traditional anti-poverty measures. Backed by India and China, they insist that any broadening of the bank’s remit must be accompanied by an expansion of its lending resources. Developed countries, however, are not minded to provide new funds — at least until they can see reform under way.

Second, the World Bank’s operating procedures have been widely criticised. Determined to protect the triple-A credit rating that allows it to borrow at the same interest rates as Western governments, the bank follows highly risk-averse lending policies. In many countries it competes with private banks to lend to commercially safe projects, leading commentators to question its added value. In an early reform agreed to in Washington, the bank will now be able to lend out more funds relative to its shareholder capital. But this will yield only an extra US$4 billion annually.

Meanwhile the bank’s own operating procedures are notoriously slow and cumbersome. Forced by its developed-country shareholders and NGOs to apply stringent environmental and human rights safeguards, and still using paper-based processes, the bank can often take two years to reach a decision on a lending application. As one African leader observed at a fringe event, “If I want a new road, I can be driving on the one that China builds us before the bank has put it to their committee.”

Third, the MDBs are being urged to mobilise far more private-sector lending. In a world in which developing countries need to invest an estimated US$2.4 trillion annually in green infrastructure, sustainable agriculture, nature conservation and climate resilience, the funds at the banks’ own disposal are not nearly sufficient. But getting the private sector to invest at scale in emerging markets other than China has proved difficult.

Even in stable economies like India, the interest rate charged on borrowings is twice as high as in a rich-world country; in Africa it can often be a multiple of three. New, more innovative approaches are thus being urged on the banks, involving greater use of risk-sharing instruments such as government guarantees and insurance mechanisms to protect against exchange rate fluctuations.

Can the World Bank and its sister institutions respond to these demands? The latest version of the bank’s reform roadmap was widely criticised in Washington as too limited and incremental. But blame-shifting was also rife: country shareholders pin the weak draft on unimaginative management; the latter say privately that it is the shareholders who have watered down their much bolder initial proposals.

Ajay Banga thus faces both great expectations and tough challenges. He has been clear about his own priorities. Integrating climate change into everything the bank does will be one of them; mobilising private sector cash another. And he warns he will be forthright whenever the real problem is not the bank’s bureaucracy but the unwillingness of its country shareholders to agree to something new.

The elephant in the room is the make-up of the shareholders themselves. As in any bank, voting rights reflect equity. Since the last set of reforms in 2010, China has been the third-largest shareholder in the bank’s main arm, after the United States and Japan. With other emerging and developing economies it now has 47 per cent of total shares. If, as seems likely, the bank receives another injection of capital next year consequent on reform and an expansion in its remit, that figure could rise to more than 50 per cent. But the United States and its Western allies will be loath to allow China the possibility of amassing a majority voting coalition.

In this context June’s Paris Summit promises to be pivotal. Working closely with Barbados prime minister Mia Mottley, originator of the ambitious “Bridgetown Initiative” for global financial reform, and Indian prime minister Narendra Modi, chair of this year’s G20, Macron has set out an ambitious agenda for world leaders.

Focused on expanding global financial flows for development, climate and environmental protection, the summit will make World Bank and MDB reform one of several priorities. Others will be a review of the system under which developing countries fall into, and might escape, unsustainable debt; new funding streams for climate “loss and damage,” such as an international levy on carbon emissions from shipping; and the reallocation of Special Drawing Rights, the reserve currency issued by the International Monetary Fund, to poverty-reduction programs. If the “3M” leaders — Macron, Modi and Mottley — succeed, each of these issues will be taken forward to detailed decisions next year.

For his part, Ajay Banga has made clear that he is up for the idea of a “new global financial pact” along these lines. He may be their nominee, but the question is whether the United States and its Western allies are up for it too. •

The post Banking on Banga  appeared first on Inside Story.

After ten days of talks between officials end in deadlock, pairs of ministers (one from a developed country, the other from a developing one) are charged with seeking out compromises on the major issues. After two more days, still largely deadlocked, the ministers hand over to the host country’s COP president — this year, Egypt’s foreign minister Sameh Shoukry — to try to produce a compromise text. The president initially develops what are essentially shopping lists of options that define the differences between different countries’ positions but do little to resolve them.

By now it is Friday morning, and the conference is due to end at 6pm. The negotiations fall silent as the president takes further “soundings.” The exhibition halls and food stations are dismantled; anyone who isn’t a country delegate, UN staffer, journalist or NGO analyst leaves for home, their COP done. Six o’clock comes and goes. A new text is shown to the heads of delegation at 3am on Saturday morning, but there are no printed versions and phones are confiscated so they can’t take photos. The president again retreats to his cell, inviting individual ministers in for more hours of bilateral contemplation.

Finally, at 1pm on Saturday, a new compromise text is published. The major negotiating groups go into separate meetings to discuss how much they dislike it. The compromise is “unbalanced,” each of them says, leaning too far towards the other side. The groups take a long time to work through the various documents, not least because many countries are members of more than one group. (China, for example, is part of the “G77 and China,” which includes all the countries deemed “developing” when the UN Framework Convention on Climate Change was signed in 1992, but also part of a much more tightly knit and hardline “Like-Minded Group” with India, Saudi Arabia and Malaysia.)

Teams of NGO analysts pore over the documents, examining what has shifted and what has not, and issue briefings to grateful journalists on-site and geeky campaigners back home. As the concluding plenary is postponed multiple times amid further consultations, and the meeting climbs up the league table of “longest-ever COPs,” bets are taken on when it will end.

By Saturday evening most COPs have at last finished, with a compromise agreement no one likes but everyone is too exhausted to oppose. The process is masochistic because it’s the delegates themselves prolonging their own irritable sleeplessness. It’s sado- because the only other people left are sad individuals who still care. Your correspondent included.

COP27 seemed determined to inflict even more pain than normal. By Saturday midnight, leaks revealed that Saudi Arabia had introduced new text not just watering down but reversing the opposition to fossil fuels. Britain’s head of delegation, Alok Sharma (president of last year’s COP26 in Glasgow), was spitting, while the venerable US deputy head Sue Biniaz — John Kerry by this time confined to his hotel with Covid — was seen talking at length on two phones. Presumably one was to Kerry; was the other the White House?

It’s now 2am and journalists and NGO staffers are sprawled out on chairs asleep. The Egyptian presidency announces there will be a plenary between 3am and 6am. It actually starts at 4am. When it does, it seems that final texts have at last been agreed. Shoukry takes no chances. Post-last-minute amendments have been made at this stage in the past (in fact, last year). He names the key document. “Seeing no objections,” he says, not looking up to the hall in case he sees any, “it is so decided,” and bangs his gavel down. Further pauses ensue, more documents are approved, but at around 6am on Sunday morning the texts have been concluded.

Not that it’s actually finished at this point. A further three hours of speeches come from the floor, as countries and negotiating groups explain their grudging welcome for some aspects of the text and their deep disappointment at others. It’s not till past 9am, fourteen days after the conference opened and nearly forty hours after it was due to close, that we can say that another COP is over.

Was it worth it? In the end, just two significant decisions caused all the conflict. The first was “loss and damage,” UNFCC-speak for the economic and human costs faced by developing countries as a result of the greenhouse gas emissions of developed ones over the past two centuries.

Loss and damage was recognised as a concept in the Paris climate agreement, but with a huge caveat: the developed countries secured an explicit exemption from legal liability for the multibillion-dollar impact of a warming world.

For the same reason the developed countries have held out against any kind of financing mechanism for loss and damage, which would require both more aid money and the tacit acceptance of moral responsibility. For the last six years, as developing countries’ demands for a loss and damage “finance facility” surged ever more strongly, the developed countries held them off with a variety of designed-to-be-useless discussion forums.

But this year the dam broke. After John Kerry had spent the first ten days insisting that the United States could not and would not support a financing facility or a fund, with the European Union equally adamant, each produced a new draft on the final Friday accepting just that. It was surprisingly poor diplomacy on their part: if they actually were prepared to concede this (and most observers thought they would have to), they would have gained much more credit by doing so early in the conference.

Crucially, this would also have given them a much better chance of winning their primary condition of support, namely that China could no longer hide behind its historical “developing country” status and would have to contribute to the funding pool as well. By leaving it so late to concede the creation of a loss and damage fund, the United States and the European Union wasted the opportunity to put public pressure on China, and the final wording included merely a vague reference to “other sources” of financing beyond the developed nations.

Nor was any actual money promised for the fund. Before that happens, further consultation on what precisely the fund can be used for, which countries will be eligible, and how it will be governed will proceed for at least a year. Nevertheless, this was a historic moment for climate-vulnerable countries, whose delegates were exhausted but jubilant at the end.

Ultimately, though, the more contentious final issue was fossil fuels. Last year, for the first time, the COP addressed not just greenhouse gas emissions in the abstract, but also their direct causes in the combustion of fossil fuels. A scientifically self-evident but nevertheless unprecedented bit of text was agreed noting that holding warming to the 1.5°C temperature limit would require the “phasing down” of coal use. (China and India baulked at the last at the aim of “phasing out.”)

In Sharm el-Sheikh the vulnerable countries’ and NGOs’ goal was an agreement that such phasing down should apply to all fossil fuels (that is, also oil and gas) and not just coal. Their cause was surprisingly taken up by India, keen to deflect attention from its still-abundant coal use.

But Saudi Arabia and next year’s COP hosts, the United Arab Emirates, were not having that. No doubt with a little gentle pressure on their import-dependent neighbour Egypt, they instead redefined “clean energy” to include “low-emission” fuels as well as renewables. By “low emission” they mean gas, a much lower-emitting fuel than oil, but not in the slightest a near-zero one in the manner of hydro, wind, solar, tidal, geothermal or nuclear. To the anger of many, the Gulf states’ language made it into the final agreed text.

The significance of these textual niceties is often overplayed. Nothing in general COP decision text is legally binding, and no petro-state will change its behaviour as a result of it. Last year’s bitter endgame argument over whether coal should be “phased out” or merely “phased down” was a case in point: without a date for phasing out, the two phrases in practice mean the same.

Yet the Sharm el-Sheikh language approving “low-emission fuels” as part of emissions reduction plans is a serious blow to the climate action cause. It will be used to justify the expansion of gas production and consumption everywhere this is government policy, giving the apparent seal of approval of the UN climate regime. The climate-vulnerable countries and NGOs were aghast; it was this issue that took the talks into the small hours on Sunday morning.

It won’t only be the Gulf states, however, who are pleased. One of the most insistent arguments running through COP27 pitched a range of African countries against the European Union and NGOs over the financing of gas. Africa has a lot of unexploited gas resources, and the countries under whose territory they lie are understandably keen to exploit them. Yet it is also true that keeping within the 1.5°C goal will require, as the International Energy Agency has pointed out, the cessation of all new oil and gas (as well as coal) production anywhere in the world.

The European Union and NGOs insist that Africa could supply all its energy needs through solar, wind, geothermal and other renewable resources. But that’s not the issue. The value of gas is in the foreign exchange it earns — a major source of the hard currency dollars to which few African countries have much access. They are simply not going to pass the opportunity up — and particularly not at the behest of a hypocritical Europe that built its own wealth on fossil fuels and is currently scouring the world for new gas contracts to make up for lost Russian supply.

In fact, the issue of African gas heralds the emergence of a new era in climate policymaking. It’s a focus on the so-called “just transition”: the principle that decarbonisation strategies must be aimed not just at cutting emissions but also at providing alternative sources of jobs and livelihoods in the process.

As countries get serious about tackling climate change, moving from generalised target-setting to specific economic policymaking, this imperative is coming to the fore. African countries desperate to reduce poverty and develop into middle-income economies won’t allow decarbonisation to stop them. And nations already dependent on homegrown fossil fuels will only be willing to reduce their dependence if they can see a viable alternative source, not just of domestic energy, but also of employment and foreign exchange earnings.

The argument over fossil fuels in the final text was symbolic, but in this context it was not nearly the most important development at COP27. That came in two separate announcements that were not part of the formal conference but merely part of its fringe; and indeed one of which was not made in Egypt at all.

During the first week of COP27 the government of South Africa announced a new US$8.5 billion “Just Energy Transition Partnership,” or JET-P, with the United States, the European Union, France, Germany and Britain. It aims to transform South Africa’s energy and industrial landscape by reducing its dependence on coal, increasing its renewable supply, upgrading its electricity grid, and developing its car manufacturing sector to become a domestic and global supplier of electric vehicles.

For a country that employs 92,000 coalminers, and whose giant, sclerotic state-owned energy company, Eskom, is unable to prevent regular blackouts across the country, this is a hugely ambitious program. The loans and loan guarantees from the donor countries will barely begin to cover the scale of the investment needed, but it is hoped they will leverage in orders of magnitude more from the private sector.

Even more importantly, the political challenges will be enormous. In a country already experiencing social unrest as a result of the rising cost of living and persistently high levels of unemployment, laying off coalminers could be a recipe for trouble. The coalmining union is one of the bastions of political support for the country’s ruling African National Congress. During the year-long consultation process the government undertook to prepare the partnership plan, it was clear that many sections of the public remain to be convinced that reducing coal consumption is in the country’s interest, or will make their own lives better.

The same challenge also faces the government of Indonesia, which, a week after South Africa, announced its own Just Energy Transition Partnership with the United States, Japan and others. This time the package of loans and guarantees was worth US$20 billion. The announcement was made not in Sharm el-Sheikh but in Bali, where Indonesia was hosting the annual G20 summit. But it had the same COP27 resonance: another huge coal-producing nation choosing ultimately to leave the coal in the ground and pledge its long-term future to renewable and geothermal energy. The partnership plan envisages Indonesia embarking on an industrial strategy designed to exploit the country’s world-leading nickel and tin mining to create battery factories and other high-technology plant.

If the world is to succeed in cutting greenhouse emissions at the same time as enabling developing countries to grow and to modernise, these JET-Ps, or something like them, are surely the form it will take. Vietnam is currently in talks with the Western powers to do the next deal, and India is making interested noises as well. It has not escaped anyone’s notice that such partnerships are potentially a means by which the West can offer developing countries financial assistance — and political influence — to rival those of China’s huge Belt and Road Initiative.

More widely, the principle of the “just transition” is likely to be the basis for much climate policy over the coming years. It already informs Joe Biden’s Inflation Reduction Act, whose trillion-dollar subsidies for green energy and industrial production are conditional on components being sourced from US manufacturers (or those within the North American Free Trade Association, namely Canada and Mexico), a fact which has led the European Union to threaten to take the United States to the World Trade Organization for breaching trade rules.

This is essentially a form of green protectionism — but it is also surely the inevitable political consequence of serious decarbonisation. Moves away from fossil fuels and energy-intensive industry will only be supported by the workers and communities affected if alternative jobs and livelihoods are on offer. Imposing domestic supply chains may not be economically efficient according to neoclassical free-trade theory, but in the eyes of any politician it makes perfect political sense.

Although these issues were animatedly discussed in COP27 fringe meetings — there was an entire pavilion devoted to Just Transition policy, sponsored by the International Labour Organization — very few measures or proposals entered the decision text. But they almost certainly will in due course.

COP27 has demonstrated the notable shift that has occurred since the 2015 Paris agreement. Before then, COPs came first, setting out principles and mandating national action, which countries subsequently followed. Today the order has been reversed. Countries are designing and implementing policies for mitigation, adaptation, and loss and damage. If a few years later they get mentioned in COP texts as important examples to follow, that is just a bonus.

This is indeed how it should be. The Paris climate agreement sets out the principles and legally binding rules of climate action, with more detailed regulation negotiated at subsequent COPs. But now the international rules are in place, the focus of debate must inevitably shift to the national political arena, where policy is made and politics rule. Given how tortuous they have become, that COPs have less and less for their negotiators to do is a boon to them as well as to the watching world. •

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It takes twenty-five minutes in an overpriced taxi, and longer in a free shuttle bus, to get from either end of the coastal strip to the UN COP27 venue, which has been specially constructed in temporary buildings around the international convention centre. When the conference palls, the bright lights, loud music and traditional Egyptian belly dancers of the Naama Bay strip inevitably have their appeal. “It’s like Las Vegas,” one delegate said, “only not as highbrow.”

Nevertheless, this is where COP27 is taking place, and it’s the scene of plenty of serious negotiation and debate. The Leaders’ Summit in the first two days was notable mainly for the traffic jams caused by presidential convoys and tight security. Although the speeches didn’t generally rise very far to the occasion, they served their allotted purpose: forcing heads of government to declare in front of their domestic TV audiences that climate change is an urgent priority and they are committed to stronger action to combat it.

The two most eagerly awaited speeches were not actually scheduled for the summit itself. Fresh from his unexpected triumph in the US midterm elections, Joe Biden arrived in the largest convoy of all a couple of days after the other leaders had left. In his usual inimitable monotone, he declared that the American Inflation Reduction Act — his administration’s unprecedented package of climate change measures, which finally got through Congress in August — would enable the United States to meet its 2030 emissions targets, driven by investment in new technologies and American enterprise.

The president also declared the United States would provide more help to developing nations to combat a climate crisis that concerned “human security, economic security, environmental security, national security and the very life of the planet.” Climate wonks poring over the text could find little new support that had not already been announced, but the general uplift from Biden’s presence was evident. A grateful audience gave him a standing ovation, not something hard-bitten COP delegates are wont to do.

The other eagerly awaited leader has only just arrived. President Luiz Inácio Lula da Silva of Brazil, fresh from his even more momentous election victory, will make his speech today, and his ovation will be even longer. Under the far-right, Trump-imitating Jair Bolsonaro, Brazil has gone from climate leader to renegade destroyer of the Amazon, and the relief among the climate community to have Lula back in power is palpable.

Without control of Brazil’s Congress, the returning president may struggle to pass the environmental legislation he wants, but he will beef up security protection for forest lands and indigenous peoples, and commit to “net zero deforestation” in the future. He has already made clear that he will be a regional and global champion for climate action, and in a geopolitical world riven by tension between the big Northern hemisphere states — the United States, China, the European Union, Russia and India — there are high hopes for his Southern leadership.

If the big countries inevitably take up the largest space in UN climate conferences — commensurate with their outsized emissions pouring into the atmosphere — there is nevertheless always room at COPs for the small nations to make a mark. It is one of the more remarkable features of the thirty-year-old UN climate regime that decisions have to be reached by consensus, which gives otherwise internationally invisible and powerless countries a crucial role. Coupled with the fact that the poorest countries most vulnerable to climate change — the small islands of the Pacific and Caribbean, low-lying nations such as Bangladesh and glacier-melting ones like Nepal — are the evident victims of a climate crisis they didn’t cause, this creates a rather remarkable dynamic.

At the Paris COP in 2015, it was the tiny Marshall Islands that led the High Ambition Coalition with the European Union and the United States that drove the final treaty negotiations to an unexpectedly radical conclusion. And in Sharm el-Sheikh it is Vanuatu and Tuvalu that have made the early headlines. They have been reiterating their request for an International Court of Justice ruling on the legal liability of rich countries and companies for the historical emissions that threaten their island existence. The two countries have demanded that the world agree a “Fossil Fuel Non-Proliferation Treaty” to manage the global phase-out of coal, oil and gas.

The most powerful speech at the Leaders’ Summit also came from a small island. The prime minister of Barbados, Mia Mottley, was the standout speaker at last year’s COP26, and retained her top spot in the unofficial charts with another remarkable and insightful contribution here.

Mottley’s rhetoric transfixed the hall. “We have the collective capacity to transform,” she told the heads of government sitting in the rows of seats in front of her. “We’re in the country that built pyramids. We know what it is to remove slavery from our civilisation… to find a vaccine within two years when a pandemic hits us… to put a man on the moon. And now we’re putting a rover on Mars. We know what it is. But the simple political will that is necessary, not just to come here and make promises, but to deliver on them and to make a definable difference in the lives of the people whom we have a responsibility to serve — this seems to be still not capable of being produced.”

Mottley’s core argument was that the international financial system isn’t working for poor and middle-income countries, like Barbados, that want to move to net zero emissions and cope with the devastating climate change they are already experiencing. They cannot access the finance or the technology to do so. She laid the blame squarely on the World Bank, the IMF and their developed country shareholders. “This world,” she said, “looks still too much like it did when it was part of an imperialistic empire.”

Mottley is not, however, content with rhetoric. Over the last few months she has been promoting a new plan for financial reform dubbed the Bridgetown Initiative after the Barbados capital in which it was hatched with her adviser, economist and former investment banker Avinash Persaud. And it has been getting increasing traction at COP27.

At the core of the plan are three innovative reforms that between them could galvanise more than US$1 trillion of new finance for climate-compatible development, including emergency help to countries hit by extreme weather events, and low-cost lending for emissions reduction investments.

The first is to get the World Bank, along with the other multilateral development banks, or MDBs, in Africa, Latin America and Asia, to use their capital base more expansively. These banks are all funded by the richer countries to provide concessional lending to developing ones. But the World Bank in particular has become deeply risk-averse. Highly protective of the triple-A rated status of its bonds, it has refused to use its healthy balance sheet to increase its lending capacity.

A recent expert report commissioned by the G20 group of nations found that between them the MDBs could lend an extra US$500 billion or more if they slightly relaxed their risk appetite and capital accounting procedures and better utilised government guarantees.

Second, Barbados has been pioneering “disaster clauses” in its debt contracts. These are stipulations that if a country borrowing money from private or public creditors experiences a predefined extreme weather event, all its debt repayments will be postponed for two or more years. Given how much many developing countries are forking out in debt repayments, such clauses immediately release millions of dollars of liquid funds for disaster relief and reconstruction and public service budgets. The creditors get repaid on a later schedule, but with the interest they have lost made up, removing any financial loss. Barbados is proposing that such clauses should become standard practice in all sovereign debt contracts.

Third, Mottley has called for a new issuance of Special Drawing Rights, or SDRs, the reserve currency the IMF is empowered to release to support the global financial system. She proposes that these SDRs be put into a trust fund that can then back new lending for emissions reduction investments such as renewable energy, methane control and forest and land management. For most developing countries, the cost of capital is simply too high to enable them to borrow for such priorities.

Where developed countries with strong currencies can borrow on international markets at 3 to 5 per cent, most developing countries — including relatively stable, growing ones such as India and South Africa — face interest costs at least three times higher. Barbados proposes that the new fund should auction its lending capacity to the projects, wherever they are located, that can achieve the highest and fastest emissions reductions.

These reform ideas are not the only ones circulating at COP27. The V20 group of climate-vulnerable nations has produced its own suggestions for new financing mechanisms, and innovative ideas are being produced by academics and civil society organisations, including a plan for the cancellation of developing country debt in return for commitments to verifiable climate action plans.

Mottley used her short stay in Sharm el-Sheikh to discuss her ideas with other leaders. French president Emmanuel Macron duly called for an expert group to look at the Bridgetown Initiative and other proposals and make rapid recommendations on their implementation to the international financial institutions and their shareholder nations next year.

And in the negotiating sessions that have followed, ministers from other countries have gone further. Several have called for a review, not just of individual funding mechanisms, but of the entire international financial system. Many countries are today experiencing once again the problem of the dominance of the US dollar. As American interest rates rise, their own currencies are depreciating, making imported energy, food and manufactured goods more expensive and raising the cost of dollar-denominated borrowing. Another global debt crisis looms, with more than forty countries in or at risk of debt distress, according to the IMF. When the United States catches a cold, one delegate noted, the rest of us get flu.

So an even bigger agenda is beginning to make its way into COP speeches and debates. The present international financial system and its institutions were designed in 1944, in a very different economic and political world. Nearly eighty years on, they could do with a refresh.

No one is yet claiming Sharm el-Sheikh will one day be as famous a venue for international financial reform as Bretton Woods. But the seeds are being planted. •

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Yes, it’s COP time again: that annual attempt by journalists to persuade their editors that this year’s UN climate conference is genuinely important and they really should give it some coverage.

Is COP27 genuinely important? At first sight it’s hard to make the case. Up to and including the twenty-first of these conferences, in Paris in 2015, COPs really were important. The international community was desperately trying to reach a new international agreement to succeed the 1997 Kyoto Protocol, and every year the torturous negotiations produced another faltering step forward. Paris itself produced a historic treaty: the first genuinely comprehensive global climate agreement, with a built-in mechanism for strengthening itself every five years.

But once we had the Paris agreement, what was there to negotiate about? There was a geeky answer: Paris was a high-level accord and many detailed implementation rules still needed to be worked out. COPs 22 (Marrakech), 23 (Bonn), 24 (Katowice) and 25 (intended for Santiago but actually in Madrid because of some local political difficulties) duly worked on these specifics, with few people outside the climate world taking much notice.

COP26, scheduled for Glasgow in 2020 but postponed for a year because of Covid, was the five-year moment when the emissions targets set in Paris had to be strengthened. The Intergovernmental Panel on Climate Change had reported in 2018 that global emissions must be more or less halved by 2030 if the goal of limiting warming to 1.5°C above pre-industrial levels was to be met. Greta Thunberg was leading an increasingly vocal movement of younger climate activists; publics were beginning to mobilise again. Countries would be under the spotlight to respond.

But the conference ran into a huge problem. Yes, many governments brought new emissions reduction commitments (“nationally determined contributions,” or NDCs) to the table, some of them quite ambitious. And many pledged themselves to net zero emissions by 2050 or a decade or two later. But when all these promises were added up, they still fell well short of the cuts scientists said were necessary to meet the 1.5°C goal.

COP26 came up with pretty much the only option it could to “keep 1.5°C alive” and rescue the conference from failure: countries admitted they were not doing enough and promised to come back in a year’s time with stronger, 1.5°C-compatible commitments.

And so COP27 was dragged from post-Paris obscurity and turned into the next critical climate moment. Will those world leaders use their six minutes to announce new targets sufficient to close the “emissions gap”?

Unfortunately we know the answer, and it’s No. Only one major economy has said that it will table a new and stronger NDC — Australia, which for a short time finds itself in the unusual position of being a global climate leader. But the other 195 signatories to the Paris agreement have offered little or no change.

As a result, the emissions gap is barely narrower than it was a year ago. In its latest annual report the UN Environment Programme calculates that current policies offer a two-thirds chance of limiting the global temperature increase to 2.8°C above pre-industrial times. Cuts pledged by governments would reduce this only to 2.6°C.

To limit global warming to 1.5°C, emissions must fall by 45 per cent more than is envisaged under current policies by 2030; for 2°C, a 30 per cent cut is needed. Launching the report, UNEP executive director Inger Andersen warned that “we had our chance to make incremental changes, but that time is over. Only a root-and-branch transformation of our economies and societies can save us from accelerating climate disaster.”

It is hardly surprising, of course, that so little progress has been made over the past year. It’s not been a propitious time to think about emissions reduction plans. In a world still recovering from the Covid pandemic, the Russian invasion of Ukraine has triggered huge global energy price increases, food shortages, generalised inflation and a cost-of-living crisis, not to mention the threat of nuclear war. China and the United States are adopting increasingly belligerent stances towards one another. With the US dollar rising as the Federal Reserve hikes interest rates, many developing countries are seeing trade and growth slow and are falling back into unsustainable indebtedness.

In the meantime, severe climate impacts have become more frequent. After record-breaking heat waves baked India and Pakistan in the summer, monsoon flooding left a third of Pakistan under water, affecting an estimated thirty-three million people and killing more than 1500. As glaciers melted in the Himalayas, extreme heat in Europe led to wildfires. In France, low river levels meant insufficient water to cool nuclear power stations, which had to be shut down, while German barges had difficulty finding enough water to navigate the Rhine.

In the United States, Colorado River reservoirs hit record lows and major flooding occurred elsewhere, from Death Valley to eastern Kentucky. In China, an eight-week heat wave and drought dried up parts of the Yangtze River to the lowest level since the mid nineteenth century — until parts of the same area were inundated with flooding rains in August.

The need for action could hardly be clearer. But if COP27 won’t see any new commitments to cutting emissions, is it even worth holding? Could not the greenhouse gases from all those leaders’ and delegates’ flights at least have been saved?

There are two grounds for saying that, despite all this, COP27 will be a worthwhile event. The first is that climate change is not all about cutting emissions, or “mitigation” as climate negotiators call it. This aspect of the subject dominates the debate in most developed countries because they are responsible for most of the world’s historical and present emissions, and are now more or less all embarked on a difficult process of decarbonisation.

Elsewhere, though, reducing emissions is not the big national issue. Most developing countries produce very few greenhouse gases: their economies are just not large or rich enough. What they are desperately trying to do is cope with the climate change they are already experiencing, and what they want is for the developed world finally to provide them with the financial assistance they have been promised for thirty years to support climate-resilient development.

It is these issues, not mitigation, that will dominate debate at COP27. The agenda has three parts.

The first is adaptation, climate-speak for the things countries have to do to adjust to a warming world: building flood defences, planting drought-resistant seed varieties, and so on. The Paris Agreement decided that there should be a “global goal on adaptation” in the same way that there is a global goal (1.5°C) for cutting emissions.

It seemed clear to scientists and to many developing countries that the adaptation goal should logically be the obverse of the mitigation one, since the more emissions are reduced, the lower the global temperature rise will be, and therefore the less adaptation countries will have to undertake. But the developed world has so far resisted any attempt to define the adaptation goal in this way: it would cast an unforgiving light on their failures to mitigate enough. Negotiators will have another go at COP27.

Second, the subject of “loss and damage” will take centre stage. This is the term used to describe the economic costs developing countries experience from climate impacts. Such costs are in many cases large and growing, not least because of more frequent and more severe extreme weather events.

But the concept of loss and damage unnerves developed country negotiators. It looks far too close to the idea — increasingly being tested in the international courts — that the rich world is legally liable for such costs, and could therefore be forced to pay practically unlimited compensation. The Paris Agreement did recognise that loss and damage occurs but included an explicit clause ruling out any legal liability.

This has not stopped developing countries — particularly the small islands and low-lying states most vulnerable to climate impacts — from pushing for more financial aid. At COP26 they demanded a new financial facility be created for this purpose. The knockback by developed countries nearly brought the conference to a halt; a last-minute compromise in which a “Glasgow Dialogue” was established did little to assuage the vulnerable countries’ anger. They pointed out grimly that the Glasgow Dialogue on Loss and Damage could now be added to the list of futile non-negotiations that already included the Warsaw Mechanism for Loss and Damage and the Santiago Network for Loss and Damage created by previous COPs.

A new financial facility for loss and damage will therefore be back on the agenda in Sharm el-Sheikh; it will be the developing world’s single biggest demand. Recognising the Paris clause, many are now insisting that what they want is specific and automatic help when they are hit by an extreme weather event. They are not seeking reparations for historical emissions. Some developed countries may in turn be relenting: Denmark recently announced the first-ever pledge of specific loss and damage funding. If the financial facility is not agreed — or explicit talks are not at least promised towards it — the vulnerable countries may well walk out.

In the end, adaptation and loss and damage both come down to the third key agenda item, which is finance. Once again, the developed world will be in the dock: it has still not organised the $100 billion per year in financial flows to developing countries it promised at COP15 (Copenhagen, 2009) and again in Paris. Although the funds were meant to be secured by 2020, only $83 billion was provided that year, and the latest review suggests the $100 billion won’t be met till 2023.

The consequence is not just that insufficient money is flowing. It’s the disastrous loss of trust that the shortfall has caused. If developed countries can’t keep to their most straightforward promises, developing nations are little inclined to make commitments of their own.

At the same time, though, the $100 billion is not really the issue. That sum doesn’t get anywhere close to the trillions of dollars now needed for global investment in climate mitigation and resilience. Governments don’t have that kind of money; it’s going to have to be raised from the private sector. Intense discussions are under way looking at how this can be done.

In Sharm el-Sheikh these discussions will take place away from the formal negotiations. Veteran climate economist Nicholas Stern of the LSE will publish a new report with the executive director of the UN Economic Commission for Africa, Vera Songwe, on how much money is needed for different purposes, and how it can be mobilised. Banks, insurers and investment funds will be out in force, proclaiming their commitment to net zero and green growth, while trying to defend their continued financing of fossil fuels.

The World Bank, meanwhile, will come under renewed attack for inadequate climate commitment. The International Monetary Fund will look good by comparison. Even the world’s central banks will be in on the debate, now committed to assessing their financial systems’ stability in terms of “climate risk” as well as the usual capital adequacy.

And this is where COP27 will prove itself worthwhile after all. It’s not really about the formal negotiations. COPs are the annual gatherings of the world’s climate industry. That’s not a term of abuse: acting on climate change is now a major driver of economic growth, of investment and trade, of urban regeneration and rural land restoration, and of civil society mobilisation.

People come from all those sectors: from city authorities and sub-national states, from multinational corporations and green technology innovators, from impact investment funds and academic research institutes, from non-government organisations from both the North and South of the world. They come to announce their new projects and commitments, to network and plan, and to discover what’s happening elsewhere.

And those government leaders will have to make a speech about climate change when they come to the COP. For many of them it may be the only one they make on the subject this year. Oddly enough, none of them will say “actually, you know, this climate change thing is not really happening, so we’re doing bugger all about it.” Each of the six minutes will force leaders’ attention onto the global crisis and what they should at least say they are doing in response. And most importantly, each of those speeches will be covered by those leaders’ national media outlets. They will appear to be talking to the international community, but that’s just the backdrop (and an important one). Each will be talking primarily to their national media and public.

This, in the end, is the justification for the annual UN circus. Progress on climate change will ultimately come because publics the world over will demand it from their governments. They will do this when they are better informe, and the challenge gets a higher profile in each country’s political debate.

Political leaders need to be forced to say they will act, and to be held to it. In a world where so much else is happening, that’s hard to engineer, either for civil society or for the media. Climate change is not news: it’s been the same story now for many years, and if it can be reported on any day it can always wait for another one.

So the point of COPs is to provide a focal point, a moment: one fortnight a year when climate change is unequivocally on the political agenda, and on the news. This year NGOs will find it harder than usual to make their voices heard: the Egyptian government has notoriously been cracking down on dissent and demonstration, and hotels in Sharm el-Sheikh are too expensive to allow most activists to attend.

Nevertheless, for a couple of weeks, climate will come into focus. Political leaders will make speeches, and they will be covered on the main TV news. Broadcasters will run climate change features. Editors will commission articles. •

The post What exactly is the point of COP27? appeared first on Inside Story.

The country’s second female prime minister, elected to take Britain out of the European Union, is deposed by her own MPs after torturous negotiations fail to secure a parliamentary majority. She is replaced by a chaotic, philandering buffoon who suspends parliament illegally and expels pro-Europeans from the Conservative Party — but then wins a general election promising to “get Brexit done.” He does so by agreeing to a deal he’d attacked when the previous prime minister proposed it, putting peace in Northern Ireland in jeopardy.

The world is struck by a deadly pandemic; the buffoon very nearly dies. Mishandling its response to the virus, the government presides over 180,000 deaths, among the highest per capita in the developed world. It’s revealed that while the PM was passing laws prohibiting people from socialising, he and his staff were holding regular parties at 10 Downing Street, about which he lied to parliament.

Fined by the police, the PM is then discovered to have had clandestine relationships with a former Russian spy and current party donors. After he tries to bend anti-corruption rules to save a colleague, his second in command resigns. He rapidly loses the support of his cabinet and is ousted. In the subsequent election for party leader his number two, the favourite to succeed him, is beaten by a slightly unhinged free marketeer prone to mimicking Margaret Thatcher, who becomes the country’s third female prime minister. Two days after she takes office the Queen dies after seventy years on the throne. Two weeks later the new PM’s chancellor of the exchequer announces a “mini-budget” comprising huge tax cuts, targeted at the rich, paid for by massively increased borrowing.

The pound falls to its lowest-ever level against the US dollar. The financial markets go into meltdown and the Bank of England is forced to step in to prevent pension funds going bust. Conservative MPs say they will not pass the measures. The PM sacks her chancellor. His replacement reverses almost the entire mini-budget while the PM looks on stony-faced and humiliated. She then faces chaotic scenes in parliament as she tries to force her MPs to vote in favour of fracking, which many oppose.

The next day the PM announces her resignation, making her at fifty days the shortest-lived occupant of 10 Downing Street in British history. For a brief moment it looks like the buffoon will return as the new party leader. But eventually the crown passes to his former number two, the loser of the previous race. Britain’s first-ever non-white prime minister stands in front of the famous black door of 10 Downing Street, pauses, and walks in. The credits roll.

That new prime minister, Rishi Sunak, is not just the first from Britain’s Asian community — his parents came to England from East Africa in the 1960s — but at forty-two is the youngest prime minister for more than 200 years. Even more remarkably, he is the first-ever prime minister richer than the reigning monarch. This is thanks to the £730 million fortune he shares with his wife Akshata Murthy, daughter of the Indian billionaire and founder of Infosys, N.R. Narayana Murthy. (King Charles’s personal wealth is estimated to be a mere £370 million.)

Sunak’s rise to the top has been swift. A former hedge fund manager educated at one of Britain’s poshest public schools, he has only been an MP since 2015. But when Boris Johnson needed a new chancellor in February 2020, the field of economically literate Tories who had voted for Brexit was not a large one. Sunak took up the position just as Covid-19 struck.

The crisis made him unexpectedly popular. A generous furlough scheme, which at its height was paying the wages of around nine million employees, kept the British economy alive as society locked down. Later, to revive the hospitality sector, Sunak introduced an “Eat Out to Help Out” scheme giving the public £10 off restaurant meals. It seemed that Sunak could do no wrong. As it happened, the scheme was later found to have contributed to a spike in Covid cases. By this time, though, Sunak was embarked on a new project, that of restraining Boris Johnson’s spending plans.

Little was known about Sunak’s economic views before he became chancellor. But once the Covid crisis was largely out of the way, it emerged that he was a “sound money” fiscal conservative who believed in balanced budgets. After his own Covid spending and borrowing spree, that meant public spending had to be kept firmly under control.

The result was an increasingly abrasive relationship with Johnson, who wanted to spend money. Almost every one of Johnson’s political goals — reducing regional inequalities, reforming social care, moving towards net zero — required higher spending. But Sunak not only refused to provide the money Johnson demanded, he also introduced the largest series of tax rises in a generation to try to bring down debt, now approaching 100 per cent of GDP. It almost seemed as if he was trying to sabotage Johnson’s premiership.

And then — just a year ago — a strange thing happened. A leak to the press revealed that Sunak’s wife was avoiding millions of pounds in tax by claiming that she was not resident in Britain. Such information is known to very few people, so it was widely assumed the leak had come from Boris Johnson’s team. Sunak said his wife’s tax arrangements were a matter for her. But given he was chancellor, and therefore responsible for the tax rules, his response didn’t suggest the most astute political judgement.

When it then emerged that Sunak himself still held a US green card, an American work permit that has to be applied for annually, the reaction — much of it from his own colleagues — was explosive. Did this former Silicon Valley executive believe his involvement in British politics was just a temporary thing, and if he got bored with it he could always return to America to make some more money?

As pictures of Sunak’s four multimillion-pound homes (three in Britain and one in California) were paraded in the media — in one property he was installing a £400,000 swimming pool whose heating bill would exceed that of most entire households — it seemed that his ambition to be the next leader of the Conservative Party was over.

But Sunak didn’t quit and return to America. He remained chancellor, received a fine for attending one of the infamous Downing Street parties during Covid, and awaited his moment. It came in July when Johnson finally made one corrupt error too many. Sunak resigned as chancellor and called on Johnson to stand down. His departure triggered a wave of other ministerial resignations. Johnson was left unable to form a government. He resigned two days later.

Sunak started out as favourite in the Tory leadership race that followed, his former transgressions apparently forgiven, at least by his fellow Conservative MPs, who gave more of their votes to him than to any other candidate. But he had not reckoned with the party membership. Many Tory members were furious with him, both for his role in Johnson’s defenestration and for his tax rises. (While some, it was whispered, noted that he was not white.)

He warned that Liz Truss’s radical tax-cutting plans were “fantasy economics” that would not stand contact with the reality of the financial markets. He too was a Thatcherite, he declared, but one who believed (as Thatcher did) in fiscal responsibility: bringing borrowing and inflation under control first, and then cutting taxes when the economy was strong enough to do so.

His warnings went unheeded. Truss beat him comfortably to claim the party leadership and become prime minister. The rest, as they say, is history.

And so, now, is Liz Truss. In the truncated process that a traumatised party chose to elect its leader last weekend, Sunak promised to bring unity, with a cabinet appointed from across all the party’s warring factions. He duly won the support of more than half its MPs. Boris Johnson returned from a holiday in the Caribbean to try to regain the crown. But this time even the Tory Party preferred bread to circuses, and he was forced to withdraw.

Sunak was elected unopposed. The next day he was asked by King Charles to form a government. Constitutional order was restored. Who knows, the two men may even have discussed wealth management strategies. •

The post Rishi redux appeared first on Inside Story.

We must assume Truss didn’t intend these outcomes. But she can hardly have been surprised by them. They were the direct and immediate result of her first major policy initiative, a “mini-budget” announced on 23 September by her new chancellor of the exchequer, Kwasi Kwarteng. Describing it as the government’s “Growth Plan,” Truss and Kwarteng declared that it would set the country on a new course for economic growth.

The centrepiece of the statement was a huge package of financial support to cushion households and businesses from the steep rise in energy prices following the Russian invasion of Ukraine. From around £1300 in 2021, the average household energy bill in Britain had already risen to almost £2000, and, had nothing been done, was projected to hit around £6000 next year. So the government announced that it would be capping domestic bills at an average of £2500 for the next two years. At the same time it would subsidise energy use by businesses for at least six months.

The cost of these measures will depend on how far wholesale gas prices rise over this period. But Treasury’s estimate for the first six months was an eye-watering £60 billion. To put this in context: the cost of the government’s furlough scheme to keep people in work for eighteen months during Covid was £70 billion.

The general verdict on these measures, nevertheless, was favourable. Costly, yes, but necessary — with the added bonus, as Kwarteng noted, that they reduced the headline rate of inflation, since the government’s subsidy is defined as cutting the price of energy, rather than adding to households’ incomes.

But it was not this part of the budget that caused such a reaction. It was the rest of it. Alongside the energy measures Kwarteng announced a £45 billion package of tax cuts, the largest made in a single fiscal statement since 1972. They included the repeal of an increase in National Insurance contributions introduced by Boris Johnson’s government just a few months before; the abandonment of another Johnson commitment, an increase in corporation tax; a cut in the stamp duty on house purchases; a cut in the main rate of income tax from 20 per cent to 19 per cent; and — in a move that took everyone by surprise — the abolition of the 45 per cent top rate of income tax, levied on people earning over £150,000 a year.

How was this largesse to be paid for? The government had nothing to say on that topic at all. Not only did the budget contain not a single revenue-raising measure; Kwarteng had explicitly prevented the independent Office for Budget Responsibility from publishing its usual analysis and forecasts. This was indeed why he was at pains to call it a “mini-budget”: had it been a proper budget, the OBR would have been required by law to publish an analysis of its impacts.

The UK’s think tanks, of course, were quick to fill the gap. They calculated that the government’s plans would require over £400 billion of extra public borrowing over the next five years — with no end in sight beyond that. That would represent a 50 per cent increase on last year’s level of borrowing every year — taking annual borrowing to five times its pre-pandemic level.

The response of the financial markets was immediate. The interest rate (or yield) on government bonds shot up, and the pound plummeted. If the government was going to borrow so much more, lenders were inevitably going to charge them more to do so. Indefinite higher borrowing suggested a government with no plan.

In reality, part of the pound’s weakness reflected the strength of the US dollar; but since the pound fell against other currencies too, there was no doubt it was also a verdict on the British government and the country’s future economic prospects.

The shockwaves were rapid. Banks started withdrawing mortgage products, as it became clear that interest rates were about to rise even further and their mortgage offers would soon be unprofitable. Pension funds revealed they could rapidly become insolvent; they were having to sell government bonds to cover heightened risk, but the value of these had plummeted. In response, the Bank of England announced overnight an emergency program under which it would buy up to £65 billion of bonds to shore up their value and prevent financial contagion.

By now — just days after Kwarteng’s fiscal statement — the financial markets were in turmoil. The Bank of England was not meant to be buying bonds — it was in the middle of a “quantitative tightening” program that involved selling bonds to push interest rates up.

A vicious spiral was now in prospect: the combination of tax cuts, monetary loosening and a falling pound would push inflation up, forcing the bank to raise interest rates further and more quickly. As interest rates rose the cost of government borrowing would increase, requiring even more borrowing to cover it. Rising mortgage rates would hit household spending and could lead to a housing market crash, both of which would exacerbate the recession into which Britain was now predicted to fall.

And just to add insult to injury, the IMF at this point decided to flout its usual rule of not commenting on individual fiscal statements in developed countries. The budget, it declared, would have serious negative consequences — not just in Britain but more widely across a still-fragile global economy. It urged the government to reconsider. Former US treasury secretary Larry Summers was just one of several financial commentators who likened Britain to an emerging economy, its currency under speculative attack and being told off by the IMF.

Extraordinarily, Truss and Kwarteng went missing for almost a week while this happened, refusing to calm the markets or reassure voters. When the prime minister did emerge, it was to do a series of local radio interviews, no doubt expecting them to be easier than national TV. Confronted by presenters keen to make their names, her performance was squirmingly bad (and of course, immediately broadcast on national TV).

Truss refused to apologise, frequently seemed stumped by the questions and repeated the same talking points with wooden monotony. Resorting to the classic politician’s defence that the policies were fine, it was all a problem of poor communication, her only concession was that she could have “prepared the ground” better. But that was hardly true — all the budget measures apart from the top rate tax cut had been leaked or announced in advance.

The reaction of the financial markets was only half the problem. The distributional impact of the government’s tax cuts was extraordinarily regressive. Income tax cuts always benefit the rich more than the poor, since the rich pay more in tax; and those below the tax threshold don’t benefit at all. But the abolition of the 45 per cent rate meant the beneficiaries of the budget package were concentrated among the very rich.

Analysis quickly demonstrated that almost half the gains of the overall tax package would go to the richest 5 per cent of households. A person earning a million pounds a year would find themselves £55,000 better off, while someone on £20,000 would gain just £157. Coupled with a separate decision to abolish the cap on bankers’ bonuses imposed by the European Union after the 2008 financial crash, the budget demonstrated a remarkable desire to give money to those who already have it.

In the context of a severe cost of living crisis, with inflation now running at 10 per cent and families on the lowest incomes facing choices about whether to “heat or eat” this winter — the use of charitable food banks has rocketed over the last year — it was a politically tin-eared approach. Radio phone-in programs fairly crackled with public anger.

Tory MPs, in turn, reacted with dismay. Unfortunately timed for the prime minister, this week’s annual Conservative Party conference gave them plenty of opportunity to express their views on TV and radio. Former cabinet members indicated publicly that they would vote in parliament against the abolition of the 45 per cent tax rate. As the revolt spread, it became clear that Truss would not be able to get it through the House of Commons. Nine days after announcing it, the government declared that the cut was to be abandoned. It was never a major part of the package, Kwarteng said, and had become “a distraction.”

But Truss’s travails were still not at an end. Abandoning the top rate cut would save only £2 billion; attention now turned to how the government would pay for the rest. Would it have to inaugurate a new period of austerity, with swingeing public spending cuts to bring borrowing back under control?

The prospect caused further alarm to Tory MPs. The National Health Service faces another post-Covid winter crisis, with long waiting lists and deepening staff shortages, and most other public services have been pared to the bone by a decade of austerity. So the only obvious target for cutting was the welfare budget.

When Liz Truss duly refused to say that welfare benefits would be raised this year by the rate of inflation — a commitment given by Boris Johnson’s government — uproar ensued. Few Tory MPs were prepared to support this; several openly declared that it would be immoral and wrong (not to mention “electoral suicide,” as one put it) to pay for tax cuts for the rich by cutting the incomes of the very poorest. They would vote against this too. Truss loyalists in turn accused the rebels of organising a “coup” against their leader.

As the Conservative Party conference descended into open blue-on-blue warfare, the prime minister made a defiant speech. Truss dismissed her troubles as the inevitable “disruption” caused by a radical program and declared herself determined to take on the “anti-growth coalition” that was now ranged against her.

How did it get to this? To understand that, we need to go back to 2012, two years after both Liz Truss and Kwasi Kwarteng entered parliament. The Conservative leader David Cameron had become prime minister at the head of a coalition with the Liberal Democrats. His pitch to the electorate was that the Tories had changed: no longer the Thatcherite “nasty party” of the rich and selfish, they were now “compassionate Conservatives” in favour of a caring society and protecting the environment.

Truss and Kwarteng demurred. Together with other new Tory MPs they set up a new Free Enterprise Group in the Commons and wrote a pamphlet entitled Britannia Unchained, a strident manifesto of free market economics and libertarian politics. Their solutions to Britain’s economic and social problems were simple: lower taxes, lower public spending, a less interventionist state, more deregulation, fewer workers’ rights, freer enterprise. Two decades after Thatcher left office — and just three years after financial deregulation had almost crashed the global economy — it was Thatcherism on speed.

Truss became a minister in Cameron’s government in 2012, Kwarteng in Theresa May’s in 2018. Now close friends and neighbours as well as colleagues, by 2019 they sat in Boris Johnson’s cabinet together. When Johnson fell earlier this year, Truss seized her chance. Her campaign for the Conservative Party leadership, strongly backed by Kwarteng, proudly boasted of her Thatcherite philosophy. And now she had a receptive audience.

Convulsed by the arguments over Brexit, which has seen almost all senior pro-European MPs kicked out of the parliamentary party — and others on the left and centre abandoning it — the Tories have become much more ideologically narrow. Despite winning the support of fewer than a third of Tory MPs, in the final ballot of party members Truss won convincingly against the “sound money” fiscal conservative Rishi Sunak, architect of the tax rises they so despised.

Truss and Kwarteng see themselves as revolutionaries. The chancellor’s first act in his new job was to sack the chief civil servant at the Treasury, an experienced and respected figure but someone the new Tories demonised as a representative of the old regime. Truss installed as her chief economic adviser the leader of the Taxpayers’ Alliance, a campaign for low taxes and deregulation. Other advisors were brought in from neoliberal think tanks such as the Institute of Economic Affairs.

Announcing his mini-budget in the Commons, the chancellor declared that “we are at the beginning of new era.” For he and Truss the last decade of Conservative rule has not been radical enough. “Treasury orthodoxy” had placed far too much emphasis on balancing the public accounts and reducing public debt. After the huge expenditures to support the economy through the pandemic, taxes had risen to a seventy-year high, which could only stifle enterprise and hold back growth. The state had grown too large.

In her Tory conference speech Truss declared her three economic priorities to be “growth, growth and growth.” In recent years, she declared, there had been far too much emphasis on redistribution and not enough on growing the economy. (As various commentators pointed out, this was a somewhat odd claim, given that the Conservatives had presided over stagnating wages and a huge increase in wealth inequality). And the way to get growth was to cut taxes, and to reform the economy’s supply side.

The government’s supply side reforms have not yet been spelled out in detail. But the Growth Plan indicated the general direction. “Investment zones” will be established across the country, where businesses will have lower taxes and fewer regulatory requirements. The planning system will be reformed to speed up infrastructure construction and housebuilding. The financial sector will be deregulated to make it more globally competitive. Childcare regulations limiting the number of children per worker, and environmental regulations affecting farmers, will be relaxed.

Such policies may or may not work to stimulate economic growth. The economic evidence on investment zones is weak, with most similar schemes simply poaching investment from other areas. Planning reform has been notoriously difficult, with Conservative MPs among the most vociferous opponents of new housing developments and infrastructure (such as windfarms) in their own constituencies. Financial deregulation did not go well last time round.

But the problem for the government is that, even if they are successful, none of these reforms will generate growth in the next couple of years. And while in theory tax cuts might provide a short-term boost, this will almost certainly be overwhelmed by the recessionary forces the government’s fiscal package has unleashed.

On the morning of the budget the interest rate on a typical two-year mortgage was well under 5 per cent. Now it is over 6 per cent. Hundreds of thousands of people whose fixed term deals are ending soon have been on rates between 2 and 3 per cent. So they will see their mortgage payments rise by hundreds of pounds per month, vastly outweighing the tax cut they will receive. Their disposable income will be lower next year, not higher. Many will not be able to pay at all.

Politically, this is disastrous for the Conservatives. Britain’s ten million mortgage holders, and the many young people who want to buy a first home, are among their core constituencies.

Across all polling companies, Labour’s lead has more than doubled to 23 per cent. In a general election, that would translate into a comfortable Labour majority. Keir Starmer, Labour’s leader, is now seventeen points ahead of Truss as “best prime minister,” and Labour leads on every significant policy issue. Truss’s approval rating has dropped to minus 37 per cent, a fall of 28 per cent in a week.

The next general election is still two years away. But it is now almost impossible to find a political commentator who believes Liz Truss can recover from these figures after such a disastrous first month in office. Many are predicting an electoral rout worse than 1997, when Tony Blair won a landslide victory to end eighteen years of Conservative rule.

The mood among Tory MPs has become correspondingly grim. Many are now privately telling journalists that Truss will have to be got rid of. No one thinks it would look good for the Conservatives to impose a fifth prime minister on the country in six years. But the economic turmoil she has precipitated, and the polling deficit the party now faces, make anything better than this. If she doesn’t reverse course, warn some, she could be gone by Christmas.

One veteran Tory, a minister in John Major’s government in the 1990s, put it even more starkly. Without a fundamental change of direction, he said, Liz Truss would be “quite probably the last-ever Tory prime minister.” •

The post The Truss effect appeared first on Inside Story.

In the leadership election, held among the OECD’s thirty-seven member states, Cormann beat the Swedish former EU trade commissioner Cecilia Malmström, a centrist liberal. Campaigning for the job, Australia’s longest-serving finance minister made a point of toning down his economic opinions and record, particularly on climate change. Challenged by environmental organisations, he insisted that he was in favour of “an inclusive and future-focused recovery, including a green recovery” and “accelerating the transition to a lower emissions future.” Commentators assumed that in his new position, accountable to the wide range of economic policy views held by the OECD’s member governments, he would operate with a more plural and open economic outlook.

But recent events suggest that Cormann’s free-market instincts remain intact. Among his early reforms is a move to effectively shut down one of the OECD’s most innovative programs, the New Approaches to Economic Challenges, or NAEC, initiative.

NAEC was established in 2012 by the previous secretary-general, former foreign and finance minister of Mexico Angel Gurria, as a way of bringing new thinking into the institution after the global financial crisis. Gurria’s view, shared by many leading economists, was that orthodox economic thinking had helped precipitate the 2008 crash, and new economic ideas were required to get the world out of it. NAEC was to help the OECD lead that process.

The OECD has never been a source of what you might call radical economic thinking. Throughout its sixty-year history it has more or less dutifully followed the consensus of mainstream economics and economic policy. Originally broadly Keynesian, in line with the approach adopted by almost all developed economies in the 1960s and early 70s, it took the same free-market turn as they did in the late 1970s and 80s.

Often described as “neoliberalism” or the “Washington consensus,” the policy approach originally championed by Margaret Thatcher and Ronald Reagan — and then copied around the world — was based on the economic theories of Friedrich Hayek and Milton Friedman. They saw “free” (relatively unregulated) markets as not just the best means of generating economic prosperity but also the guarantor of political liberty.

Neoliberals wanted a smaller state, with lower taxes, privatisation of nationalised industries and public services, less government regulation and greater freedom for enterprise, unencumbered by trade unions. The OECD joined its fellow international economic institutions, the International Monetary Fund and the World Bank, in proffering such policy advice to governments throughout the 1980s and 90s.

For its critics, neoliberalism achieved its apotheosis in 2008, when the “efficient markets theory” — the idea that well-informed financial markets would always generate optimal outcomes — took something of a beating. Alan Greenspan, former chairman of the US Federal Reserve and neoliberal high priest, famously admitted to Congress that the theory had a “flaw.”

Yet neoliberal policy prescriptions had not yet been exhausted. Reacting to the global economic slump and the huge increase in government borrowing to which bank bailouts had led, many governments opted for “austerity,” slashing public expenditure and raising taxes in order to balance the books and reduce public debt. With interest rates reduced to near zero, central banks flooded the financial sector with printed money under a program of “quantitative easing.”

It was what the neoliberals had prescribed; but it merely succeeded — as the Keynesians predicted — in slowing economic recoveries and exacerbating wealth inequality, as asset values inflated far above wages.

In 2010–12 the OECD took the neoliberal position, praising Greece’s austerity program, which almost brought the country to its knees, and prioritising deficit reduction and public spending cuts in its advice to governments. As the decade developed, along with mainstream economists everywhere, the OECD puzzled over stagnant productivity, and why economic growth remained so weak for so long. It began to worry about rising inequality but struggled to relate this to quantitative easing and over-flexible labour markets. It did advocate taxing carbon to tackle climate change, but such taxes were never high enough to make a significant dent in emissions.

It was in this intellectual and policy context that Gurria launched NAEC. He was not sure precisely what those “new approaches” should be, but he knew that something better was required. The OECD’s member states agreed, providing the new program with a small but significant budget and encouraging its outreach to some of the world’s leading economists.

The result has been a decade of fruitful research, analysis and events, seeking to bring new economic thinking not just to the OECD’s own policy departments but also to the wider international community. Economists contributing to NAEC’s seminars, conferences and publications have included Nobel Prize winners Joseph Stiglitz, Esther Duflo, James Heckman, Angus Deaton and Robert Shiller, along with other world-leading figures such as Mariana Mazzucato, Thomas Piketty and Adam Tooze.

NAEC has focused on some of the key problems facing the world in the post-crash period, including reform of the financial sector, climate change and economic resilience after Covid. It has brought the relatively new field of complexity economics — which sees the economy as a complex, adaptive system rather than a self-balancing mechanism — to mainstream policymakers, and explored whether policymakers should now be seeking to go “beyond economic growth” to achieve environmental sustainability, reduced inequality and greater wellbeing.

NAEC has not fundamentally changed the OECD’s economic approach. The Paris-based institution employs hundreds of economists whose views were not going to change overnight, and most of its member governments wish to continue following largely orthodox economic prescriptions. But as Gurria wanted, it has provided a space for new thinking to be developed and debated, and some of this has been taken up both within the OECD and beyond it.

Cormann, it appears, is not impressed. He has reduced NAEC to a series of internal seminars for country delegates, ending its association with external economists and policymakers. In May he ordered a NAEC seminar on globalisation featuring a senior US senator and government official to be cancelled at the last minute. As a result of these changes, donors to the program have threatened to withdraw their support.

Now a group of twenty-six economists who have spoken at NAEC events have written an open letter to Cormann expressing their alarm at its demise. Including Stiglitz, Mazzucato and Tooze, the group originally wrote privately to Cormann in January praising NAEC’s work and asking him to maintain it. Cormann didn’t reply, and so the group has gone public with its concern.

In their letter the group notes that new forms of economic analysis and policy are needed more than ever, given the multiple crises currently facing the world. Many OECD countries are now heading for a period of “stagflation” — simultaneous inflation and recession — while many low-income ones are about to run into another debt crisis. What the economists call the “existential” challenge of climate change needs to be confronted urgently. In these circumstances, they say, it is important that an organisation providing advice to governments, like the OECD, “is at the forefront, not just of the present orthodoxy, but of competing views, theoretical frameworks and policy approaches.”

Throughout the history of economics and economic policy, the economists note, orthodox economic frameworks and policies have often been superseded as the empirical evidence changes and rival theories come to be more convincing. “This to and fro between received economic ideas and new ones is an important part of how intellectual and practical progress is made,” they argue. So it is not just the OECD, they conclude, but the wider international economic policy community that would benefit from NAEC continuing. They end their letter by offering to help Cormann and his staff in developing a new work program for NAEC.

No response has been received so far from Cormann or the OECD. •

Former senior OECD official Kumiharu Shigehara responds to Michael Jacobs’s observations about the OECD orthodoxy in the 1980s and 90s:

It is not true to say that the OECD’s advice followed that of the International Monetary Fund and the World Bank throughout the 1990s, at least when I was OECD chief economist from May 1992 to May 1997 and a deputy secretary-general from May 1997 to the autumn of 1999. I strengthened the OECD Economics Department’s work on inequality and, unlike the IMF and the World Bank, I spoke against too hasty liberalisation of international capital movements in emerging market economies, at an IMF seminar chaired by Michel Camdessus, then IMF managing director, and more openly at a number of other international gatherings and conferences.

My recollection is supported by an article, “Don’t Blame the Victims of Asia’s Crisis,” by Anthony Rowley, a reporter for the Business Times in Singapore, who wrote: “It is instructive that a Japanese national [Mr Shigehara] writing from Paris [the OECD offices in Europe] should be able to analyse the situation with such clarity. It seems that the ideological miasma in which Washington-based institutions such as the IMF and the World Bank have become entrapped, by virtue of their proximity, to the US administration and Congress, render such clear thinking impossible on their part. They dare not blame the system of unthinking trade, investment and capital market liberalisation to which they have co-opted, so they blame its victims.”

The post Trouble at the OECD appeared first on Inside Story.

Truss’s decisive victory over her opponent Rishi Sunak, former chancellor of the exchequer, in the ballot of Tory Party members was by no means guaranteed at the beginning of the two-month leadership campaign. When Boris Johnson’s serial cronyism, misconduct and untruth-telling finally led to his ouster as Tory leader (and therefore prime minister) in early July, Sunak appeared his likely successor. He came out ahead in the initial series of votes among Tory MPs to identify the top two leadership candidates to be put to the wider membership. Truss was supported by less than a third of her own colleagues.

But over recent years the Conservative Party at large has changed. Once a broad church stretching from centrist “One Nation” Tories to ideological free marketeers, the party’s membership has narrowed since Brexit. With those who voted to leave the European Union in the 2016 referendum now dominant, many of its pro-European moderates have quit the party altogether. The desire to leave the EU was driven partly by anti-immigration sentiment and partly by a patriotic nostalgia for Britain’s free-trading past. But leaving was also seen as a means of liberating the economy from the alleged constraints of EU law and red tape.

Above all, for many in the party, Brexit’s purpose was to restore the small state, deregulatory agenda championed by Margaret Thatcher in the 1980s. Vigorously encouraged by the still highly influential newspapers the Daily Telegraph and Daily Mail, the party has consequently shifted decisively to the right. And Liz Truss understood this much better than Sunak.

Truss’s campaign emphasised her Thatcherite views from the outset. Her central message was that she would cut taxes: income tax, corporation tax and possibly even the value-added tax (Britain’s GST). Never mind the impact on public finances, with debt already at 100 per cent of GDP, post-Covid health spending rising sharply, and Truss herself promising to increase the defence budget following the Russian invasion of Ukraine. Tory mythology remembers Margaret Thatcher as a great tax-cutter, and so Truss made this the centrepiece of her appeal to the party membership.

(Critics pointed out that Margaret Thatcher actually raised taxes in her first term of office to help reduce inflation, and only cut them when the public finances were in better shape. But this unwelcome fact failed to dent Truss’s appeal.)

For Truss — though for very few economists — cutting taxes and deregulating markets is the way to stimulate growth in the underperforming UK economy. Challenged about her proposed income tax cuts (via national insurance rates), which will give the richest ten per cent of the population an average benefit of £1800 (A$3050) a year and the poorest ten per cent less than £8, she described them as “fair,” arguing that growth was more important than distribution.

At the same time she has promised to scrap all Britain’s remaining EU-based laws by the end of 2023, including a swathe of employment, environmental and consumer protections. She proposes new low-tax and low-regulation “investment zones” to attract overseas finance. And, just in case this were not enough to ensure support among the Tory grassroots, she has promised to bring back selective grammar schools and scrap local house-building targets.

Liz Truss was not always a Thatcherite. Indeed, she was not originally a Tory at all. Born in 1975 to left-wing parents — her father was a professor of mathematics, her mother a nurse and teacher — Truss was an active Liberal Democrat as a student at Oxford. (One of the more entertaining features of the campaign has been footage of Truss at the Lib Dem national conference in 1994 proposing the abolition of the monarchy.) But two years later she joined the Conservatives, beginning her shift to the right.

After entering parliament in 2010, she founded the Free Enterprise Group of MPs, and co-wrote a right-wing manifesto entitled Britannia Unchained. Arguing for deregulation and lower taxes, the pamphlet notoriously described British workers as “among the worst idlers in the world.”

After a number of junior ministerial positions, Truss was appointed to David Cameron’s coalition cabinet as environment secretary in 2014. There, she became known primarily for a bizarre speech to the Conservative Party conference in which she criticised as “a disgrace” the fact that Britain imported two-thirds of its cheese. She campaigned for Remain in the 2016 EU referendum but changed her mind swiftly after the result, becoming a vociferous Brexit advocate.

As Boris Johnson’s international trade secretary Truss trumpeted her negotiation of a number of post-Brexit trade deals. Observers noted that most of these simply rolled over existing EU agreements. Her 2021 UK–Australia trade agreement, meanwhile, was widely criticised for giving Australian farmers greater access to the UK market without any reciprocal benefits for their British counterparts. Subsequently promoted to foreign secretary, Truss was frequently ridiculed in the media for carefully managed photo opportunities in which she appeared to be imitating Margaret Thatcher.

Truss’s performance as a minister didn’t commend her to many of her colleagues. As one put it recently, “her ambition is, undoubtedly, considerably greater than her ability.” Another branded her “as close to properly crackers as anybody I have met in parliament.” But her loyalty to Boris Johnson — backing him to the end, even as many of his cabinet (including Sunak) abandoned him — made up for that among party members, a majority of whom still don’t believe Johnson should have been deposed. And during the leadership campaign her ideological fervour won her the critical support of the party’s new right.

This is perhaps the most striking feature of Truss’s victory. Her campaign was backed both by supporters of Boris Johnson and by the party’s ideological vanguard. The latter are the same MPs who pursued the hardest form of Brexit and got rid of former prime minister Theresa May when she would not deliver it. During Covid they organised a libertarian resistance to lockdowns. Today their new target is climate change policy, which they see as a left-wing cause requiring excessive state intervention in the economy.

And they have already influenced Truss. Faced with Europe’s overdependence on Russian gas, which has seen its price skyrocket, Truss has come out not for more renewable energy but for a big expansion of domestic oil and gas drilling, including fracking. Leaving aside its impact on global warming, new oil and gas would take more than a decade to come onstream, far longer than an expansion of wind and solar power. For the party’s new right, though, climate change is a “culture war” issue that divides older Conservative voters from young metropolitan graduates, and being pro–fossil fuels is part of the strategy. Next in their sights is the repeal of Britain’s target of reaching net zero emissions by 2050.

Liz Truss therefore starts her term as prime minister with a well-prepared agenda. Her only problem is that very little of it bears any relationship to the crisis in which the country finds itself.

Next month Britons will see their energy bills rise by 80 per cent as the persistently high price of gas on global markets feeds through to customers. Following earlier price hikes, this will raise the cost of energy to consumers to three times what it was just a year ago. And this process has not ended. Under Britain’s regulatory regime, energy prices are due to rise again over the next six months, with independent forecasters predicting that by next April prices will reach almost 600 per cent of their level a year ago.

The impact on British households can hardly be exaggerated. Next month’s increase will take a typical household’s energy bill to £3500 a year. With the UK median income standing at just over £31,000, that will mean half of all households paying over 10 per cent of their income on energy, which is the official definition of “fuel poverty.” Around four million of the poorest households, including many pensioners and families, will see their energy bills rise to almost half of their disposable income.

Poverty campaigners warn that the inevitable result of these rises will be destitution, with households unable to heat their homes during the winter or children going without food (or both). Many elderly people are predicted to die of cold-related disease. The country’s most famous consumer champion, Martin Lewis, has described the situation as a “catastrophe.” It is widely expected that many households will be unable or will simply refuse to pay. Police forces are reportedly making plans to deal with civil unrest.

Over the past six months Boris Johnson’s government has provided some help to households to cope with rising bills, including a £400 payment to all, and up to £1200 targeted at those on the lowest incomes. But this was before the latest increases were announced, and the government is now under heavy pressure to do more. During her leadership campaign, though, Liz Truss insisted that her proposed tax cuts would be sufficient, and rejected the idea of further “handouts” to consumers.

Described as “a holiday from reality” by a senior Tory during the campaign, this position is not expected to survive contact with the real world once Truss is in Downing Street. Since income tax cuts will do nothing to support the poorest households, whose incomes are too low to pay the tax at all, it is clear they will not prove a publicly acceptable solution.

The Labour Party has argued that the new energy price increase should be scrapped altogether, with government picking up the tab for the costs. This would be partially paid for by a higher windfall tax on oil and gas companies, whose profits have soared during the crisis. Perhaps unsurprisingly, its approach is hugely popular, including 85 per cent support among Conservative voters.

It is therefore now widely expected that Truss will abandon her campaign stance and provide further help to households. A version of Labour’s approach is considered likely, with energy prices ordered to be frozen. The policy will be paid for by a mixture of public spending and a long-term financing scheme in which consumers will pay gradually for higher bills over a period of ten years or more. The government outlays will blow a further hole in the government’s budget. Truss’s team has already hinted that other areas of public spending will have to be cut, and — in a major reversal of previous Tory orthodoxy — public borrowing will need to rise substantially.

Will this spending be enough to give Liz Truss the kind of voter honeymoon usually granted to new prime ministers? Few observers think so. Having focused her leadership campaign entirely on policies designed to please Conservative Party members, Truss has said very little about other aspects of the immediate economic crisis Britain faces. With inflation running at more than 10 per cent and still rising, Britain is in the middle of a wave of strikes as workers across the economy seek to prevent further cuts in their real incomes. The Trades Union Congress has even mooted the idea of a general strike.

Meanwhile, soaring energy bills are likely to lead to a wave of company failures over the coming months: one study suggests that as many as 70 per cent of British pubs could be forced out of business. The Bank of England forecasts that Britain is about to enter a recession that will last the whole of 2023.

Liz Truss enters Downing Street with the Conservatives 9 per cent behind Labour in opinion polls. Translated into parliamentary seats, this would make Labour the next government, though not with an absolute majority. The two years before the next general election would be extremely difficult for the most gifted politician. Truss’s leadership campaign, conducted largely in a parallel universe, has left even her own supporters anxious. •

The post Who is Liz Truss — and why? appeared first on Inside Story.

Countries had to dismount from plenty of high horses in the last few days of the conference. As negotiators sought a final agreement, many nations’ red lines were crossed in the interests of compromise. But the conference ended in high drama when India stubbornly refused to get off its particular steed.

The issue was coal. Every other country had accepted a line in the final agreement calling for “the phasing-out of unabated coal” (that is, coal used without carbon capture and storage technology). But India — supported by China — would not. Even after the conference had to be adjourned because of its refusal, and after delegates were called back two hours later assuming a deal had been done, India objected again, proposing a further amendment to the now-completed text. “Phasing-out,” India said, should be replaced by “phasing-down.” The British chair of the conference, Alok Sharma, choked back tears as he apologised for the failure of the process, to much sympathy from delegates.

India’s and China’s late obstructionism highlighted both the power and limitations of these UN climate conferences. On the one hand, the largest and fifth-largest economies in the world cared enough about the precise wording of the agreement to face down the anger of 194 other nations. Other countries didn’t like many things in the text either, but had accepted them in the spirit of compromise required to reach agreement. On the other, it will make practically no difference to anything that happens in the real world beyond the conference hall. Though Greenpeace and other climate campaigners hailed the first-ever mention of getting rid of fossil fuels in a COP decision, the words are entirely symbolic. Without a date by when it must be done, neither “phasing-out” nor “phasing-down” have much practical meaning.

Part of the reason we know that it was only symbolic was that Australia had accepted “phasing-out” even though the government in Canberra has no plans to end coal use or exports at all. Poland and South Korea, two other coal-dependent nations, have agreed to a phase-out, but not till 2049. In practice, all five countries will have to end their use of coal well before that date if the Paris goal of limiting global heating to no more than 1.5°C above pre-industrial times is to be achieved.

The 1.5°C limit was in fact not the principal Paris goal, which was “well below 2°C.” But the small island states in the Pacific, Caribbean and elsewhere most existentially threatened by climate change — some of the lowest-lying will not survive rising sea levels at all — have succeeded in making 1.5°C the new benchmark of tolerable warming.

Remarkably, the conference didn’t just accept the new goal. It also acknowledged that countries’ current plans to reduce emissions would not go anywhere near meeting it, and agreed to come back next year with stronger plans aimed at doing so.

On this criterion alone COP26 should probably be regarded as a relative success. Given the pre-conference hype about Glasgow being “the last chance to save the planet,” many in the public might have been forgiven for expecting countries to announce new and stronger commitments during the conference. But that was never going to happen. They came to the meeting with emissions reduction targets decided — in many cases with great difficulty — in their domestic political systems. This is why the Paris agreement calls them “nationally determined contributions,” or NDCs. Countries had neither the desire nor the mandate to raise their ambition levels during this fortnight, and the possibility of doing so was not even on the agenda.

So the most this conference could ever do was to acknowledge that the global reduction in emissions was nowhere near enough to put the world on a path to limiting heating to 1.5°C; and to resolve to reconvene as soon as practically possible with stronger commitments. Which is precisely what it did.

The numbers presented were stark. If implemented, current national pledges up to 2030 would lead to average global heating of 2.4°C. At those temperatures the oceans would be stripped of all coral reefs, many land species would become extinct, major regions would lose their water supplies, and productive agriculture would become untenable in many countries. Revisiting and strengthening NDCs is crucial if such a projected temperature rise is to be averted.

The other big issue of COP26 was finance: specifically, money provided by the rich nations to the poorer ones to help them tackle climate change. For a long time the most vulnerable countries have been angry that most of the money provided so far has been for “mitigation” (emissions reduction in those countries) and has taken the form of loans. Their emissions are too small to matter much, but they are already suffering severe effects as the climate changes. So they wanted more money directed towards adaptation, and as grants rather than loans.

They won some of this. Developed countries agreed to “at least double” their finance for adaptation (which could take it to 40–50 per cent of total financial flows) and the World Bank has been told to increase its overall funding to vulnerable countries.

But developed countries resisted the demand that they make up for their failure to hit the goal of US$100 billion in financing by 2020 — first promised over a decade ago — by providing more in 2024 and 2025. Instead the text sticks to US$100 billion a year. A new process will be established to define how much wealthy countries should pay after 2025.

It was the issue of “loss and damage,” however, that provoked the most anger — and the greatest resistance. This is the idea that rich countries should compensate poor ones for the economic and human costs caused by the former’s emissions. The idea of compensation for loss and damage represents a vital principle for the global South, one that lies at the heart of the idea of “climate justice.” Climate change is the result of the two-centuries-old economic development process that has made rich countries rich. But its most damaging effects are being experienced by the countries that contributed least to causing it — and it is making them poorer.

In climate negotiations the developed world has always fiercely resisted the idea of compensation. They fear it is a slippery slope. Accept liability for causing climate harm and before long they will find themselves in the international court, required to pay out trillions of dollars to every developing nation.

This clash of interests was never going to end harmoniously at COP26. The least developed nations and small island states demanded a new financing facility for loss and damage — with no sums or liabilities mentioned. But the United States, the European Union and other developed nations were determined not to concede. The final text called merely for a “dialogue” to discuss “arrangements.” The island nations vowed to return next year with the same demand.

So, two weeks of intense wrangling, with a leaders’ summit thrown in, ended in a nine-page main document primarily notable for asking countries to do it again next year at COP27 (to be held in the somewhat warmer location of Sharm El-Sheik, Egypt). It’s easy to see why the whole process attracted so much hostile comment. Did the Glasgow jamboree actually achieve more by way of reducing emissions than it caused, in bringing 25,000 people together from across the world to merely talk about climate change? Haven’t greenhouse gas emissions risen continuously throughout the thirty years in which these annual UN climate chinwags have taken place?

Cynicism is understandable. But the right question to ask is not whether emissions have fallen since the UN Framework Convention on Climate Change was first signed in 1992. It is what would have happened if there had been no international treaties, and no talks.

We have an answer to this. Before COP15 in Copenhagen in 2009, the Intergovernmental Panel on Climate Change, or IPCC, projected that if emissions continued on their “business as usual” path, the average global surface temperature would likely rise 4–6°C above pre-industrial levels by the end of the century. Prior to COP21 in Paris in 2015, the projected temperature rise had been reduced to around 3–5°C. In 2018, it was around 3°C. If the “nationally determined contributions” presented in Glasgow are implemented, the projected likely temperature rise is 2.4°C.

So it is not true (as Greta Thunberg is wont to say) that nothing is being done. Almost all countries have either reduced their absolute emissions (in the developed world) or slowed their rise (in the emerging economies). Not by enough, as the IPCC makes clear. But this is not a record of complete inaction.

Has this anything to do with climate negotiations? Yes. The reason we have an international climate treaty and big global “moments” like COP26 is that they internationalise what would otherwise be national policy responses to a global problem.

Climate change can only be tackled if all countries reduce their emissions. The largest single emitter, China, contributes 31 per cent of the global total; the United States 14 per cent, India 7 per cent, Russia 5 per cent. No other country’s share is above 3 per cent. Global emissions can only be reduced if every country plays its part, but if it were left to every country to act on its own, most would surely not. It would be too easy for each to say, “Our emissions are too small to make a difference; how do we know anyone else is acting?”

But it is also a problem of political circumstances. There are few countries in which climate change is a major political issue, with powerful interests favouring action. Left to themselves, most governments would no doubt do something, some time; but it is highly unlikely that this would be coordinated with every other country’s domestic political timetable.

By forcing all countries to act simultaneously, not just when it is domestically propitious to do so, the UN climate process has created much larger collective action. And in doing so it has built global scale for emissions-reducing technologies. It is no coincidence that the cost of solar power has fallen around 90 per cent since Copenhagen in 2009, and wind power up to 70 per cent. That has happened because all larger countries have introduced renewable energy policies in response to UN climate agreements (even the apparently “failed” one in Copenhagen), and the resulting scale and innovation have slashed costs. The same effect has led to the rapid and continuing fall in the price of electric vehicles and batteries since Paris in 2015.

And, of course, the declining cost of decarbonisation means that more of it can be done. It is a virtuous circle. International agreements lead to near-universal national action, which creates global markets for green technologies, which reduces costs and incentivises innovation, which allows stronger targets to be adopted next time round.

Given the requirement in the Glasgow agreement that every major country produce new 2030 commitments by COP27 next year, attention will now turn back to domestic politics. It won’t be easy for any country, barring a few with very weak plans (such as Australia), to find ways of cutting their emissions further than they have already decided. New policies and new public investment funding will be required, whether in renewable energy, regenerative agriculture, industrial emissions, or research and development into green technologies.

Can it be done? Technically and economically, yes. But politically, for many countries, it will be mighty hard. The Glasgow agreement acknowledges the need to support a “just transition” — the creation of alternative jobs and incomes for the workers and communities of high-carbon industries — but it will still be difficult to overcome the power of incumbent interests. The fossil fuel sector will defend itself vigorously for some time yet.

And yet, taking the longer view, Glasgow did feel like a turning point. Never at a COP has there been such a recognition of the injustice faced by poorer countries as a result of a problem caused by rich ones. Never have leaders been confronted so directly with the evidence of their failure. Never have they admitted that failure, and agreed to have another go. China and India’s pyrrhic victory in the dying minutes of the conference may have given heart to all those still wedded to coal. But for the rest of the world it looked like the beginning of the end for the age of fossil fuels. •

The post Glasgow kiss appeared first on Inside Story.

Colourful and noisy, the Glasgow demonstrators waved a diverse range of banners and placards. But one seemed to dominate. “Make it a fair COP!” said the bright yellow hearts waving above the marchers’ heads. “Climate justice now!” It expressed the marked shift within the climate movement over the last few years, in Britain and elsewhere. This cause is no longer just about protecting future generations from the likely ravages of a warming planet. It is about defending the poorest peoples of the world from the devastating impacts they are experiencing right now.

After all, the idea of “climate justice” expresses a profound truth. Climate change has been caused by the burning of fossil fuels over two centuries in the richest countries of the world. It is indeed what has made them rich. But it is wreaking its greatest damage on the poorest countries and people; indeed, it is making many of them very much poorer.

I walked for a while alongside a group wearing brightly coloured national costumes. They came from some of the low-lying Pacific islands that will cease to exist if sea levels rise as currently predicted. Walking with them was Tishiko King, a Torres Strait Islander and campaigns director of the Australian youth environmental organisation Seed Mob. She was there, she said, to stand shoulder to shoulder with First Nations across the world fighting for the rights of indigenous peoples. “Too often our voices are missing when decisions are being made that impact our future,” she told me. “So if world leaders won’t hear us in the conference, we’ll make sure they’ll hear us on the streets!”

Nearby another Australian, Caroline Sherwood, held a homemade banner depicting Scott Morrison with his head in the sand in front of a massive coalmine. The Sydneysider said she was ashamed of her government. “Their plan to meet net zero by 2050 is nothing more than a public relations exercise: it has no substance,” she told me. Almost everyone I spoke to, wherever they were from, expressed similar shame or disappointment. They all noted the gap between politicians’ rhetoric and what they themselves saw happening.

At the “Fridays for Future” march the previous day, though, the mood had been different. This was the demonstration by the young people galvanised by Greta Thunberg’s weekly “school strikes” — around 20,000 of them — and they, like Thunberg, were angry. Though COP26 was only halfway through, Thunberg told the crowd, it was already a failure. The politicians were all talk and no action. It’s just “blah blah blah,” she said, repeating the catchphrase that has reverberated around the global media this past week.

To the young people I spoke to, almost all of them under twenty-five, climate change feels like an existential threat. One banner put it simply: “You’re stealing my future!” At a personal level, the prospect of living in an unstable world of frequent natural catastrophes and geopolitical conflict fills many with deep anxiety. A recent Pew poll of 10,000 young people in ten countries found nearly half admitting to climate-induced feelings of distress that affected their daily lives. Almost four in ten said they were not sure if they would want to bring children into such a world.

At a political level, the young people’s concerns are much more directed. They are angry with their parents’ generation. It is those born before 1970 — as several of my interviewees made pointedly clear to me (born 1960) — who have failed to act on climate change over the past quarter century. And it is they, the millennials and “generation Z,” who will suffer from our self-indulgent and selfish lifestyles.

And many of them are angry at capitalism too. This was a powerful thread running through the assembled slogans. “Systems change not climate change!” said one banner. “Uproot the system!” demanded another. And a third: “Environmentalism without socialism is just gardening.”

Wit aside, this was no throwaway rhetoric. These young climate activists offer a powerful critique. Capitalism has caused this emergency. So only getting rid of capitalism can solve it. It’s an argument fed by some serious scholars and bestselling writers. In her book This Changes Everything: Capitalism vs the Climate, the Canadian author Naomi Klein argues that the modern capitalist economy, run by huge corporations and financial interests, and feeding on mass high-carbon consumption, cannot reverse its core dynamic of material growth and human exploitation. Only economic transformation, based on the principles of ecological sustainability and social justice, can do that.

The core demand of the radical climate movement is for a “green new deal”: a thoroughgoing program of public investment in reducing emissions and restoring nature, combined with new rights and higher wages for workers and oppressed minorities, and constraints on financial capital. Its most famous champions are Klein — whose most recent book sets out the case — and the young US politician Alexandria Ocasio-Cortez, whose millions of followers on Twitter and Instagram attest to the power of her inspirational rhetoric (as well as her effective interventions in the US Congress). Thousands of young people have become local and national activists for a “GND” in America, Britain, and elsewhere across the world.

Listening to young people articulating these arguments it would be easy to dismiss them as the usual activist minority. But the Pew poll should make politicians ponder. Around 65 per cent of those surveyed around the world felt governments were failing young people. These are voters (or in some cases soon will be) and it is pretty clear that climate change will determine how many of them vote.

They have already shaken up the environmental movement. Only a few years ago that movement was led by the “big logos” — Greenpeace, WWF, Friends of the Earth and the like. Today the running is made by young climate strikers, direct action groups blocking roads and chaining themselves to bulldozers, and students forcing their universities to divest from fossil fuels. It’s Greta Thunberg whom the media now turn to first. Here at COP the dominant civil society voices are groups from the global South rather than their Western counterparts. The new political power of radical and predominantly youth-led climate activism is everywhere apparent.

And yet there is something paradoxical about this too. Because looking at the climate science — and there is also plenty of that on show in Glasgow — it is the urgency of the required action that presses most strongly. The Intergovernmental Panel on Climate Change warns that global greenhouse gas emissions must be cut by 45 per cent by 2030, en route to net zero by around 2060. It is difficult to imagine capitalism being overthrown in that kind of time. In practice, capitalism will have to solve the climate problem, or it will not be solved.

There are plenty of capitalists here who will tell you that this can be done. Companies with climate solutions are out in force: hundreds of them boasting of their new and cheaper green technology, their expert financial and consultancy services, their innovative new product just waiting for some government policy to make it profitable.

Their business rivals are here too, of course. Global Witness has enterprisingly counted the number of representatives from the fossil fuel sector registered for the conference and noted that, at over 500, it is more than any country has brought. Most of these companies are claiming to be turning green (if gradually), but few observers are very convinced. A recent report by the UN Environment Programme found that current plans for oil and gas drilling and coalmining globally amount to twice the level that would be allowable under a scenario in which global heating were limited to the COP26 goal of 1.5°C above pre-industrial times.

Can capitalism be greened? It is the question that underpins the entire conference, though it won’t be mentioned in the negotiating rooms and is too provocative for most of the fringe meetings. The answer in practice is likely to have two parts.

First, it won’t be greened by itself. Almost all the progress in environmental technologies and consumption patterns over the past thirty years has come about as a result of government policies. Energy efficiency standards, pollution regulations, renewable energy mandates, conservation orders, product bans, green taxes, emissions trading schemes, research and development subsidies: it is the panoply of state interventions in markets that have driven such progress as we have had. And it is much more far-reaching interventions that will be needed if fossil fuels are to be squeezed out of the global economy and investment in green solutions increased to the levels required. There might even be some people who would question whether an economy subject to such intervention should still be called entirely “capitalist.”

Second, this will be a continuous battle, for every policy put forward will be opposed by an incumbent interest. The fossil fuel representatives gathered in Glasgow are as nothing next to the number of their lobbyists who are being deployed in national legislatures. The banks and pension funds will carry on financing them until they are legally prevented from doing so. For every politician with green voters to satisfy there will be another — often the same one — with local high-carbon jobs at risk and consumers complaining about higher prices.

In this field of political conflict — one that will inevitably dominate the next decade — it matters that there are people on the streets and young people who are angry, for the demonstrators in Glasgow and elsewhere across the world are setting the terms of the debate. Climate justice, fairness for future generations, net zero, 1.5°C, a green new deal, green capitalism and anti-capitalism: we are only going to hear more of this argument. For those seeking to understand what the political and economic future might look like, this will surely be it. •

The post “System change, not climate change!” appeared first on Inside Story.

The case for pessimism was made eloquently — if perhaps unintentionally — by Sir David Attenborough in a powerful address to the Leaders’ Summit that opened the conference on Monday. Tracing the precipitous rise in the concentration of carbon in the atmosphere over the past hundred years, the ninety-five-year-old naturalist reached a simple conclusion: “We are already in trouble.”

The prime minister of Barbados, Mia Mottley, was even more brutal in her speech in response. The developed world had failed to meet its promises to cut emissions and provide financial assistance to the poorest countries. The cost, she said, would be measured in lives, and in livelihoods. “It is immoral, and it is unjust.”

Both Attenborough and Mottley insisted humanity can still turn things around. But listening to the rhetoric of the 119 leaders whose speeches filled the next two days — all of them stressing how much their countries were doing, despite most of the facts showing otherwise — it was hard for the rational brain not to feel overwhelmed by pessimism.

The facts are pretty simple. To have a reasonable chance of limiting global heating to the UN goal of 1.5°C above pre-industrial times, global emissions need to be cut by 45 per cent by 2030. On current trends they will rise by 16 per cent.

And yet COP26 is strangely a place of extraordinary optimism. This is mainly a function of its structure. Most of the 25,000 attendees aren’t country negotiators here for the UN climate talks, who probably number around 2500. The rest are people who work professionally on climate change, for businesses, charities and activist groups, universities, city and regional governments, and myriad others. They are here not to negotiate but to sell their wares, meet their international colleagues and network tirelessly.

For a COP is never just — or even mainly — a UN negotiating meeting. It is the world’s annual global climate expo and conference. And almost everyone who comes has a positive story to tell about how they are tackling climate change in some way. For some reason the climate sceptics and the opponents of climate action don’t seem to regard themselves as welcome, and they don’t show up.

So walk among the country and business “pavilions” in the middle of the conference centre — a slightly grandiose name for a series of pop-up stalls and exhibits — and the good news is relentless. Every country is doing so much to tackle the problem, from renewable energy to flood defences, sustainable transport to overseas aid. Every business is committed to “net zero,” engaging its eager workforce in meeting the goal. Every technology company has a world-leading solution, from green hydrogen to drought-resistant crops.

And every hour of the day all the side rooms are full, hosting hundreds of fringe meetings on every possible aspect of climate change. And here too the mood is powerfully feel-good. Of course most of them start with speakers recounting how dire the climate situation is. But they quickly move on to what can be done to tackle it; indeed what their organisation is already doing, in partnership with local communities and local businesses, supported by benevolent financiers and researched by concerned academics. The poorest people in the world may be suffering from severe climate impacts, but a lot of people claim to be helping them.

Observing all this it is easy to be cynical. But it’s also hard not to be affected. It can only be a good thing that a global climate industry of this scale and variety exists. There will surely be no solutions without it. And it has contributed to the remarkably upbeat mood of the official COP proceedings in the first few days.

The negotiations themselves have barely started. An agenda was agreed on the first day — you might think that this would be routine, but plenty of seasoned negotiators saw it as something of a triumph — and the committees and working groups on key issues have held their opening sessions. But most of the attention has been taken up by a series of side agreements carefully choreographed by the British hosts. And the extent and ambition of these have taken many by surprise.

The first was on deforestation. A new pact was announced between more than a hundred governments, representing over 85 per cent of the world’s forests and including Brazil, Indonesia and the Democratic Republic of Congo, pledging to halt and then reverse deforestation and land degradation by 2030. Donor countries would give US$12 billion for forest protection and restoration; many of the countries, companies and financial institutions most involved in trading forest products, including timber, pulp and palm oil, would eliminate deforested areas from their supply chains.

After forests, methane. US president Joe Biden announced that ninety countries had agreed together to cut methane emissions by 30 per cent by the end of the decade. Methane, produced from agriculture, oil and gas, and landfill sites, is a much more potent greenhouse gas than carbon dioxide: if fully implemented, the pledge could limit global heating by about 0.2°C by 2050.

Green technologies were next in the spotlight. Forty countries, including the United States, China, India, the European Union, Britain and Australia, signed up to a “Breakthrough Agenda” to coordinate the global introduction of clean technologies, starting with zero-carbon electricity, electric vehicles, green steel, hydrogen and sustainable farming. The governments said they would align standards and coordinate investments to scale and speed up production. The aim is to bring forward the tipping point at which green technologies are more affordable and available than fossil-fuelled alternatives.

Then it was the turn of finance. Mark Carney, former governor of the Bank of England and Britain’s climate finance envoy, announced that financial institutions holding US$130 trillion of assets under management had committed to hitting net zero emissions targets by 2050. Including more than 450 banks, insurers and asset managers across forty-five countries, the Glasgow Financial Alliance for Net Zero said it could deliver as much as US$100 trillion of financing to help economies decarbonise over the next three decades.

Not everyone applauded all this. Observers noted that a very similar agreement on forests had been announced at the UN Climate Summit in 2014. Nothing much had happened since then; would this time really be any different? It was pointed out that China, one of the world’s largest sources of methane, had not joined the new agreement. Several other green technology initiatives over the last ten years, including a “Mission 2020” platform announced with great fanfare in Paris six years ago, had proved disappointing.

The finance announcements attracted the most criticism. Non-government organisations quickly pointed out that the financial institutions were not promising that all the financing would be focused on environmentally friendly companies. Many of the banks and pension funds would only be greening a small proportion of their portfolios while happily continuing to invest in fossil fuels. The “net zero” commitments of the firms whose shares they owned were in many cases pretty dubious, resting on “offsetting” mechanisms (such as buying trees in developing countries) that can’t be guaranteed to have any effect.

And yet these agreements can’t be wholly dismissed. Many involved a large number of countries that had not previously signed up to such pledges; and most came with a lot more money — both public and private — than previous attempts. A specific agreement between South Africa, the United States and several European countries to help South Africa move away from coal particularly impressed observers: it included both significant policy reform and serious financial support.

These side agreements have a slightly strange relationship to the main negotiations. Formally, they have nothing to do with them: they do not involve the universal participation of the 197 parties to the UNFCCC (the Framework Convention that governs the talks) but rather are “coalitions of the willing.” Most of them involve private sector partners that have no formal place in the UNFCCC.

Yet in another sense they are clearly part of the process of cutting global emissions and increasing climate-related finance, which are the two main goals of COP26. Indeed, they are rather more concrete manifestations of this than anything negotiated in the conference hall. So the British government is trying to find a way of bringing them into the final COP agreement. In particular it wants to show how these agreements will help close the emissions gap between the 1.5°C trajectory demanded by the science and the current total of country pledges. Initial analysis has been uncertain: it’s possible that these sector-specific emissions reductions will be the means by which the “nationally determined contributions” of the participating countries will be achieved. Or it could be that they will enable those contributions to be exceeded.

And the nationally determined contributions themselves have also received a welcome boost in the first few days. China and India were the only two major countries who came to the COP without having announced new commitments for 2030. When it did come, China’s statement added nothing to what it had already pledged. Coupled with president Xi Jinping’s non-appearance at the Leaders’ Summit, it has made many observers question China’s current stance: a country that once prided itself on being the champion of the developing world is appearing to absent itself from this crucial moment.

India, by contrast, announced a much more ambitious contribution than anticipated. Speaking in his leader’s slot, prime minister Narendra Modi declared that India would commit to net zero emissions by 2070, and half of its electricity production from renewables by 2030. The former — a later date than China (which has committed to net zero by 2060) and apparently too late to be compatible with the 1.5°C goal — seemed disappointing to some. But scientific observers noted that this was not necessarily the case: it was indeed too late if Modi meant net zero carbon dioxide, but not if he meant net zero from all greenhouse gases. And the renewables pledge was truly ambitious: with India’s proportion of renewable electricity currently under 20 per cent, a more than doubling in less than ten years is a startlingly radical goal.

And so the early feeling in Glasgow is considerably happier than many had feared. More side agreements are still to be announced, including on phasing out coal and electrifying cars. No one will admit to expecting that COP26 will be a raging success. But some are allowing themselves a small boost of optimism. •

The post Closing the Glasgow gap appeared first on Inside Story.

COP26 is not the first “last chance,” of course. Several others have been so billed over the past decade or so. But this is indeed an important meeting because it’s the moment specified under the 2015 Paris climate agreement when countries must strengthen their commitments to tackle global heating. After three years of biblical droughts, fires and floods on every inhabited continent — and melting ice sheets on the other — no leader can claim that climate can safely be left to the future.

COP26 must tackle two big issues. The first of these is the gap between the aggregate commitments countries have made to cut their greenhouse gas emissions by 2030, and the total the scientists have said is required to keep global heating to the Paris goal of 1.5°C above pre-industrial levels. To have a reasonable chance of achieving this limit will require global emissions to be around 26 gigatonnes of carbon dioxide equivalent, or GtCO2e, in 2030. Countries’ announced emissions reduction pledges will reduce global emissions to around 46–49 GtCO2e, leaving an emissions gap of 20–23 GtCO2e. Put another way, we are currently on track for an average global temperature rise not of 1.5°C but of 2.4–2.9°C, levels at which the severest climate impacts become certain.

The second issue for COP26 is the finance gap. In Paris the richest countries promised the poorest that they would mobilise US$100 billion a year by 2020 to help them tackle climate change, and more thereafter. At the last count, in 2019, they had raised around US$80 billion. Developing countries have been loud in their protests.

But there’s a problem. Although the emissions and finance gaps are the big issues COP26 must address, neither will actually be negotiated in Glasgow. They are not even on the official agenda for the talks.

How is this possible? To understand it we need to delve into the past, for what might be called the “Glasgow paradox” — that the two most important issues at COP26 will not actually be the subject of its negotiations — has its origins in the turbulent history of UN climate negotiations.

The treaty underpinning these negotiations is the UN Framework Convention on Climate Change, or UNFCCC, agreed at the first Rio Earth Summit in 1992. Just a few years after the first assessment of global warming by the Intergovernmental Panel on Climate Change, or IPCC, it set out an overall goal and some governing principles for how the international community should control emissions and adapt to a warming world. In doing so it made a very clear distinction between developed and developing countries. Countries had “common but differentiated responsibilities”: while all had a general responsibility to act, developed ones — the Western world and Eastern Europe — had the specific obligation to reduce their emissions and provide finance and technological support to developing countries. In 1992 China was still unequivocally “developing.”

These principles were then enacted in the Kyoto Protocol, agreed at COP3 in 1997. The developed countries negotiated how much each would commit to cutting its emissions by 2008–12. (Some, such as Australia, were allowed to increase them.) Developing countries took on voluntary actions only — and insisted that these depended on financial and technological assistance from the rich world.

Kyoto was a landmark agreement, backed by sanctions in international law for non-compliance. But it failed at its first hurdle. Though personally negotiated by US vice-president Al Gore, it attracted not a single vote in the US Senate. America, its legislators agreed, could not accept a treaty in which China did not have the same legal obligation to act.

The emissions reduction targets negotiated under the Kyoto Protocol were largely achieved. But the US’s absence was not acceptable to the European Union, Japan and the rest of the developed country signatories, and they sought to negotiate a new agreement at COP15 in Copenhagen in 2009. Copenhagen foundered, though, when the United States insisted that China — now a rapidly growing “emerging economy” — must take on the same legal obligations to cut its emissions (and to be transparent about reporting them) as it had. China refused, and the negotiations broke down in acrimony and recrimination.

Fast-forward to COP21 in Paris in 2015. A third attempt was being made to agree on an implementing treaty. Now China was the world’s second-largest polluter and a major economic competitor to the United States and the rest of the developed world. Brazil, South Africa, India and other emerging economies had also become major contributors to climate change, and each was now willing to take on emissions reduction commitments. But they weren’t willing to negotiate these with other countries. And they were not prepared to have them made legally binding in international law, with Kyoto-style sanctions for non-compliance.

If the emerging economies wouldn’t do this, nor would the United States, which still insisted on legal parity. So the Paris agreement found a compromise. It set out a new and comprehensive set of rules on how governments should act, including the legal requirement that they must make a “nationally determined contribution” to the global climate process. But it was up to each country to decide for itself what that contribution should be.

The Paris agreement was undoubtedly a breakthrough. For the first time, every country in the world had to tackle its emissions, and to do so in pursuit of a specific temperature goal — limiting heating to “well below” 2°C, with an aspiration to keep it to 1.5°C. The agreement even set a “net zero” goal, albeit for some time in the second half of the century.

But Paris had a huge flaw. The contributions submitted by countries alongside the agreement didn’t add up to the agreed aggregate goal. The emissions gap was born.

Paris has a mechanism designed  to patch this up. It requires the IPCC to conduct a “stocktake” of the climate science three years after the agreement, and assess progress so far. And two years after that, countries must return to the table with stronger commitments.

The IPCC duly reported in 2018, with a much starker injunction that global emissions had to be cut by 45 per cent by 2030 to hold heating to 1.5°C. COP26 is now the five-year moment (having been postponed from 2020 because of Covid) when the emissions and finance gaps must be dealt with.

But the Paris compromise still rules. It is still up to individual countries to make their emissions cuts and finance pledges on their own. It is still not the task of the UN climate talks to negotiate these, and still not even the job of countries to discuss with one another what they each should be doing. Hence their absence from the COP agenda.

And despite much stronger commitments, countries are still not doing enough. The United States, the European Union, Britain, Japan and others have all this year strengthened their emissions reduction pledges for 2030, some very dramatically. But the gap to the 1.5°C trajectory remains. Although China and India have not yet announced their contributions (the only major emitters not to have done so), they can’t get near to closing the gap on their own.

So the emissions and finance gaps are what COP26 is primarily about, but neither is on the actual agenda. Of course, the conference will discuss emissions reductions and finance in general, and no doubt bitter speeches from developing countries about the inadequate commitments of the developed world. But there will be nowhere in the talks where the gaps can be narrowed.

So what will be negotiated at COP26? The official agenda is all about the “Paris rulebook,” the task of turning the general principles of the Paris agreement into specific, detailed regulations. Much has already been done in the intervening years, but there are still some major sticking points.

The largest of these is about “carbon markets.” These are the mechanisms by which developed countries, including Australia, and companies hope to be able to buy emissions reductions (such as tree planting) done in developing countries, to save them the difficulty and cost of reducing emissions themselves. Many companies claiming to be committed to acting on climate change (notably in the oil and gas and airline sectors) are expecting to get much of their emissions cut in this way — to the great consternation of climate campaigners, who see such “offsetting” largely as an unsustainable scam. Many developing countries are not happy about carbon markets either, and the Glasgow talks are likely to be tough.

So the Paris rulebook is not insignificant. But it is hard to argue that it is what’s really important. The negotiations over the regulations are highly technical, barely needing ministers, let alone leaders. And they are certainly not what climate activists, the public or the media think COP26 is about.

So how can this mismatch of expectation and reality be overcome? As the COP convenor, the British government hopes to bridge the gap in three ways.

First, it has brought the leaders together (which does not normally happen at COPs) precisely to discuss the shortfalls in emissions cuts and finance. In an ideal world it would be extracting stronger commitments than the assembled presidents and prime ministers have so far announced.

They might — just — achieve this on the finance gap, where recent announcements by the United States and others have offered hope that the US$100 billion promise could finally be achieved, and maintained up to 2025. But it seems extremely unlikely that any major country will improve its emissions pledge. In most cases, these have been painstakingly won in each country’s domestic politics, and no leader will want to reopen the argument at home. With China’s leader absent, the idea of a new “grand bargain” between the great powers looks out of the question, too.

But Britain still hopes that it can at least get the leaders to acknowledge that they’re not doing enough, and to commit conclusively to the 1.5°C goal and to the new goal of achieving net zero emissions by 2050. This certainly looks possible.

Second, Britain hopes to get some “side agreements” in four key areas where emissions need to be brought down. These are on building and financing new coal-fired power stations; slowing deforestation; accelerating the phase-out of petrol and diesel cars; and mobilising trillions of dollars of private finance for investment in green infrastructure and technologies. In each of these areas countries and companies have both been signing up to new commitments. So Britain hopes that “real economy” announcements in these areas will show that genuine progress is being made. It will try to bring these for the first time into the formal declaration at the end of the conference.

Third, Britain will encourage the demand by vulnerable countries that parties to the agreement should come back earlier to review their pledges. Under the Paris agreement this is due in 2025: given the continuing emissions gap, there will be huge pressure to agree an earlier review date, probably 2023.

But even if they are achieved, will these moves assuage the public demand for more urgent and stronger action? It is hard to see how they could. The climate scientists and campaigners — with Greta Thunberg their clear-eyed clarion — will say that it isn’t enough. In the conference hall they will be joined by the most climate-vulnerable countries. It will be hard for the media to report anything else. •

The post The Glasgow paradox appeared first on Inside Story.

Johnson’s claim — made in an upbeat, joke-strewn speech to last week’s Conservative Party conference — looked like a novel way of brushing aside Britain’s current woes. The country’s troubles, he said, were just the growing pains of the country’s post-Brexit transition to a “high-wage, high-productivity economy” no longer dependent on immigrant labour. Castigating both Labour and Tory governments over the last thirty years for failing to deal with structural weaknesses, he declared that his administration would at last fashion a different and better kind of economy.

To most observers Johnson’s optimism seemed outlandish. Britain is currently experiencing a welter of economic problems. Tens of thousands of East European workers have gone back home since Brexit, leaving critical labour shortages in key sectors. A scarcity of lorry drivers has meant long queues at garages; too few seasonal fruit pickers has left produce rotting in the fields; an exodus of abattoir workers means healthy pigs are being shot on the farm. Not just supermarkets but toy shops are warning they will be short of stock at Christmas. As global gas prices rocket, meanwhile, Britain has been hit particularly hard. The government is subsidising vital fertiliser-making plants; energy-intensive industries such as steel and paper are desperately seeking government support to stay solvent.

The idea of drawing anything positive out of this might be dismissed as fantasy. After all, Johnson can’t argue that losing so many immigrants was simply misfortune: this was precisely what the “Leave” campaign he led during the Brexit referendum promised voters. With a small exception for 5000 lorry drivers (and only till Christmas), the government has steadfastly rejected business pleas to issue more visas for key workers, instead telling industry bosses that if they want more staff they should pay higher wages. Yet it is already painfully obvious that this won’t be enough: in key sectors there simply aren’t enough workers in the population both sufficiently skilled and willing to do the manual work previously done by East Europeans.

And yet Johnson also has a point. For it is indeed the case that over the past four decades Britain has become a predominantly low-wage, low-productivity economy. Since its dramatic deindustrialisation in the 1980s, the country has lost manufacturing jobs much faster than its comparator economies. Manufacturing now makes up just 10 per cent of GDP, compared with 19 per cent in Germany and 16 per cent in Italy. The financial sector, Britain’s major export industry, continues to provide high salaries and skilled work. But the country’s once-lauded “flexible” labour market has proved a powerful driver of low productivity.

Fifteen per cent of the UK workforce is now self-employed, many of them contracted to just one client — a convenient way for the employer to avoid paying social security and providing holiday and sick leave and other employee benefits. Almost a million people are on “zero hours” contracts, with their working hours determined just a few days (or hours) in advance, and no level of work guaranteed. This has kept employment levels high — much higher than in other European economies. But it has also kept wages low, and given employers little incentive to invest in the skills or capital equipment that would raise productivity. Output per hour in Britain is around four-fifths of German and French levels.

Where Johnson is wrong is on immigration. Contrary to popular belief, there is no evidence that immigration reduces wages. Though it does mean a bigger labour supply, it also means higher demand (immigrants are also consumers) and therefore higher employment. The two effects largely cancel one another out. And, as Britain is now painfully discovering, immigrants do (or did) jobs that Britons simply don’t want to.

If his views on immigration are put to one side, Johnson’s criticism of the British economic model is much more usually heard on the left. This is, after all, a classic critique of modern capitalism: dominated by financial capital, more concerned to extract short-term profit than invest in long-term prosperity, seeking to pay workers as little as possible. And the solutions too come more naturally from the left: a stronger role for government in directing investment through active industrial policies; stronger trade unions to bargain wages up; reforms to corporate governance and finance to end the fixation with short-term returns.

Johnson didn’t propose any of these things, of course. His conference speech was almost entirely rhetoric, with virtually no policy content. But the implication of his remarks was not lost on the Conservatives’ ideological bedfellows. “Vacuous and economically illiterate,” railed the free-market think tank the Adam Smith Institute. “An agenda for levelling down to a centrally-planned, high-tax, low-productivity economy.” It would be fair to say that they didn’t like it.

And the reason is not hard to identify, for Johnson is confronting the legacy of the Conservatives’ great heroine, Margaret Thatcher. It was Thatcher who initiated the deindustrialisation of the British economy; who deregulated the financial sector and let foreign capital flow in freely to buy up Britain’s most valuable companies; who destroyed the power of the unions and created the flexible labour market. The British economic model is of the Tories’ own making, and if Johnson is serious about reforming it he will have to break decisively with the party’s free-market nostrums.

This is not just about raising Britain’s productivity and investment levels. All of Johnson’s stated priorities will require leftish policies. He has promised to reform the country’s poor-quality social care system — and has already raised income taxes to pay for it. He has pledged to “level up” Britain’s disadvantaged regions — which are more or less everywhere that isn’t London and the southeast of England. But that will require both higher public spending and more directed investment; he has already established a state-owned National Infrastructure Bank for the purpose.

He is also committed to tackling climate change, with a goal of achieving a 78 per cent reduction in emissions (on 1990 levels) by 2035 and “net zero” by 2050. That will require even more extensive regulation of the energy sector and industry, and public investment in energy efficiency and sustainable transport. None of these policies is comfortable territory for the post-Thatcher Conservative Party, and his critics on the right have not been slow to say so.

It is still possible for Johnson to differentiate himself from the Labour Party and the left. The new battleground is Britain’s version of the culture wars, in which the Conservatives cast themselves as the defenders of British nationhood and tradition against the “woke” metropolitan liberals who criticise the country’s colonial history and proclaim their multiple identities, none of them patriotic. This political dividing line, virulently reinforced by Britain’s largely conservative press, may work to bolster Tory support of a particular kind. But it doesn’t look like a strategy to win elections.

And this, in the end, is how Johnson’s foray into a new ideological positioning will surely be judged. If he can succeed in reviving the British economy with interventionist policies and higher taxes and spending after the pandemic — and if his plans to reform social care, reduce geographic inequalities and tackle climate change begin to look as if they might work — then the next election, due in 2023 or 2024, could vindicate his optimism. But if the coming months spiral downward into a Shakespearean winter of discontent, and the prime minister’s rhetoric proves to be as unhinged from reality as it looks to many today, then all Johnson will have proved is that he can wield words with boisterous skill.

But that has never been in doubt. It is on whether he can govern competently that the jury of British public opinion remains out. •

The post Between the idea and the reality appeared first on Inside Story.

Judging by the bemused looks in his audience, few were familiar with the musical oeuvre of Sesame Street circa 1970. But it was not really them that Johnson was seeking to convince. It was his own Conservative Party and his own government back home. For the prime minister has found himself facing an acute difficulty as COP26 approaches.

It’s not merely that Johnson has something of a reputational problem of his own. Only six years ago he was a paid-up climate sceptic, accusing global leaders of being “driven by a primitive fear that the present ambient warm weather is somehow caused by humanity; and that fear — as far as I understand the science — is equally without foundation.”

Given that Johnson’s entire career has been one of political shapeshifting according to the views of his audience and his prospects of personal advancement — he’s the socially liberal mayor of London who became the figurehead of the Brexiteers’ “Leave” campaign — Johnson’s conversion to climate advocate has surprised no one. His problem, rather, is that being green is actually proving much more difficult than he had bargained for when he blithely offered to host the crucial UN climate talks a couple of years ago.

His rationale was that Britain needed to show after Brexit that it remained a big international player: no longer central to Europe, but still a “global Britain.” What could be a better signal than leading the world in tackling the climate crisis? Unfortunately for Johnson it is now clear that Britain is almost completely failing to do that.

At home, the Conservative government boasts that Britain is the first major country to put a “net zero” emissions reduction target into law: under the amended Climate Change Act, the government is obliged to achieve this by 2050. It has also adopted one of the world’s most ambitious medium-term targets, a cut in emissions of 78 per cent on 1990 levels by 2035. (Of this, 44 per cent had already been achieved by 2019.)

But setting targets is the easy bit. Meeting them is more difficult. And here Britain is well off track. As the government’s independent Climate Change Committee has been warning for some years, policy has lagged well behind promises. In its latest report on the government’s progress, the committee didn’t mince its words. “This defining year for the UK’s climate credentials,” it declared, “has been marred by uncertainty and delay to a host of new climate strategies. Those that have emerged have too often missed the mark. With every month of inaction, it is harder for the UK to get on track.”

To respond to this criticism, the government has for some time been promising a “net zero strategy.” But this has been repeatedly delayed amid disagreements between Johnson and his ambitious chancellor of the exchequer, Rishi Sunak. The Treasury under Sunak has been preparing a review of the costs of achieving net zero, designed to show that it will hit middle- and lower-income earners hard through higher energy, transport and food prices. The review’s methodology is highly contested. It takes almost no account of innovation, which has already pushed the costs of green technologies — wind and solar power, for example, and electric vehicles — far below the levels predicted when policies to promote them were introduced. In this way, the Treasury’s critics argue, the review will considerably overstate the actual costs of achieving the net zero target.

But this is not really an argument about obscure economic methodologies. It is an entirely political one, for Sunak is pitching himself as the Conservatives’ next leader, and to do that he wants to appeal to the sizeable chunk of Tory MPs and party members who are not at all signed up to the net zero idea.

There are two sources of resistance. One is cost: the genuine anxiety that moving to a net zero economy — even over thirty years — will hurt Conservative supporters, and that any government pursuing it will pay a political price. The other is that it is patently obvious that the only way to make such a transition is for government to intervene much more actively in the economy, through industrial strategy, regulation and taxation, and such a prospect makes most Tories deeply uncomfortable.

This resistance has already spurned a new Conservative organisation, the Net Zero Scrutiny Group, designed to rally political opposition and slow down the government’s climate ambitions. Not coincidentally, it was founded by the same backbench MP, Steve Baker, who led the hardline Tory Brexiteers in parliament and harried Theresa May’s government into successive concessions and defeats until Boris Johnson replaced her and acceded to their demands.

These factors mean that Johnson is feeling the squeeze. On the one hand, he needs to go into COP26 with an ambitious domestic plan to achieve net zero. It will hardly do for the conference hosts, desperately trying to persuade other countries to take stronger climate action, to be so visibly unable to produce a plan to do so themselves. On the other, Johnson can’t afford to risk producing a plan that in its implementation could cost the Conservative Party votes among its core supporters — and give Sunak the ammunition with which to succeed him.

This is not, of course, a problem unique to Britain. Some version of this political squeeze is occurring in almost every advanced economy. Most governments accept that they must take stronger action to reduce emissions. Most will say (rightly) that the green transition offers huge opportunities to develop new industries and create new jobs. But all are worried that higher-carbon industries will lose out, and that consumers and households will face higher costs and punish them at the ballot box.

And this is why Johnson has a problem with COP26. The conference in Glasgow is just a month away. But the media triumph that Johnson envisaged when he decided to host it looks increasingly unlikely. On the contrary, he could be facing a PR disaster: a conference denounced for its failure not just by Greta Thunberg but by many of the UN climate negotiators themselves.

And the reason is that, if no major advanced country is doing enough to achieve net zero, the global emissions trajectory is even further off track. With China’s economic growth having resumed after Covid, Brazil experiencing rapid deforestation, and Russia and India largely uninterested in the climate agenda, the collective commitments of governments are not nearly enough to hold the global average temperature rise to the “well under 2°C” goal of the Paris Climate Agreement, let alone the 1.5°C that the poorest countries demand.

The numbers are these. To have a reasonable possibility of being on track to hold the temperature rise to 1.5°C, the Intergovernmental Panel on Climate Change says global emissions in 2030 must be limited to around 26 gigatonnes of carbon dioxide equivalent, or GtCO2e. Announced emissions reduction pledges for 2030 will reduce global emissions to 46–49 GtCO2e. The “emissions gap” of 20–23 GtCO2e, between where the world needs to be and where it is currently likely to be, represents almost an additional 100 per cent of maximum desirable emissions.

If many countries were still to announce their commitments, COP26 might still have a chance of success. But among large emitters only China has yet to make its new 2030 pledge. The European Union, the United States, Japan, Britain, Brazil, Australia and most others have already submitted their “nationally determined contributions,” the UN term for emissions pledges. As COP president, Britain is desperately trying to persuade China to announce an ambitious target — for example, to have its emissions peak earlier, in 2025, and commit to stop building coal-fired power stations. But China has never been amenable to external pressure of this kind, and after the recent defence pact announcement between the United States, Australia and Britain, it is particularly resistant to British overtures. China will make a big commitment. But it can’t bridge the global emissions gap.

So what will happen at COP26? There will be negotiations. But the gap to 1.5°C will remain. And in those circumstances it will be almost impossible for the poorest and most vulnerable countries to agree on a final communiqué, except one that acknowledges the conference has failed. And it will be very hard for the global media to report anything else.

One of the popular stories about Boris Johnson is that as a small child he wanted to become “world king.” Perhaps he thought COP26 might fulfil his dream. Right now it looks as if it could turn into his worst nightmare. •

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What fewer people have noticed is that it was also a remarkable display of the political power of civil society. The Paris agreement was forged over two gruelling weeks of negotiations between governments. But it was crafted into being over the previous five years by a broad coalition of forces from global civil society.

To understand this, we need to understand the astonishing nature of the agreement reached. The Paris deal requires governments to do something none of them wants to do. Governments hate making commitments that they do not know they can meet, and for which the cost is unknown. But this is precisely what the agreement does. It sets the goal of ensuring that greenhouse gas emissions peak as soon as possible, and then commits to phasing them out altogether in the second half of the century.

This is not quite a death sentence for fossil fuels, since it may be possible to capture some emissions in natural systems or underground. But it comes close, requiring their almost complete replacement by renewable energy (and possibly nuclear power), even while global energy demand continues to grow. At the same time it requires a complete end to deforestation within the next decade or so, even while agricultural production must rise to feed a growing human population. And it means a fundamental redesign of the world’s cities to reduce energy and transport emissions, even while the world continues to urbanise.

All of this is necessary if the rise in global temperature is to be held to “well below 2ºC,” or even to 1.5ºC as the agreement stipulates. But right now we do not know precisely how achieving “net zero” greenhouse gas emissions will be technologically possible, and we certainly have no idea of the cost. Eighty per cent of the world’s energy still comes from fossil fuels despite the advances in renewables in the last decade.

It is therefore extraordinary that governments have set themselves this radical goal. But they have done more than this. The agreement requires them, every five years, to set progressively more ambitious targets to reduce emissions. These targets must be based on a scientific “stock-take,” also conducted every five years, that will show how far current plans fall short of the 2ºC and 1.5ºC targets. The Paris agreement therefore guarantees that governments will come under huge pressure to strengthen their targets on a regular basis. To what degree individual governments respond to such pressure remains their prerogative, but it will almost certainly drive them into policies they are reluctant to adopt, such as taxing carbon, reducing subsidies for fossil fuels and phasing out the use of coal. This will antagonise powerful vested interests, and risks stoking political opposition.

Governments hate pressure of this kind. So why on earth have they agreed to subject themselves to it?

The quadruple alliance

The answer is that they have effectively been forced to. Following the failed Copenhagen conference in 2009, an informal global coalition of NGOs, businesses, academics and others came together to define an acceptable outcome to the Paris conference and then applied huge pressure on governments to agree to it. Some of this activity was formally coordinated; much of it came from individual organisations and coalitions. But the combined effect was to generate a political momentum that proved strong enough, in the end, to overcome all resistance. Civil society effectively identified the landing ground for the agreement, then encircled and squeezed the world’s governments until, by the end of the Paris conference, they were standing on it. Four key forces made up this effective alliance.

The scientific community

The first was the scientific community. Five years ago the Intergovernmental Panel on Climate Change, or IPCC, which reviews and summarises evidence from the world’s climate scientists, was in trouble. Relentless attacks from climate sceptics and a number of apparent scandals – the “climategate” emails, dodgy data on melting Himalayan glaciers, allegations surrounding its chairman – had undermined its credibility. But the scientists fought back, subjecting their work to even more rigorous peer-review and hiring professional communications expertise for the first time. The result was the IPCC’s landmark Fifth Assessment Report, published over several months in 2013–14. The report was not just another painstakingly sober – and sobering – account of the latest evidence on the impacts of climate change and the costs and benefits of acting on it. It also contained two powerful central insights.

First, the IPCC report introduced the concept of a “carbon budget”: the total amount of carbon dioxide the earth’s atmosphere can absorb before the 2ºC temperature goal is breached. Since the beginning of the industrial revolution, that amounts to around 800 billion tonnes of CO2. Of this, approximately 530 billion tonnes has already been used up, which leaves another 270 billion tonnes available to the world and its future economic growth. At present emission rates, even without growth, that would be used up in less than thirty years. So cutting emissions cannot wait.

The other insight was that these emissions have to be reduced until they reach zero. The IPCC’s models are clear: the physics of global warming means that to halt the world’s temperature rise, the world will have to stop producing greenhouse gas emissions altogether. If we want to hold it to under 2ºC, net zero carbon emissions will have to be reached by 2060–75, and all greenhouse gases emissions halted before the end of the century.

The economic community

The IPCC’s report put the scientific evidence on climate change right back on the political agenda. But it was a second set of forces that really changed the argument. Back in 2006, the British government’s Stern report had convincingly shown that the costs of future climate change were far greater than the current costs of preventing it. But since the financial crash in 2008–09, cutting emissions had fallen down the priority lists of the world’s finance ministries. The old orthodoxy that environmental policy was an unaffordable cost to the economy reasserted itself. A new argument was required.

Enter the Global Commission on the Economy and Climate, an initiative hatched by a number of economists, research institutes and the Swedish, Norwegian and British governments to re-examine the evidence on climate change and economic growth. Chaired by the former Mexican president Felipe Calderón, and comprising more than twenty leading figures from politics, business and finance, the Commission’s report, Better Growth, Better Climate, set out a powerful new argument. Cutting emissions was not just compatible with economic growth: it could generate better growth, with lower air pollution, more liveable and economically efficient cities, more sustainable use of land and greater energy security.

Published in September 2014, the report drew on longstanding academic work on “green growth” and the practical evidence of international organisations such as the UN Environment Programme and the UN Development Programme. Its message quickly reverberated around the world: by the time Calderón’s presentation received a standing ovation at the Lima climate conference in December 2014, it had become the dominant discourse of climate action, repeated by governments and businesses alike. The heads of the mainstream economic organisations quickly took it up: soon, some of the strongest advocates of low-carbon growth included Christine Lagarde of the International Monetary Fund, Jim Kim of the World Bank and Ángel Gurría of the OECD.

At the same time, a quite separate economic story was being told by a tiny NGO in London called Carbon Tracker. Founded by former investment managers Mark Campanale and Nick Robins, Carbon Tracker took up the IPCC’s idea of the global carbon budget and turned it into a startling proposition. If the world was to stay within the 2ºC limit, 80 per cent of the world’s remaining oil, gas and coal reserves were now effectively “unburnable” and would have to be left in the ground. If governments acted on their own commitments, it would leave many of the world’s fossil fuel companies with “stranded assets,” unable to continue planned production and with heavily devalued share prices. The world’s stock markets and pension funds were effectively sitting on a “carbon bubble.”

Carbon Tracker’s analysis spread like wildfire. Some of the biggest shareholding institutions sat up. The insurance sector had already begun to understand the risk that heightened climate impacts could have both on its products (as insurance claims from extreme weather events rocketed) and on its investments. Within just four years of Carbon Tracker’s first report, Mark Carney, governor of the Bank of England, was warning of the financial risks of climate change, and the global Financial Stability Board was starting to draw up guidelines on how companies and asset holders should “stress test” their investments against different climate scenarios and publicly disclose their risks.

The businesses

As these narratives of science and economics gathered pace, a critical new player began to amplify them. The traditional stance of business organisations had been to oppose stronger climate policy. But over the last decade a number of leading global corporations, exemplified by the consumer goods giant Unilever, began to argue that strong climate policy was in the interests of business. On the one hand, climate change’s threat to water and food production in supply chains around the world had become increasingly clear. On the other, the growth of green and renewable energy policy had created a global market in low-carbon and environmental goods and services now worth US$5.5 trillion and growing at 3 per cent a year. This has generated whole new industries – such as wind and solar power – dependent on strong climate policy.

For Unilever and other global giants such as Nike, IKEA and Bank of America, it was not enough for businesses to take advantage of the new markets: they should be advocating for policy change. The result was the creation of a new global network, We Mean Business, that brought together seven global business and investor organisations to lobby in favour of climate policy and for a new international agreement. By September 2014 over 1000 global companies were calling on governments to introduce “carbon pricing” through carbon taxes or emissions trading schemes. By May 2015 organisations representing over 6.5 million businesses were urging an ambitious climate agreement in Paris.

The non-government organisations

Meanwhile, environmental NGOs had shifted their campaign tactics in the aftermath of the Copenhagen conference. While some of them downgraded climate campaigning altogether, others focused their attention on a different battle: the fight against fossil fuels.

The initial focus was coal. Beginning in the United States and western Europe, broad-based coalitions with the aim of stopping the building of new coal-fired power stations spread rapidly across the world, as protests over air pollution, land rights and corruption – and the attractions of renewable energy – aligned with climate concerns. Local groups joined forces with sophisticated national campaigns, at great personal risk to protestors in some countries. But the results have been remarkable: since 2010 new coal generation has been virtually abandoned in the United States and Western Europe, and almost 900 projected plants have been cancelled worldwide. Global coal demand has now tipped into decline, with the movement in the United States and Europe now pressing to phase out its use altogether.

Greenpeace turned its attention to protecting the Arctic, and in particular to Shell’s plans to drill for oil there. Combining its usual methods of spectacular direct action with the mass campaigning of over seven million supporters around the world, the campaign achieved a landmark victory just a few months before Paris, when Shell announced its withdrawal from the Arctic.

What made the NGO revival after Copenhagen different was its global nature. As it became clearer in many developing countries that climate change was already occurring, the issue increasingly became a focus for a huge range of civil society organisations struggling for development, women’s rights, the rights of indigenous people and other social and economic issues. The global labour movement, too, took it up. The International Trade Union Confederation shifted its campaign strategy away from simply defending jobs under threat and towards arguments for industrial and community support policies to enable a “just transition” from a high-carbon to low-carbon economy. In many countries city mayors and state governors also became critical advocates and exponents of change.

At the same time, two much newer NGOs entered the fray. 350.org, founded by the American writer and activist Bill McKibben, fired up a largely student and youth membership with two highly imaginative and focused campaigns. Picking up Carbon Tracker’s concept of “unburnable carbon” and drawing inspiration from the anti-apartheid disinvestment campaigns of the 1980s, 350.org called on universities and other institutions to divest from fossil fuel companies. The campaign expanded to include supporters among pension funds and other financial institutions. These argued not that fossil fuel companies were immoral, simply that in a climate-constrained world they were not sound financial assets.

At the same time, 350.org mounted a nationwide campaign in the United States against the proposed Keystone XL pipeline, designed to bring oil from the carbon-heavy Canadian tar sands through the United States to the Gulf of Mexico. Bringing together a huge range of opponents – one colourful protest featured Nebraskan ranchers alongside native Americans in a “cowboys and Indians” alliance – the campaign reached a triumphant conclusion in November, when president Barack Obama announced that the pipeline was incompatible with the US climate policies and would not be approved.

Meanwhile the online campaigning organisation Avaaz was steadily building a global supporter base. Deploying an imaginative combination of online petitions and email campaigns with street protests and paid-for advertisements in newspapers around the world, Avaaz acquired new supporters at the rate of a million a month. Entirely self-financed from small donations, it had reached forty-two million global supporters by the time of the Paris conference.

The 2014 climate summit

These four emerging forces in civil society – science, economics, business and NGOs – first came together in an organised way around the climate summit in New York in September 2014. Organised by UN secretary-general Ban Ki-Moon, the summit was unusual in that it brought together not just heads of government but leaders from business and finance, city mayors and state governors, heads of international organisations and NGOs. While the heads of state made speeches accepting the IPCC’s science and the new economics of low-carbon growth, hundreds of new commitments to climate action were made by this new community of “non-state actors” – from stopping deforestation in commodity supply chains to investing in renewable energy; from disinvesting in fossil fuels to making cities more sustainable; from reducing emissions in agriculture to helping developing countries build resilience to climate disasters.

But it was outside the conference hall that the summit really took off. For months a small number of activists had seen the event as a perfect opportunity to mobilise large numbers of climate supporters around the world in big street marches. But the major NGOs were not convinced: what decisions would be made in New York?

So a remarkable thing happened. The idea for a climate march was taken up by the newcomers 350.org and Avaaz, working with community organisations in New York. In the end the big NGOs came on board, and the People’s Climate March on 23 September 2014 became the largest in the history of climate campaigning, and one of the largest ever – 400,000 people in New York, and many more in countless parallel marches in cities around the world. It put climate change onto the front pages of almost every newspaper, and made sure that the leaders gathering at the summit knew they were being watched. Some even joined it.

The climate summit marked the long build-up of political momentum towards the Paris conference. In June 2015 the Pope’s encyclical on climate change, Laudato Si, galvanised support from faith-based organisations, particularly in the developing world; he was joined in his calls for climate action by leaders from almost every other faith.

The think tanks

Meanwhile, behind the scenes, a fifth civil society force was exerting its influence: the think tanks and academics drawing up designs for the agreement to be secured in Paris. Organisations such as the World Resources Institute, or WRI, and C2ES in Washington DC, the Centre for Policy Research in New Delhi, the National Centre for Climate Change Strategy and International Cooperation in Beijing and the Institute for Sustainable Development and International Relations, or IDDRI, in Paris conducted quiet consultations with governments and civil society organisations to gather ideas and build support for a new international regime. A gradual consensus coalesced around the concepts of a five-yearly stock-take and cycle of commitments, parity between mitigation and adaptation, the importance of “climate justice,” finance for developing countries, and the definition of an accounting and monitoring regime.

The most remarkable of these efforts was the idea that the agreement should have at its heart the long-term goal of reducing net greenhouse gas emissions to zero in the second half of the century. This was the idea of London-based lawyer and longstanding negotiator Farhana Yamin. She argued that, since “net zero emissions” was what the IPCC said was required to hold global warming to under 2ºC, it should be the goal of the agreement. When Yamin set out the proposition in early 2013, few people in the climate movement thought it was remotely achievable – it might be true, but it was surely far too radical for governments to adopt. But Yamin was undeterred. She set up a small NGO, Track 0, to campaign for it, and used her extensive global networks to win support.

It rapidly became clear that Yamin had hit on the concept that could unify the entire civil society movement, now growing in strength. The scientists supported it; the economists and business organisations recognised that it would send the clearest signal to investors about the future direction of the global economy; and the NGOs saw it as the end of fossil fuels. When German chancellor Angela Merkel indicated that she too would support it, a brilliantly orchestrated campaign, supported by a three-million-strong Avaaz petition, produced a remarkable outcome: agreement at the G7 meeting of industrialised country leaders in Bavaria in June 2015 that they should phase out greenhouse gas emissions altogether by the end of the century.

Gathering all these forces together, the climate movement made a bold decision. The Paris conference had to become another make-or-break moment, at which maximum pressure must be applied to governments. Many warned against raising expectations: hadn’t we done this before Copenhagen, and then been catastrophically defeated? The world could not afford another failure. But others realised that that risk had to be taken – if ambition wasn’t high enough, a sufficiently strong agreement would be impossible. The Paris conference would not solve the problem, but it had to be a big deal.

The diplomacy

In the run-up to the conference, the dominant dynamic in the UN negotiations was the relationship between the United States and China. Determined to leave a new international agreement as part of his legacy, President Obama and his secretary of state John Kerry prioritised the establishment of a climate relationship with the Chinese government. A joint statement between the two heads of state in November 2014 was followed by a second in September 2015. This raised many people’s hopes that a new agreement could indeed be signed: if the two largest polluters and global powers were aligned, the chances were surely good. But it also led many to fear that the agreement would be weak, for neither the United States nor China would want to be constrained by the goals and rules of a binding international treaty.

But in Paris something else happened. The Americans and the Chinese continued to talk, but a much more powerful force emerged as the dominant voice in the negotiations. This was that of the countries most vulnerable to climate change – the low-lying islands and others who are already experiencing severe impacts from rising temperatures and extreme weather events. The structure of the UN climate negotiations, which requires decisions by consensus, gives small countries unusual power if they act together. A new grouping of forty-three countries, the Climate Vulnerable Forum, made itself heard alongside the more traditional groupings of small island states, least developed countries and African countries. Together they set the negotiating agenda: they would not sign an agreement unless it had the target of holding global warming to 1.5ºC rather than 2ºC; included the long-term goal of net zero emissions; recognised that developing countries needed support for the loss and damage they were already experiencing from climate change; and committed developed countries to scaling up finance from a floor of $100 billion per year in 2020.

Supported on the outside by a broad coalition of NGOs coordinated by the international Climate Action Network, and a looser group of organisations led by WRI’s climate director Jennifer Morgan, the vulnerable countries reached agreement first with the Latin Americans and European Union and then, remarkably, with the United States. A common agenda was agreed, including a commitment to the five-year cycles and to a single “transparency” system of measurement, reporting and verification which would apply to all countries. This new “high ambition alliance” challenged other countries to join them. To see one of the tiniest nations on earth, the Marshall Islands, alongside other small countries such as St Lucia and the Gambia, coordinating the agreement of the EU and US – and eventually Canada, Brazil and others – to a radical common platform was a remarkable sight. As one Filipino negotiator said, “it was the ants moving the elephants.”

The final piece of the jigsaw that created the Paris agreement was the expert management of the conference by the French government, led by foreign minister Laurent Fabius and his climate ambassador Laurence Tubiana. Together with the executive secretary of the United Nations Framework Convention on Climate Change secretariat, Christiana Figueres, they handled the two-week negotiations superbly, ensuring that all countries felt listened to and that the agreement gave everyone something of what they wanted.

The key decision occurred on the Thursday of the second week, when the French issued a bold draft of the final agreement. It was high risk: it could have been rejected. But it was brilliant politics. By anchoring the text in the principles of equity, “common but differentiated responsibilities” and sustainable development, and ensuring continued differentiation between developed and developing countries (though not on a fixed and binary model, which the United States and the European Union could not accept) they achieved the seemingly impossible – an agreement that met the demands of the “high ambition alliance” but also gave China, India, Saudi Arabia and others what they sought. In the end, it ensured that everyone acceded to a high ambition agreement.

The new politics of climate

So Paris was a triumph for multilateral diplomacy. But it would not have happened without the huge mobilisation of civil society in the five years beforehand. By orchestrating the narratives of science and economics to demand strong climate action, and by organising the business community, NGOs and many others in support of a strong agreement, it was civil society that pressured governments into the positions that made the final negotiations possible.

That’s why the vast majority of environmental NGOs welcomed the agreement. And it’s why the reaction of the few that did not – those such as Friends of the Earth, who called the Paris outcome a “sham” – is so short-sighted. Of course in an ideal world governments would have committed to higher ambitions now. But in the world we live in, this was more or less as good as it could have been, and far stronger than most people realistically thought possible. Moreover, it owed a great deal to civil society pressure. If you cannot recognise victory when it comes, how can your supporters ever feel that campaigning is worth it? Rejection of the agreement sends a terrible message to campaigners and activists. It says to them – whatever you do, whatever you achieve, you’ve always failed.

More importantly, the agreement casts new light on the relationship between civil society, governments and capitalism. In her bestselling book This Changes Everything: Capitalism vs the Climate, Naomi Klein argues that climate change is the inevitable consequence of capitalism, and that the former will only be combatted if the latter is overthrown. This thesis, intended as a clarion call for campaigners, was always a recipe for despair. If it depends on capitalism being overthrown, reversing climate change in the little time we have available will surely be impossible. But the real problem is that the causality in this argument is the wrong way round. We do not have to overthrow capitalism to tackle global warming. On the contrary, by tackling climate change, we can change capitalism.

This is what the Paris agreement will set in train. In order to achieve the targets they have set, governments will have to introduce policies that regulate businesses and shape markets. They will have to tax carbon and incentivise innovation. They will need industrial policies and public expenditure. They will find themselves penalising fossil fuel industries and encouraging energy efficiency. They will have to create cities that work for people, and land-use systems that sustain the forests, soil and water. And in doing these things they will ensure that capitalism can no longer destroy the climate system, because global society will no longer allow that to happen.

This is, of course, why those on the free-market right so hate the climate agenda. They know that dealing with it involves managing and shaping capitalism in order to achieve social and environmental goals. But equally, it is why everyone else, from social democrats to greens, liberals and Christian democrats, can welcome the Paris agreement as a signifier that our economic system is not out of our control.

So has the agreement saved the world? Of course not. No international negotiation can do that. As many people have pointed out, the agreement is just a framework of goals and rules. Now governments have to act on it – and at every step there will be battles with powerful forces that continue to pursue a high-carbon economy. Achieving a temperature rise limit of 2ºC, let alone 1.5ºC, will be an immensely difficult process requiring transformative economic change that will challenge our political system. It will take immense, continuing efforts by civil society to force governments down the path to zero emissions that they have now laid out.

But in building this agreement, civil society has cleverly written itself into it. Lying at the heart of the agreement are the five-yearly “global moments,” when governments will have to face up to the inadequacy of their current efforts and commit to doing more. At each of these moments it will be up to the combined forces of civil society – in every country – to pressure them into doing so. As ever throughout history, economic and social change will come from below, from a coalition of social movements and enlightened businesses, campaigners and visionaries. It was how the Paris agreement was constructed over the last five years. And it is how the agreement just may be able to save the planet over the next fifty. •

This article also appears in edition 22.4 of Juncture, the Institute for Public Policy Research’s quarterly journal of politics and ideas, published by Wiley.

POSTSCRIPT, MARCH 2026

As well as being the longest article I have contributed to Inside Story, this was an unusual one, in combining original reportage with undisguised opinion. The article traces the forces in civil society, and the diplomatic processes, which generated the landmark Paris Climate Agreement in December 2015. While the diplomatic story was not unknown to those in the climate field, the account of how organised groups of scientists, economists, businesses, NGOs and think tanks created the conditions for the agreement had not previously been reported. Most of the activities described in the piece were separately organised, and few people had sight of all.

I was fortunate in that respect because I had personally been involved in many of them, and I was part of the small coordinating group (coyly mentioned in the piece only in passing) that helped define the overall strategy and procure philanthropic funding for it. The events described did not happen by chance.

Reading it again I am a little surprised I let my personal opinions colour the final section of the article quite so much. But as someone who had been highly invested in the Paris outcome it really annoyed me to hear NGOs rubbish it, and Naomi Klein’s book This Changes Everything, which was widely influential, got the politics of climate change wholly upside down. It felt to me important that, however imperfect the Paris Agreement was, people who cared about climate should enjoy a moment of achievement and hope. Hope is such a vital commodity in this field: lose it and the fight for a safer planet will assuredly be lost. Ten years on, this seems clearer than ever.

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CANADA’s announcement this week that it will formally withdraw from the Kyoto Protocol could not have been better timed to puncture the sense of progress generated by the UN climate change conference in Durban just two days earlier. There, delegates had celebrated a dramatic and unexpected conclusion that saw all 194 countries (including Canada) agree to work towards a new legal regime to succeed Kyoto; they will now be feeling that a bucket of cold water has been tipped over their heads.

In truth, the Canadian decision is no surprise, and it does not affect – much – what was achieved in Durban. Since signing up to Kyoto in 1997 Canada has made almost no effort to meet its modest emissions reduction targets (6 per cent on 1990 levels by 2012), and is now headed for an increase of around 30 per cent. Withdrawal from Kyoto now, a year before its target has to be met, will allow Canada to avoid the sanctions the Protocol imposes on countries that fail to meet their commitments – though since these principally lie in being forced to accept a stronger target next time, they were unlikely to have much impact on a country that had already said it would not be joining another commitment round.

The decision is therefore principally significant for the demonstration it provides of the limitations of international law: whatever “compliance” mechanisms are formally designed, it is very difficult to apply them if a country simply withdraws from the regime altogether. This looks like a sobering reality check for those who have hailed the Durban outcome as a major step forward – if the force of law means so little, should so much be invested in negotiations towards a new protocol?

But this misses the point about what happened in South Africa. Compliance mechanisms have always been the weak link in international treaties, and few people believe that the United States, China or India will sign up to anything that threatens them with serious sanctions. The significance of the Durban deal is more fundamental: these countries have finally accepted the principle of a collective, rules-based legal system for dealing with climate change – to which they too should be subject.

This, after all, was what was lost in Copenhagen two years ago. At that conference, the United States and the four largest emerging economies (China, India, Brazil and South Africa) combined to delete the objective of a new treaty under international law. The system created by Copenhagen, consolidated last year in Cancun, was that of “pledge and review,” under which countries adopt voluntary national commitments using their own carbon accounting rules, with only the lightest monitoring at international level. Such a system looked as if it suited the largest emitters very well, and in the emerging world order was unlikely to be changed any time soon.

Yet here we are now with all these five countries – and Canada, Russia and Saudi Arabia to boot – joining the other 186 nations of the world in agreeing to negotiate “a protocol, another legal instrument or an agreed outcome with legal force... applicable to all.” How did that happen?

The answer lies precisely in those numbers – and in a remarkable change in geopolitical alliances among them during climate change negotiations over the last two years.

Almost uniquely among international decision-making bodies, UN climate change conferences operate by consensus among all participating nations. When coupled with the inescapable moral basis of climate negotiations – the recognition that this is a problem caused by the richest countries whose greatest costs are occurring in the poorest – this gives unprecedented influence to the poor but numerous developing countries, which can accurately portray themselves as the “victims” of the issue. In no other global decision-making forum do Gambia (population 1.7 million, chair of the Least Developed Countries) and Grenada (population 108,000; chair of the Association of Small Island States) sit at the negotiating table as equals with the United States, the European Union and China.

In the past, this hasn’t in practice counted for much, because all the developing countries negotiated together in a single bloc, the “G77 and China,” which was inevitably dominated by the biggest among them. But in Copenhagen the four largest developing countries effectively split off from the rest, and since then the tectonic plates underpinning the negotiating continents have undergone a dramatic shift. On the one hand Brazil, South Africa, India and China (the BASIC group) have forged a strong collective identity as the emerging economic and political powers, capable of acting as a counterweight to both the United States and Europe. On the other, an entirely new grouping of countries with progressive ambition on climate change has emerged, the so-called Cartagena Dialogue, with membership drawn from both developed and developing countries.

In Durban, for the first time, this alliance called the shots. In a brilliantly executed strategy, the European Union, the small islands and the least developed countries, supported by progressive allies such as Colombia and Costa Rica, forged a set of common positions in pursuit of the legal outcome they all wanted – the continuation of Kyoto on one hand, and negotiations towards a legally binding treaty on the other. As the talks reached their climax, 120 countries issued a joint statement in support of such a deal, an unprecedented act. In doing so they effectively identified the “opposition” – those who did not want a legally binding outcome – as the United States and BASIC. On both sides of the argument the traditional negotiating division between developed and developing countries was shattered.

For BASIC this was deeply uncomfortable. At once it exposed the tensions within the bloc – South Africa and Brazil were prepared to sign up to legal commitments after 2020, but China was reluctant and India deeply opposed – and put them embarrassingly on the same side as the United States, their traditional negotiating opponents and bête noire of all climate talks.

In the final showdown the pressure got too much. China and India inserted into the key text a weak wording allowing the goal of negotiations to be a “legal outcome” as well as a protocol or legal instrument; the European Union, the island states and the least developed countries were adamant that they could not accept this, and would walk away from a deal if it remained. India’s environment minister, Jayanthi Natarajan, made an impassioned speech denouncing the claim that hers was the country standing in the way of a deal, deploring the lack of reference in the text to the need for equity or the different responsibilities of rich and poor countries, and saying she would not be intimidated into making a harder legal commitment. The South African chair asked the European Union and India to discuss whether a compromise was possible. And then, in an extraordinary scene, a direct negotiation began in the plenary hall between the Indian minister and the European Union’s commissioner, Connie Hedegaard, rapidly flanked by the United States, China, Brazil, Gambia and others, all surrounded by delegates and press taking photographs and trying to catch what was being said. Half an hour later a handshake and a cheer signalled that agreement had been reached.

But it was not a compromise at all. Natarajan had simply caved in, accepting a much stronger form of words – “an agreed outcome with legal force” – and failing to win any new references to equity or the different responsibilities of developed and developing countries. These would have been acceptable to the European Union (they had indeed already been offered); but the United Sates said no, and China and Brazil notably did not come to the Indians’ aid.

And so what had seemed highly improbable at the start of the talks had been achieved. Durban re-establishes the principle that tackling climate change should be governed by international law, and preserves that principle’s only existing manifestation, the Kyoto Protocol. The new regime is to be negotiated by 2015, and to come into force from 2020. Kyoto will survive until then, albeit with limited participation, with “pledge and review” for everyone else; but at the end of the decade, if all goes as now planned, a new legal regime covering all countries will commence. It is in effect the result everyone wanted in Copenhagen, but now timed for eight years later – after 2020, not 2012.

And that’s the key. What has happened since Copenhagen is a gradual realisation among the emerging economies – other than India – that the rigid distinction between the responsibilities of developed and developing countries in terms of legal commitments was becoming less and less tenable as their economies and geopolitical power grew. They are not prepared to abandon it just yet; but from 2020 they could see it would have to go.

China was the swing voter. One of the most striking aspects of the Durban talks was how forward-looking the Chinese were – parading their ambitious domestic climate policies in a series of side meetings, suggesting in an early press conference that they might be prepared to take on legally binding commitments, and generally doing everything to ensure that if Durban failed it would not be seen as their fault. They would not, in other words, allow another Copenhagen. Almost certainly they would have preferred an outcome that fell short of a clear commitment to a legally binding regime (and they may still try to claim that the agreed wording does not require that) but in the end they were not prepared to bring the talks down for it. Acceptance of international legal constraints on its emissions pathway is a remarkable shift in China’s stance, not just on climate change talks but on international governance more generally.

And for all the resistance it put up through the talks, it is notable that the United States too has conceded the principle of an international legal instrument. But as ratification of that by the US Senate will not have to take place until after 2016, they have artfully ensured that this will be some other president’s problem.

As for Australia, a mixed report card. As a member of the Cartagena Dialogue it has helped forge the new progressive alliance of developed and developing countries. But in Durban it negotiated as usual on the side of the United States, weakening the agreement in a variety of areas. The government now faces a single crucial test of where it stands: does it commit alongside Europe to a second commitment period of Kyoto from 2013 to 2020, or does it take the likely Russian and Japanese route of remaining within the Protocol but without a new target? Only the former will maintain its progressive credentials in the eyes of the world.

None of this, of course, is to overestimate what Durban achieved. As the green NGOs have rightly pointed out, the talks did nothing to raise the targets that countries have set themselves – and therefore nothing to change the course of emissions which on current trends look likely to take the world towards around four degrees of warming by the end of the century.

Yet even here there was some progress. Again as a result of the pressure applied by the developing countries and the European Union, countries have been forced to admit that their current commitments are not sufficient to achieve the two degrees warming goal they have all signed up to, and therefore will have to be strengthened – not just after 2020 but (if the science is to be followed) before. This will be hard. In the current economic climate few countries want to revisit their current targets, Australia least among them. But for campaigners that bit of the agreement provides a vital hook. As the crucial negotiating date of 2015 looms, new battles are already being prepared. •

The post What Durban revealed about climate’s shifting allegiances appeared first on Inside Story.

IT’S becoming almost an annual ritual. Another United Nations climate change conference, another report showing how far the world is from tackling global warming effectively – and another leak of hacked emails from the University of East Anglia.

What made the latest “climategate” revelations interesting was not their content – there was no evidence to overturn the independent review’s exoneration of the university’s scientists last year – but the leakers’ evident belief that the UN conference, just starting in South Africa, is worth destabilising in this way. While the target of the original controversy, the summit in Copenhagen two years ago, was clearly going to be a decisive moment for global action on climate change, this year’s gathering in Durban was not. On the contrary, in recent months Western governments have been busy lowering expectations. Did the leakers know something most of the world doesn’t?

Perhaps they did. For Durban might just turn out to be a more significant moment than we first thought.

Let’s recall the state of play. The Copenhagen conference in December 2009 had been billed as the moment when the community would agree on a new climate change treaty to succeed the Kyoto Protocol in 2012. Under the pressure of expectation, almost every country in the world adopted new climate targets, many of them highly ambitious. But the negotiations themselves broke down and even a non-binding “Accord” could not be agreed. Then, in Cancun last year, order was restored: a series of decisions brought both the Copenhagen targets and a new framework of rules and institutions under UN agreement. For the first time, the overall goal of limiting global warming to 2ºC above pre-industrial times was enshrined, and countries committed to a review of their emissions reduction pledges by 2015.

Yet it is already clear what the latter process will show: those pledges are not sufficient to meet the 2ºC goal. Last week’s Bridging the Emissions Gap report from the UN Environment Programme sets out the evidence starkly. To have a likely chance of staying below 2 degrees of warming, the world will need to be producing emissions of no more than 44 gigatonnes (GT CO2e) by 2020. But even if every country implemented its commitments to their maximum extent, emissions will be 50 GT CO2e by then. And if implementation is weak, they could be as much as 55 GT CO2e. So the emissions gap in 2020 will be at least 6 GT and could be up to 11 GT. This suggests that the world is currently on course not for a 2ºC rise but for one more likely to be 3–5ºC, which in terms of human and ecological impact would enter the terrain of the catastrophic.

The UNEP report is at pains to point out that this gap is not inevitable. It analyses a series of methods by which emissions in 2020 could be brought back to the 2ºC path – through lower carbon energy production and transport, energy efficiency and reductions in deforestation, and by cutting emissions from aviation and shipping, which are not counted in national pledges. But action will need to be rapid: as the International Energy Agency warned in a parallel report, also published this month, the world has only about five years to start investing in low-carbon technologies at the required rate. By 2017, if fossil fuel investment retains its current dominance, the world will have locked in future emissions so far that the 2ºC path will become unattainable. Meanwhile, global emissions rose again last year as global growth bounced back after the slump of 2009. Indeed, the IEA shows that it is not just total emissions that are increasing but, even more worryingly, emissions intensity: the world is using more energy to produce each unit of output than in previous years, not less.

With this alarming backdrop, what can the Durban conference achieve? Well, the first thing to be said is that it won’t see any countries pledging deeper cuts in their emissions. As Australia has amply demonstrated, the cuts already on the table were hard-won enough, and if there were any lingering appetite for more, the West’s economic crisis has eliminated it. Most of the negotiations in Durban will therefore be about implementing the decisions made in Cancun: establishing a new Green Fund to channel financial assistance from rich to poorer countries to help them tackle climate change; setting up new mechanisms for adaptation to global warming and the transfer of low-carbon technologies; and getting revenues from aviation and shipping emissions into the global funding regime.

Meaningful progress on each of these is possible in Durban; but it is on the largest and thorniest issues of all – the future of the Kyoto Protocol and the prospect of a new legally binding treaty – that attention is beginning to focus. And much to many people’s surprise, a possible deal is beginning to emerge.

A few months ago, Kyoto seemed to be in its death throes. At Copenhagen the developed country signatories had had a chance to renew their commitments beyond their current expiry date of 2012. But they refused: repeating their longstanding complaint that Kyoto covered less than a fifth of the world’s emissions (and falling), they pressed for a comprehensive treaty including all major emitters, including the United States and China. But the big four emerging economies (China, India, Brazil and South Africa – the so-called BASIC group) rejected not merely the form of a new treaty but even the idea, deleting the ultimate goal of a “legally binding outcome” from the Copenhagen Accord’s conclusions. Developing countries would not be forced into “legal equivalence” with the developed countries historically responsible for global warming: it was only the latter that must be bound by law. Developing countries, BASIC insisted, had only voluntary obligations compatible with their right to pursue development.

For many observers, that seemed the end. With both the United States and the big developing countries opposed to a new treaty, the top-down Kyoto model of negotiated legal commitments appeared to have run its course. We were now in a world of “pledge and review,” of bottom-up policies in every country, at best loosely aggregated into a global reporting system. Not long after, Japan, Russia and Canada all announced that they would not be putting their emissions reduction commitments into a second (post-2012) commitment period of Kyoto. The nails were prepared for its coffin.

YET over the last few weeks, remarkably, the corpse has been twitching. The European Union has declared that it is prepared to adopt a new commitment period – so long as the goal of a legally binding treaty covering all countries is restored to the negotiations. And it has found itself in effective alliance with the least-developed and most climate-vulnerable countries, which have begun to rebel against the stance on a global treaty taken by their richer negotiating partners in the developing country bloc.

The shift has come from a clear-eyed recognition of what the demise of Kyoto would mean. Few will mourn its targets – a meagre 5 per cent reduction in global emissions over 1990 levels by 2012, barely enough to slow the rate of warming at all. Its binary structure – dividing countries into two blocs, developed and developing countries, with no gradations in between – no longer fits the modern world. But Kyoto establishes the principle of tackling global climate change through the mechanisms of law, and that is a prize not to be given up lightly.

The advantages of a legal structure are fourfold. First, it overcomes the free-rider problem. Climate change is inescapably global, so countries need to know that if they take action then others will too. A purely bottom-up, voluntary approach to emissions reduction cannot provide such mutual confidence. Second, it offers the possibility of some degree of fairness in the distribution of effort, in which countries’ commitments are negotiated in relation to one another and to their levels of responsibility and wealth. Third, it turns such commitments from the particular pledges of individual governments to the sovereign obligations of countries, enduring beyond the vagaries of elections and successive administrations. And last, law provides for a set of common rules on how to count, monitor and report emissions which a fragmented system of purely national law – and national incentive to falsify the figures – cannot.

These advantages, hard-won in the original Kyoto negotiations fourteen years ago, are now at risk. As many countries have realised, if Kyoto is allowed to wither and die, it is difficult to see the circumstances in which a completely new legally binding global regime could be established. So the search has suddenly accelerated for a way to keep Kyoto alive. And the answer has been found: to agree at the same time to start a new round of negotiations towards a legally binding agreement involving all parties, the goal explicitly removed in Copenhagen. The European Union has set a timeframe for this: the details of a new agreement should be completed by 2015, and it should enter into force no later than 2020.

Both the European Union and Australia – along with other developed country allies such as New Zealand and Norway – are now committed to such a “Kyoto + negotiations” deal. More interestingly – though there remain disagreements on detail and timing, with the 2020 commencement widely regarded as too late – so are an increasingly large number of developing countries. They include the least-developed bloc (including Bangladesh and many African countries), the influential small-island states such as the Maldives and Caribbean islands, and a number of middle-income countries such as Indonesia, Mexico, Colombia, Chile and Costa Rica. This is a powerful coalition, and it says much about the changing nature of climate politics that the differences of position within the developing world are now so open.

For of course the key countries not in this coalition are the big four developing nations. China, India, Brazil and South Africa want Kyoto to continue beyond 2012: it is, a recent BASIC meeting declared, their number one priority for Durban. But they have rejected the idea that this should be achieved by simultaneously starting negotiations towards a new treaty in which they too would be required to take on obligations. There is particular disquiet at the proposed agreement date of 2015: having barely started their own serious emissions reduction programs, Brazil and India have spoken of the next few years being a “reflection phase” or “technical/scientific period,” not a negotiating one.

But just how fixed are these positions? Under its new environment minister, Jayanthi Natarajan, India seems to have reverted to a traditional hard line. But South Africa, not surprisingly, is looking to conclude a deal from the conference: as host of the Durban meeting, President Jacob Zuma will not wish to see the death of Kyoto pronounced on African soil. Brazil, too, is under its own global spotlight as host of the Rio+20 Summit next June, marking twenty years since the original Earth Summit established the UN climate regime. Having committed to ambitious plans to cut deforestation in the Amazon rainforest, it prides itself on being a progressive influence in climate negotiations. Meanwhile, there are signs that China may be in a surprisingly flexible mood. Domestically it has embarked on a concerted program to slow emissions growth, including a trial of emissions trading. And though Beijing has been firmly opposed to any suggestion that it should take on legal obligations, its relentless global expansion in search of commodities over recent years has left it highly sensitive to its relations with the rest of the developing world: it knows it is now widely seen as an economic superpower which by 2020 will have to take on responsibilities to match.

And then, of course, there is the United States. Its position is straightforward: it wishes this whole subject would go away. In a pre-election year, facing a Republican Party in which climate scepticism has become an article (literally in some cases) of faith, the last thing President Obama wants is to drag global warming back into the domestic debate. So American negotiators are happy to hide behind the BASIC position, insisting on a series of tough conditions before they can agree to a new round of legal negotiations – effectively forming an unlikely alliance with India. But they have not altogether closed the door: and as several observers have slyly pointed out, four years ago, at the equivalent conference negotiating point in Bali, even the Bush administration caved in when it found itself the last country holding out.

So the next two weeks on the South African coast could yet prove more interesting than originally anticipated. The odds remain stacked against a deal: climate negotiators have a special way of breeding mistrust among themselves and forcing their ministers into last-minute dramas, and any number of grenades can still be thrown into the process. But nevertheless, it’s a space worth watching. The prize at stake is a big one. •

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IN THE days following the earthquake that crippled Japan’s Fukushima nuclear plant in March, it was clear that the political aftershocks would spread well beyond that country. It is hardly a surprise that the Japanese government’s plans to increase the proportion of electricity coming from nuclear power (from 30 to 50 per cent) now lie in chaos. Many countries have put new nuclear building programs on hold while governments assess the implications of the disaster not just for the safety of nuclear plants but for their public acceptability.

What few people foresaw, though, was that Fukushima’s biggest impact of all would be felt halfway around the world, in Germany. But that is the inescapable conclusion from events over the past few months in the world’s fourth-largest economy. And in terms of energy and climate change policy, the results are likely to reverberate back around the globe.

The initial reaction of the German government to Fukushima was remarkable enough: it shut down seven nuclear plants pending safety checks, and then made the closures permanent. But the political reaction in the country was even more astonishing. A few weeks after the disaster, and in direct response to it, the Green Party won an unprecedented victory in parliamentary elections in one of Germany’s largest and most conservative states. As if by a chain reaction, this then led the national government of Chancellor Angela Merkel to announce that nuclear power would be phased out altogether in Germany by 2022, a decision overwhelmingly ratified this month by the German parliament. To cap it all, opinion polls are now suggesting that within two years the Greens could be coalition partners in Germany’s next government. You could describe the political impact of Fukushima in Germany as seismic.

The significance of the cross-party decision to phase out Germany’s fleet of seventeen nuclear power stations is hard to exaggerate. As the leading German news magazine Der Spiegel observed, it marks the end of a cultural war lasting almost forty years. Opposition to nuclear power created the modern environmental movement in Germany, provoking successive waves of student and civic protest and launching the world’s first elected Green Party. When the first Social Democratic–Green coalition government decided to phase out nuclear power a decade ago it looked like the environmentalists had won; but the decision was reversed by Merkel’s Christian Democrats last year, with some nuclear plants granted another fourteen years of life. So the new post-Fukushima policy represents an astonishing volte-face for the German chancellor: a very uncharacteristic one for a leader generally noted for her cautious pragmatism, but a direct consequence of the huge shift in public opinion provoked by the events in Japan.

The implications for Germany’s energy policy could not be starker. Germany has pledged to cut its greenhouse gas emissions by fully 40 per cent on 1990 levels by 2020 and by 55 per cent by 2030, en route to the European Union’s collective goal of 80–95 per cent cuts by 2050. Until a few weeks ago these commitments were predicated on low-carbon nuclear power supplying around a quarter of Germany’s electricity for at least the next two decades. The question now is whether the post-2020 targets can still be met once the nuclear contribution has gone.

In Britain a parallel question – whether tougher carbon targets can be achieved without additional nuclear power – has been answered decisively in nuclear’s favour, with the formerly anti-nuclear Liberal Democrats, now in coalition government, conceding that at least four new atomic power stations will have to be built if Britain is going to meet its new pledge to halve emissions by 2025. There, Fukushima has caused only the briefest of pauses in the drive to get new nuclear plants built.

In Germany the government is determined that its climate commitments will still be met even without a role for nuclear. Alongside its phase-out vote, the German parliament approv­ed a package of laws designed to create a new energy system built around renewables and energy efficiency. Today hydro, wind, biomass and solar account for around 17 per cent of Germany’s electricity demand: the new plan is that the renewables share will rise to 35 per cent by 2020. There will be a particular emphasis on offshore wind, which is intended to grow from near zero to 10 gigawatts (half present nuclear capacity) by 2020, and 25 gigawatts by 2030. To send the power from Germany’s northern coast to its industrial cities in the south, up to 3600 kilometres of new high-voltage transmission lines will have to be built, while €200 million (A$265 million) has been set aside over the next five years for the development of new electricity storage technologies to help cope with the intermittency of wind and solar power. More will go on developing “smart grids” to balance supply and demand. At the same time a huge drive for energy efficiency in buildings is intended to cut demand by 10 per cent by 2020. From next year, the government will commit 100 per cent of the revenues from the European Emissions Trading Scheme to climate and energy activities.

It’s a formidable program, with an investment cost estimated at up to €200 billion. But the obstacles are equally large. The sheer scale of the construction required has induced scepticism: although the government has committed to speeding up planning processes, there is already local opposition to new power plants and transmission lines, and many expect this to increase. Consumer resistance cannot be ruled out either: though the government is insisting that energy prices will rise only marginally as a result of the nuclear phase-out, this is likely to be true only in the short term when excess capacity can be used; in the medium term higher subsidies and financing costs look bound to raise prices. (Supporters of renewables note, however, that once built, the “free energy” provided by renewables should generate lower prices than fossil fuels subject to rising global demand and supply constraints.)

Perhaps most disconcertingly, under Germany’s current market arrangements it is not yet clear that energy companies will in fact build renewables to replace the lost nuclear capacity. The alternative might be altogether cheaper and less risky – that they build coal and gas-fired power stations instead. That would keep the lights on – but would also blow Germany’s emissions targets out of the water. So in the short term the major political battles of the post-Fukushima era are actually likely to be about new fossil fuel power stations – particularly coal – rather than renewables.

Much will depend on the response of Germany’s major energy companies. German energy policy has traditionally been designed to suit the interests of its four largest utilities – E.ON, RWE, Vattenfall and EnBW, long famed for their cosy relationships with the political elite. Merkel’s anti-nuclear about-turn has left them furious. Germany’s nuclear plants generate €4 billion (A$5.3 billion) of profits annually (on €7.5 billion of turnover), revenues that will now disappear over the next decade. At the same time, the introduction of full auctioning for carbon permits under the European Emissions Trading Scheme will leave their many coal plants paying the best part of €4 billion from 2013. Little wonder then that the utilities’ share prices have fallen dramatically, with the two most exposed, E.ON and RWE, down more than a fifth since March.

RWE’s chief executive, Jürgen Grossmann, has reacted especially angrily, railing against the new policy as “environmental dictatorship” and warning that it would lead to the “deindustrialisation” of Germany. RWE and E.ON are suing the government for loss of revenues from the nuclear policy. But E.ON’s boss, Johannes Teyssen, has admitted that the company has no option but to accept the decision, and has begun talking up its plans for renewables. He knows that in the new policy world Germany’s smaller municipal energy companies are gearing up to compete with the behemoths, particularly in the creation of local wind farms and decentralised grids.

More widely the nuclear decision has split the German business community, leading to a remarkable weakening of the Federation of German Industries, once the country’s most powerful lobbying organisation. On one side Germany’s heavy industries are demanding subsidies to shield them from higher energy prices. But on the other its expanding renewables and energy efficiency sectors are seizing the opportunity to shape the new policy framework to their advantage. They can see not just the supply opportunities within Germany, but also the huge export markets available in other countries going down the low-carbon path. It was a point explicitly noted by Chinese premier Wen Jiabao on his visit to Germany last month. German leadership in green technologies made the country a “very important strategic partner” for China, he said.

Yet of all the consequences of Germany’s anti-nuclear turn, it is the political impact that remains the most intriguing. There is no doubt who the new darling of German politics is: Winfried Kretschmann, the sixty-three-year-old former teacher who became Germany’s first ever Green state governor after the party’s shock victory in the southern state of Baden-Württemberg in March. A reassuringly conservative figure in a state ruled by the Christian Democrats for over half a century, he moved swiftly to form a coalition government with the Social Democrats.

The wider significance is obvious: a successful administration would provide a model for a new federal coalition after Germany’s national elections in 2013. While the Christian Democrats remain the largest single party in the national polls on 33 per cent, their current coalition partners, the liberal Free Democrats, have plummeted to just 4 per cent. With the Social Democrats on 29 per cent and the Greens on 22 per cent, this makes a “red–green” coalition the most likely outcome. Yet many commentators also note that by abandoning her former pro-nuclear position, Angela Merkel has made a Conservative–Green coalition thinkable too, if rather less probable. Remarkably, that means that the Greens look very likely to be partners in the next government whatever the outcome of the vote.

That extraordinary prospect remains two years away. In the meantime the world’s energy policy-makers and businesses will be watching to see whether it really is possible to meet tough carbon targets through renewable energy sources alone. Surveying the country’s famed engineering prowess and economic efficiency, one analyst put it succinctly: “If anyone can do it, it’s Germany.” And if Germany succeeds, then surely others can follow. •

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ARE we witnessing the birth of a new Big Idea? Fat reports from the staid and determinedly respectable Organisation for Economic Co-operation and Development, the economic think tank of the developed countries, don’t generally merit that label. But the publication in May of Towards Green Growth, the OECD’s comprehensive study of how environmental policy can be good for the economy, may mark a significant moment. It follows hard on the heels of an even larger report, Towards a Green Economy, published by the United Nations Environment Programme, or UNEP. Recent months have also seen a consortium of governments establish a new centre of excellence, the Global Green Growth Institute; the announcement of an intergovernmental Global Green Growth Forum to take place in Denmark later this year; the launch by a series of countries – led by South Korea – of national Green Growth Strategies and Low-Carbon Growth Plans; and the release of China’s latest Five Year Plan, built around the concept of “green development,” which will determine that country’s economic direction over the next half-decade.

All these terms – green growth, low-carbon growth, the green economy, green development – are being used to convey a simple but potentially radical idea: that environmental protection and the reduction of carbon emissions need not be at the expense of economic growth but can actually contribute to it. This is hardly a new concept; a small group of environmental economists first argued this two decades ago. (I confess I was one of them, in a book, The Green Economy, published in 1991.) But when nations worldwide are struggling to boost rates of economic growth while facing a multiplying set of environmental problems, the emergence of “green growth” in mainstream economic analysis and government-sponsored discourse is worth noting.

The theory works at a number of levels. At its most basic it derives from the recognition that a key route to protecting the environment is to use resources – energy, land, water or whatever – more efficiently. This is essentially a form of productivity improvement: getting more output for less input. So long as this is done at a relatively low cost – particularly by using market mechanisms to encourage firms and consumers to change their behaviour – it should help growth not hinder it. It’s true that the growth generated by raising resource productivity can lead to new emissions and more environmental impact, but the evidence shows that the total impact almost always remains environmentally beneficial. Overall, most estimates of the costs of tackling climate change show that if done efficiently, the rate of economic growth may slow slightly but will remain strongly positive. Typical was the study by the US Congressional Budget Office in 2009, which showed that a national emissions trading scheme would cut no more than 0.09 per cent from annual GDP growth in the American economy between 2010 and 2050.

A striking conclusion of both the OECD and UNEP reports is that the economic benefits of protecting the environment would be even more pronounced if the national accounts took proper notice of the loss of natural assets that occurs when the environment is degraded. If a business made money simply by selling off its assets, we wouldn’t say that its income is a good measure of its profitability, since it is clearly unsustainable. Yet when economies run down fish stocks, or farm so intensively that soils are degraded, or cut down forests without replacing the trees, that’s exactly what happens: the income earned is counted towards GDP, but the loss of the “natural capital” that can sustain this income into the future is ignored. As both the OECD and UNEP reports insist, if national accounts were properly adjusted to record this, the contribution made by environmental protection to “real” growth would be even greater.

Of course, much environmental policy is expensive, not least cleaner forms of energy. Wind, solar and biomass remain in most places more costly than coal and gas (though the costs are coming down and, as Ross Garnaut has noted, are often exaggerated). So it’s generally argued that more aggressive climate policy focused on green technologies (not simply energy efficiency) will slow growth in comparison to the alternative uses towards which these extra costs could be put: that’s the principal reason why cutting emissions has proved so politically difficult.

But here the green growth theorists take a Keynesian turn. Where the economy is not running at full strength, investment in clean energy, or better water management, or protecting biodiversity, can generate new economic activity and jobs. This was why so many countries introduced “green stimulus” packages during the economic crisis of 2008–09: 12 per cent of the US stimulus, one third of the Chinese, 60 per cent of the European Union’s and fully 78 per cent of the Korean stimulus package went towards environmental spending. These policy responses were informed by a new body of “green growth” evidence, which showed that the employment content of environmental spending tends to be higher than in other industries. The location-specific nature of many environmental industries – from insulating buildings to installing wind turbines – means that (in many if not all cases) more jobs tend to be created by “green” than by “brown” economic activity.

Though the immediate rationale for “green Keynesianism” has receded over the last year, the wider economic case for environmental spending has remained in those economies, particularly in Europe and North America, struggling to restore growth. Economists have long recognised the importance of infrastructure in providing the platform for economic growth. The claim now is that, when consumption is low and saving rates high, directing those savings into investment in a new wave of low-carbon infrastructure would provide exactly the engine for long-term prosperity the economy needs. It is this argument, for example, that underpins the creation in Britain of a new Green Investment Bank, which will use public funds to leverage private sector investment into a major program of offshore wind generation, associated transmission grids and other low-carbon projects.

Of course, in economic terms this argument could equally well justify high-carbon infrastructure. What gives it its extra green force, in Britain and a number of other countries, is the hope that low-carbon technologies will also provide new industrial growth sectors for economies desperately looking for a way out of the financial crisis. It is no coincidence that since Britain announced its offshore wind program last year, six of the world’s largest wind turbine manufacturers have announced plans to build assembly plants and R&D centres on its eastern seaboard. Both the previous Labour and the present Conservative–Liberal governments have justified their strong climate change targets (Britain recently committed to a 50 per cent reduction in emissions by 2025) on the grounds that meeting them will create a series of new low-carbon industries and their associated high-skill manufacturing and service jobs – not just for the British market, but for export as well.

The models commonly cited for this kind of industrial green growth strategy are Denmark and Germany, which have built world-leading wind turbine and solar panel industries on the back of strong domestic renewable energy policies. And the latest exponent is China, which has made the creation of export-oriented clean technology industries one of the core strategic priorities of its new Five Year Plan. Of course, not everyone can follow that path: there isn’t room for every country or region to develop green industries for export. But the prospects are attractive enough – and the global environmental markets potentially big enough – for a number of governments, from California to Korea, to be trying.

And it’s here that the theory of green growth gets really ambitious. For the argument now being made is not just that new jobs can be created in environmental sectors, but that the development of new clean technologies will stimulate a whole new wave of growth across industrial economies as a whole. Economists such as Nicholas Stern, author of the Stern Review, argue that we are on the verge of a “new industrial revolution” in which low-carbon technologies will lead to a transformation of production and consumption in the same way that the development of the steam engine, the railways, the internal combustion engine and information technology transformed industrial economies and societies in the past. In the long run it is innovation which generates economic growth, and it is innovation which is required to tackle climate change and other environmental problems. So, goes the theory, we can expect to see environmental technologies generating not just solutions in their original sphere, but also spin-offs throughout the economy, as new materials and industrial processes generate productivity improvements and new consumer products. It is in the coupling of new energy sources with IT systems, as “smart” grids, homes and offices monitor and control energy use, that the pervasive innovations will occur.

The argument, of course, is not that this will happen automatically. It will require environmental policy to stimulate the initial technological advances. So the significance of “green growth” theory is not really about whether the “new industrial revolution” claim is right. The evidence on that is not yet in – and probably never will be, until we decide to go along that path and find out. The real argument is about whether societies are prepared to pay the higher initial costs of the environmental investment – notably in the reduction in carbon emissions – which are required to start the green growth ball rolling.

For economic sceptics, the counter-argument is very simple. Sure, green spending can stimulate growth. It just stimulates less growth than the brown alternative. Low-carbon energy is more expensive, so the costs will be higher and the returns less.

But here the proponents of green growth have a crucial riposte. The argument that high-carbon growth is also higher growth rests on a premise that has rarely been questioned, but which can no longer be taken for granted. That is that high-carbon growth will look the same in the future as it has in the past. For when economic models posit a “reference” or “base case” of the growth that would occur in the economy in the absence of climate or environmental policy, they rarely include in it the impacts of the environmental and climate change that can now be expected. The assumption is that growth will continue much the same as it has done before. So green growth inevitably looks like slower growth than business as usual.

But what if there is no “business as usual”? If – as is now widely expected, and indeed may already be happening – failure to take action on climate and the environment in practice leads to effects such as rising oil and fossil fuel prices, greater water scarcity, lower agricultural productivity, declining fish stocks, more frequent extreme weather events, and so on, then the base case against which the green growth path needs to be compared may be rather different from generally assumed.

Helpfully, UNEP’s green economy report puts this thesis to the test. Rather than using a conventional base case, it models the economic impact of various resource scarcities and losses of natural capital which could be expected in the absence of policy change, and then compares the resulting global growth rates to those arising from a green policy path. The results are instructive. The “green investment” scenario starts off generating slower growth than the base case. But by the second half of this decade this has reversed, as growth rates in the base case start to decline under the impact of environmental pressures. By 2030 and beyond the “growth dividend” of the green investment scenario becomes quite marked.

Not much should be read into one modelling exercise, of course. But the point is well enough made. And as the plethora of green growth reports and initiatives show, it is beginning to attract mainstream economic and government recognition. “Green growth” provides a useful body of theory and evidence around which to build a positive economic narrative of the benefits of tackling climate change and environmental damage. But just as importantly, it points up the fact that economic growth under “business as usual” may turn out to be less usual than we thought. •

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IN MATTERS of climate change, China’s role tends to overwhelm all else. Although it isn’t responsible for the problem the world now faces — its cumulative contribution to atmospheric greenhouse gases is dwarfed by those of Europe, the United States and Russia, which began their industrialisation far earlier — China’s future emissions will play the largest single role in determining the future of the planet.

With one sixth of the world’s population and an economy doubling in size every seven to ten years, the sheer scale of China’s industrial expansion makes this mathematically inevitable. China has already overtaken the United States as the world’s biggest polluter. Now, it generates around a fifth of global emissions, or around 9 gigatonnes (Gt) of carbon dioxide equivalent per annum. If the rate at which it produces greenhouse gases per unit of economic output remains unchanged, this will rise to 30–35 Gt by 2030 — which would equal the entire amount the world would be able to emit under a global “carbon budget” aiming to hold average temperature rises to the goal of 2 degrees Celsius. In other words, unless China’s carbon economy undergoes a dramatic transformation over the next two decades, its growth will make devastating global climate change inevitable — whatever any other country does to reduce its emissions.

So the recent publication of China’s twelfth Five Year Plan, mapping out its development priorities for the period 2011–15, is not just of local concern. The plan contains a detailed account of how China will reduce its impact on the global climate, which makes it a critical document for all of us.

Five Year Plans constitute the cornerstone of China’s state-directed system. As the coordinating framework for economic and social development policy, they give rise to a series of sub-plans and targets cascading down from central government to provincial and local levels. The careers of Communist Party officials depend on achieving those targets, so they really do matter. And those in the twelfth Five Year Plan, unveiled by Premier Wen Jiabao and formally approved by China’s National People’s Congress in March, are rather remarkable.

At the heart of the plan is the aim to achieve a more “balanced” development path, slowing China’s economic growth rate to 7 per cent a year (compared with the double-digit growth of the last three decades), and shifting economic activity away from reliance on investment in low-wage manufacturing exports towards greater domestic consumption, higher value-added industries and a larger service sector. China’s leaders have accepted that China needs more than just rising national income if the growing aspirations of its people are to be satisfied: higher living standards and better public services are now primary goals. And alongside them, the plan makes “low-carbon development” a national priority for the first time.

A third of the new primary targets set out in the plan are environmental, reflecting concern not just about global climate change, but also about widespread local air and water pollution, continued loss of biodiversity and China’s energy security (China is 80 per cent dependent on imported oil, and recently became a net importer of coal). Key pollutants are to be cut by 8–10 per cent in the next five years, forest cover increased to over 21 per cent, and energy intensity (the amount of energy used per unit of output) cut by 17 per cent. But the most significant target is to reduce the carbon intensity of the economy — emissions per unit of output — by a binding 16 per cent. This constitutes the first stage of China’s commitment, which it made at the Copenhagen climate conference in 2009 and confirmed in the UN Cancun Agreements last year, to cut its carbon intensity to 40–45 per cent below 2005 levels by 2020.

Even at its new, lower growth rate the Chinese economy is likely to expand by close to a half in the next five years, so a 16 per cent reduction in carbon intensity does not mean that China’s emissions will stop growing. They will continue to rise in absolute terms. But the target represents a reduction of up to 2.5 Gt in emissions by 2020, which is a considerable slowing down over what would have happened under business as usual, depending on how existing trends are calculated. Globally, this is very significant. To put it in context, the European Union’s 20 per cent absolute reduction target equates to around 0.5 Gt. If a comparable improvement is made after 2020, China’s emissions by 2030 would be in the range of 14–15 Gt per year: under half of its currently projected total. This is a very substantial contribution to the global effort.

The plan sets out how it is to be achieved. The centrepiece is a huge expansion of investment in low-carbon energy technologies, which are planned to meet over 11 per cent of primary energy demand by 2015, including a third of China’s power generation capacity. Befitting China’s size, the figures are staggering: nuclear power is set to grow fourfold (to 43 gigawatts, or around twenty-five new nuclear reactors in the next five years), wind generation will more than double to 100 gigawatts, hydro will increase 40 per cent to 284 gigawatts, and there will be additional increases for natural gas and solar as well as huge rises in investment in transmission lines and “smart grid” infrastructure. This is not a wholesale conversion to a low-carbon energy economy — coal-fired power generation is due to expand in the same period by an estimated 260 gigawatts, more than all the low-carbon technologies put together — but it remains a significant move in that direction. It will push China ahead of the European Union as the world’s largest investor in, and market for, low-carbon energy. The plan also aims for a 30 per cent improvement in the average emissions of new vehicles, a million electric and hybrid vehicles on China’s roads by 2015, and a US$500 bilion investment in the country’s high-speed rail network, taking this to more than 16,000 kilometres.

Perhaps even more remarkable is the accompanying industrial policy. The Five Year Plan identifies seven “strategic industries” on which China will concentrate investment. Of these, three — alternative energy, alternative-fuel cars, and energy saving and environmental protection — are the key sectors of the low-carbon economy, while all the others — biotechnology, advanced materials, high-end equipment manufacturing and information technology — will make a critical contribution. At the same time, research and development spending is to rise to over 2 per cent of GDP, taking it to more than US$750 billion by 2015. There is no question what this means: the Chinese leadership intends the country to become the global market leader in what it predicts will be the green technologies of the future.

But this is only a plan, it might be argued; will it actually happen? Recent Five Year Plans in fact have a pretty good record of being implemented. The last one set a 20 per cent target for improving energy intensity, for example; a little over 19 per cent was achieved. The methods were not always very efficient: a lot of old power and industrial plants were simply closed down, while in some areas power cuts were imposed to meet the targets. There is evidence of statistical manipulation by some local governments as well. But here, too, the new plan is making changes. It proposes the use of more market-based mechanisms to achieve its goals, including reforms to energy prices, carbon offsetting, payments for environmental services, and even the piloting of emissions trading schemes in selected provinces. Bizarre though it sounds, it is now quite possible that China will introduce a national emissions trading scheme before the United States. At the same time, new “low-carbon zones” in eight cities and five provinces (with a total population of 300 million) will be encouraged to pilot innovative policies and measures.

Most analysts are in fact pretty confident that China will meet the new plan’s targets. Since Premier Wen indicated in Copenhagen that China might even exceed the 40–45 per cent carbon intensity target, a lively debate has taken place within Chinese academic circles over whether the plan goes far and fast enough. There is certainly no room for complacency: if overall global emissions are to be held to the 2C path then China, like other leading emitters, will have to do more by 2020, not just 2030.

AS IT is implemented, the new plan is likely to change the dynamic of the climate negotiations. On the global stage, China has been a deeply conservative player, insistent on its developing country status, resisting external scrutiny of its actions, and refusing point blank to make its commitments binding in law. (It was only in the very endgame at Copenhagen that it even conceded it should register its policies ly; it still insists that they are voluntary, and not formally part of an agreement.) This has left China open to attack in the West — particularly in the United States, where China’s industrial growth and balance of payments surplus has made it a popular scapegoat for American economic ills.

But there are signs that China’s position is changing. Stung by the criticism it received for its obstructive stance at Copenhagen, China was a notably emollient player in the negotiations at Cancun. It has already acknowledged that, unlike other developing countries, it does not need and should not receive climate assistance; on the contrary, it has been pointing out that it now lends more to the developing world than the World Bank does. Perhaps most of all, as the Five Year Plan is implemented over the coming years it will be more difficult for China’s opponents to excuse their own inaction by claiming that China is not pulling its weight.

On the contrary, a reverse dynamic may well develop. As one European analyst put it, surveying the plans for huge investment in clean-energy technologies, China has now taken “an expensive bet on a low-carbon future.” That bet gives China a major stake in low-carbon policies in other countries, which will provide the markets for its new green industries. In turn, this could make China much less defensive in negotiations and prompt it to use its own commitments to press more on others while having the confidence to permit greater scrutiny of its own policies. At the same time, many other industrialised countries will be fearful of Chinese dominance in these markets, and as a consequence are likely to stimulate investment in their own green industries. In Europe, certainly, that argument is now making headway — and in due course, it could yet do so in the United States.

So China’s new Five Year Plan may turn out to mark a decisive moment in global climate policy. Admittedly, it’s a far cry from the ideals of ecological harmony and social change that drove the early environmental movement. Central planning under the Chinese Communist Party was not how people envisaged the planet being saved. But it’s not too far-fetched to argue that, to an extent greater than many in the West would wish, it is precisely on this that the fate of the earth now rests. •

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IT’S DIFFICULT to have a cool-headed debate about global warming. At a psychological level, the sheer scale of the issue – global, long-term, complex, threatening – tends to induce either paralysing despair or wilful ignorance. It doesn’t help that many protagonists in the debate, whether environmental NGOs or climate sceptics, bring with them all-too-obvious ideological baggage. In the United States, indeed, the notion that impartial evidence might assist judgement has been almost entirely abandoned now that climate change has become embroiled in the culture wars between the new conservative movement and its Democratic opponents.

So, as Professor Ross Garnaut unveils the update to his landmark report on Australia’s role in eight tantalising instalments and the federal government names a date for a price on carbon, it might be useful to take stock of where we are.

Debate about climate change rests on three pillars of evidence. On one corner is the science – the evidence on whether human-caused warming is taking place, and the effects it will have. On another are the emissions – how big they are now, and what their future trajectory will be given the targets countries have set. And on the third is the investment – the evidence of what is actually happening on the ground to cause emissions to grow or decline.

First, the science. Despite the ferocious attack on the validity of climate science waged by the sceptics over the past two years, the striking conclusion one reaches from surveying the debate is that the balance of evidence hasn’t actually changed at all. It remains the case that the overwhelming majority of scientific work published in the field reinforces the extreme likelihood that the warming which the world is currently experiencing (the eleven warmest years on record have all occurred since 1998) is caused by human activity, and that, if this warming proceeds unchecked towards average temperature rises of 4–7 degrees Celsius, its impact on ecosystems, natural resources and human society will be deeply traumatic over the next century or so.

In fact, far from undermining these conclusions, most of the new evidence produced over the last two years suggests that the risks may be greater than previously thought. The recent revelation in the journal Science that last year’s drought in the Amazon is likely to have caused the rainforest to emit more carbon dioxide than it absorbed – and that this formerly “once in a hundred year event” has now happened twice in six years – provides a dramatic example of the phenomenon of “positive feedback” that is now perhaps the single most important focus of climate research. Positive feedback occurs when warming has effects that, in turn, speed up the warming process. (The Amazon droughts are believed to have been caused by higher surface temperatures in the tropical Atlantic.) The accelerated melting of Arctic summer ice over the last few years, which reduces the reflection of solar radiation and therefore further increases temperatures, provides another example.

The core of the sceptic case has been that there is greater uncertainty about the causes and impacts of warming than climate change protagonists have allowed. But the case for taking action to reduce emissions has never rested on certainty. As Garnaut argues, the rationale is insurance. Given the very strong likelihood that warming is caused by rapidly rising greenhouse gas emissions, it is sensible for society to seek to prevent catastrophic outcomes by reducing those emissions. The chances of being burgled do not have to be 100 per cent (or even a tenth of that) for households to install window locks and alarms. The significance of the Queensland floods and Cyclone Yasi are therefore not that these events are evidence of global warming – one-off events can never be so ascribed – but that they indicate the huge human and economic costs of the kinds of impacts that warming is predicted to cause more often. The question that society is being asked is simple: are we willing to pay now to reduce the future frequency of such events – along with the more pervasive projected impacts on water, ecosystems and agriculture? The argument that we would be better spending money to adapt to such change than to mitigate it makes little sense in this context. Without action to reduce emissions growth, warming will be much greater, and its costs far higher. So adaptation and mitigation are not alternatives: mitigation is a way of reducing the costs of adaption.

The challenge posed to climate science by the sceptics has been widely taken up within the media. But it is noteworthy that only in the United States, Canada and Australia have the sceptics’ arguments weakened governments’ resolve to act on climate change. Elsewhere, including in the developing world, mainstream climate science remains overwhelmingly accepted by governments and parliaments, and commitments to act have remained largely intact even under the intense economic pressures of the last two years.

WHICH brings us to the second pillar. What do we know about the current level of global greenhouse gas emissions and – given government policies around the world – their likely trends over the next decade? Over the past two years, according to recent estimates from the US Energy Information Administration, carbon dioxide emissions from energy use in developed countries have plummeted as a result of the recession – down 7 per cent in 2009 in the United States, Europe and Russia, and nearly 10 per cent in Japan (though less than 2 per cent in Australia). Yet the sobering fact is that, despite this, overall global energy emissions were more or less the same in 2009 as in 2008. The developed world’s recession was almost entirely cancelled out by the undiminished growth in emissions from China (up 13 per cent) and India (up 9 per cent).

The figures highlight the new reality of climate change: while historic responsibility for the problem lies with the developed economies, from now on almost all the growth in emissions will come from the developing world, with China not merely having become the world’s largest current carbon polluter but also growing more rapidly than anywhere else.

But this focuses attention on future projections rather than the current snapshot. Do current trends offer any hope that emissions are being curbed? A new report published by the United Nations Environment Programme, or UNEP, provides a helpful analysis. Taking ranges of probability from a number of different climate and economic models, it sets out different “pathways” or trajectories for global emissions which would be likely (with a 66 per cent or more chance) to hold the global average temperature rise below the UN goal of 2 degrees Celsius. The report then analyses the targets and policies that countries have adopted to curb their emissions over the period to 2020. It seeks to discover if there is an “emissions gap” between the trends to which countries are now committed and the possible pathways to 2 degrees.

It’s worth recalling that the goal of keeping warming to no more that 2 degrees above pre-industrial temperatures does not mean that 2 degrees is some kind of threshold above which climate change suddenly becomes more dangerous. Our understanding of climate impacts is not precise enough to say that a rise of (say) 2.3 degrees would be catastrophic. The point, rather, lies in the risk that the climate behaves not according to the central estimates of the models but in line with the outer projections. Emissions pathways which have a 50 per cent probability of achieving 2 degrees are very unlikely (a probability of 5 per cent) to lead to warming of 3 degrees or more. But emissions pathways which have a 50 per cent chance of hitting 2.3 degrees are three times as likely (15 per cent) to lead to a 3 degree rise. So the UN goal is in reality not “no more than 2 degrees of warming.” It is “emissions pathways which are likely to achieve no more than 2 degrees of warming” – because these are the pathways which reduce the risk that in fact much greater warming will occur.

The UNEP analysis has the great advantage of clarity. Global emissions in 2005 were around 45 Gt (gigatonnes) of “carbon dioxide equivalent” (the metric which includes all the different greenhouse gases). To be likely to hold temperature rises to 2 degrees, emissions will need to be in the range of 15–19 Gt per year by 2050 – a cut of well over half. To achieve this, emissions can take a number of different pathways, all of which require global emissions to peak by 2015–20. The higher the peak, and the later it occurs, the faster the required reduction in emissions between 2020 and 2050. Taking median figures, the UNEP report suggests that by 2020 global emissions will have to be no more than 44 Gt of carbon dioxide equivalent, and emissions will have to be cut by around 3 per cent each year thereafter to 2050.

So how do current trends and commitments match up to this? Well, there’s good news and bad. The good news is that since the 2009 UN climate conference in Copenhagen – and confirmed in December in Cancun – all the major economies of the world have made commitments to reduce either their absolute emissions or their rate of growth. To many people’s surprise, the most radical commitments have been made by the developing countries. China’s target of improving the “emissions intensity” of its economy (its emissions per unit of GDP) by 40–45 per cent by 2020 will involve a very substantial decoupling of emissions from growth. The same is true of Brazil’s commitment to cut its emissions growth by up to 39 per cent below expected trends by 2020, largely by limiting deforestation. India, Indonesia, South Africa, Mexico, South Korea and others have made similar kinds of pledges. Meanwhile the European Union is committed to cutting its absolute emissions by 20–30 per cent on 1990 levels by 2020, Japan by up to 25 per cent, and the United States by 4 per cent (which, because of the recession, could yet be within reach, even without formal climate legislation). Australia’s range remains officially 5–25 per cent below 2000 levels – though no one now believes that the upper end is politically feasible.

And therein lies the bad news. For these pledges and targets do not, in fact, add up to 44 Gt in 2020, as the 2 degrees pathways require. Indeed, many are highly conditional, either on what other countries do, or on receipt of financial support to developing countries. (Though note that both China and Brazil have eschewed financial help.) Moreover, the impact of the pledges will depend a lot on the rules under which national emissions are counted. So the UNEP report describes a number of possible scenarios. If countries cut emissions at the top of their ranges, and use strict accounting rules, global emissions in 2020 would be around 49 Gt – a significant cut of 7 Gt over what would happen in the absence of these policies, but still short of the “2 degrees” figure of 44 Gt. On the other hand, if countries go to the bottom of their pledges, and use lax accounting rules, emissions would be closer to 53 Gt, a much smaller cut over “business as usual,” and fully 9 Gt short of the goal. So the emissions gap between the 2 degrees goal to which countries have signed up, and the pledges they have actually made, is between 5 and 9 Gt in 2020.

Does this mean that 2 degrees is now impossible? No. The 2020 pledges could still be increased following the review which the UN agreed in Cancun for 2013–15. And then it depends on the rate at which emissions can be reduced after 2020. The models from which the UNEP analysis is taken assume a more or less uniform rate of annual emissions reduction. But it is not impossible that technological breakthroughs might occur over the next two decades which could considerably accelerate the decarbonisation trend. The mass penetration of electric cars within the next ten or fifteen years might be one possibility; a reduction in the cost of solar power to well below that of coal and gas could be another. It would be dangerous to assume we can rely on such rapid post-2020 emissions cuts; but their possibility ensures that 2 degrees is still a feasible (if very difficult) goal – so long as strengthened commitments for 2020 are implemented and the peak therefore occurs by then.

AND so to the third pillar. Political pledges and targets are all very well, but are they likely to be achieved? Is there any evidence now of changing patterns of energy investment such as to make governments’ 2020 promises believable?

Perhaps surprisingly, the answer is yes. Over the last three years, something rather dramatic has been happening in the world of global energy investment. For two hundred years, the world’s inexorable industrialisation has been powered by carbon-based energy – coal, oil and gas. But since 2008, more has been invested globally in renewable capacity than in fossil fuels. Research by analysts Bloomberg New Energy Finance reveals that in 2010 total investment in clean energy reached a record US$243 billion, more than double the level in 2005. The surge has occurred right across the renewable technologies – global spending on solar panels and other “distributed” renewables rose over 90 per cent in a single year, while wind power grew almost a third and the new technologies of smart grids, energy storage and electric cars by over a quarter. Significant government incentives allied to falling costs are driving this revolution.

Now we shouldn’t get carried away. China is powering this clean growth: in 2010 its investment in clean energy topped US$50 billion. But at the same time it also invests more than anyone else in fossil fuels, with a new coal-fired power station opening on average every week (though many are also being closed down). The oil industry continues its relentless search for new sources – at US$100 a barrel, extracting oil from the tar sands of Western Canada and exploring in the Arctic are looking highly attractive. And the sudden emergence in the United States of previously untapped “shale gas” (gas found in rock deposits) and the growth in the use of liquefied natural gas have created in the last year a world gas glut that will have a double-edged impact on other fuels. On the one hand new gas could displace coal in electricity generation, which would reduce overall emissions (gas is cleaner). On the other, as the International Energy Agency has warned, it could inhibit investment in renewables, which in the medium to long term would mean emissions stay on a much higher path.

So the investment picture is by no means simple. But the new ascendancy of renewables is without doubt highly significant. If bending the curve of global emissions is like trying to reverse a supertanker, it is not too much to conclude that the ship has now started its long U-turn. How quickly the manoeuvre can be performed, and how far the tanker will have travelled before it starts moving in the opposite direction, will determine the fate of the planet.

So what conclusions should we draw from our three pillars of evidence? I would suggest the following.

One, that the evidence on future climate change remains deeply alarming. The impacts of a warmer world will be huge and costly in both economic and human terms. So the insurance case for preventative action remains extremely strong.

Two, that such action is now beginning to happen, through major investment in clean energy. But this investment will need to continue its rapid growth over the next decade, requiring considerable government support, if emissions are to peak by 2020.

Three, that the political commitments countries have currently made are not enough to make it likely that temperature rises will be limited to 2 degrees Celsius. So if that goal is to be achieved, commitments will need to be increased for 2020 and strengthened thereafter.

Four, that it is difficult to see countries making stronger commitments of this kind unilaterally. Given the impact of trade competition and the problem of “free riding,” the community will need some kind of agreement to do more. The search for such agreement remains elusive. But it also remains necessary. •

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“I HAD low expectations,” said one environmentalist at the conclusion of the UN climate change conference in the Mexican resort of Cancun at the weekend, “and they’ve been fully met.” It’s a reaction that’s been widely shared over the last few days. Enough had been achieved to save the UN process, observed Greenpeace, but not enough to save the planet. Yet the downbeat assessment stood in stark contrast to the cheering, foot-stomping euphoria of the delegates themselves as the chair of the conference, the Mexican Foreign Minister Patricia Espinosa, brought down her gavel on a wide-ranging set of agreements in the early hours of last Saturday morning.

Why the difference in reaction? Well for the delegates it was no doubt relief that, at the very last minute (in fact, beyond it – the conference was due to close on Friday), consensus had been snatched from the jaws of the failure that looked much more likely until just hours earlier. But it also represented a fundamental difference in understanding of the political economy of climate change – for Cancun has performed the remarkable feat of simultaneously changing nothing, and changing a great deal.

It changes nothing, because the commitments countries have made to reduce their emissions, and to provide finance to help poorer countries, are exactly the same as they made in the Copenhagen Accord, the agreement that failed to get UN approval this time last year. On the surface, all Cancun does is to bring countries’ existing targets under the formalities of the United Nations. It adds nothing to Copenhagen’s financial commitments, which remain at “approaching $30 billion” of mostly reallocated (not new) aid up to 2012, with $100 billion per annum from as yet unidentified sources as the goal for 2020.

Meanwhile the new features in the Cancun Agreements are largely institutional rather than substantive: a Green Climate Fund to channel assistance to poor countries, new rules on measuring and supporting rainforest protection, new processes of monitoring emissions, a committee to promote technology transfer, and another on adaptation, which is at last to get a fairer share of political priority and finance. None of these elements in themselves cut emissions, or help poorer countries cope with climate impacts now: indeed, none of them are final agreements at all. They will all require a huge amount of further negotiation over the next few years before they become operational.

And yet Cancun is still a very significant moment. Why? Because it will restore confidence among both governments and businesses that action on climate change is going to occur. And, in turn, that makes it more likely that such action will occur. That circularity is a critical feature of the way decision-making on climate change works, one too little recognised by NGO and media critics.

Climate change presents a classic case of the prisoner’s dilemma. Every country will benefit if all countries take action to combat climate change. But it’s only in my interest to take action if I know others are doing so too; and if I think they’re not, it’s in my interest not to. For businesses, a future world in which emissions are curbed and clean technologies are incentivised makes it worthwhile investing in low-carbon systems now. There are huge advantages in being first in the market with green solutions. But if that world isn’t going to happen, such investments could prove to be expensive mistakes.

Since Copenhagen that’s been the fear. The sense that the world was not going to come to an agreement on climate change, that the differences between the United States and China were irreconcilable, that new markets for low-carbon goods could not be guaranteed, has had a chilling effect both on developed countries’ commitments and on business investment. In the United States and Australia, public support for action on climate went into reverse. Buckling under the weight of its financial crisis, Europe lost its appetite for climate leadership. Investors have put new low-carbon energy projects on hold. And into the damp pool of uncertainty have swarmed the climate sceptics and those – oil and coal companies and others – with a vested interest in stagnation.

Cancun reverses that downward spiral. It has the chance of restoring belief that countries will indeed be taking action, and that the low carbon economy will therefore happen. For governments, it re-establishes the crucial norm of cooperation: very few countries, including the United States and China, will wish to stand outside that. Already there is a sense of renewed momentum. In Europe there are calls for the European Union to move to its 30 per cent emissions reduction target for 2020; with the recession having pulled current emissions down to 17 per cent below 1990 levels, it’s not now such a stretch. In every country it will bolster the forces seeking a faster transition to the low-carbon economy and weaken those looking to hold it up.

In the Great Depression Franklin Roosevelt said that the only thing to fear was fear itself. So it is with climate change: belief in failure breeds an unwillingness to act, which then becomes self-fulfilling. But equally, belief that action is under way encourages clean energy investment, which then makes the progress real.

The critics of Cancun are of course right to say that the emissions reduction commitments in the new agreements are not sufficient. A valuable new analysis by the UN Environment Programme sets out the “emissions gap.” To have a reasonable chance of keeping the global temperature rise within the 2°C global goal that Cancun confirms, greenhouse gas emissions in 2020 need to be around 44 gigatonnes (GT) per annum. But if all countries’ pledges are fully implemented, emissions will be around 49GT, and higher if there is some backsliding. So the emissions gap will be at least 5GT and could be more.

This will require countries to make further commitments. But that’s exactly what the Cancun agreement acknowledges: noting the gap between the commitments and the 2°C goal, it establishes a comprehensive review of the adequacy of pledges to begin in 2013, based on the latest scientific evidence.

At the same time the significance of these pledges should not be underestimated. Although China and India would not agree in Cancun on a date for global emissions to peak, in fact full implementation of the commitments would see the maximum point reached around 2020. This would represent a historic turning point in humankind’s 200-year experiment with burning fossil fuels – and the essential basis for emissions to decline in the future. And one should be wary of claims that these commitments lock the world inevitably into 3–5 degrees of warming. That remains likely, and deeply alarming – and for that reason Cancun agreed on an mechanism to address climate loss and damage, as requested by the most vulnerable nations. But it’s also true that the eventual global temperature rise will be determined as much by actions taken after 2020 as before. Maintaining a chance of achieving a 2C world will require dramatic reductions in annual emissions post-2020; these will be more expensive than taking the same action now, but they may not be impossible in a world of greater technological innovation.

SO DELEGATES had some justification for their celebrations at Cancun’s end. Going into the conference plenty of people were using “last chance saloon” metaphors for the UNFCCC, the unwieldy assembly of the UN climate convention in which the negotiations take place. If an agreement could not be reached at two successive conferences, it was argued, perhaps the UN route, with its requirement for consensus among 194 countries, should be abandoned, and responsibility given to a more manageable group of the largest economies, such as the G20. But this was never a possibility; for the emerging economies the United Nations is the only legitimate forum for formal climate negotiations. And there’s no question that Cancun gives multilateralism a huge shot in the harm. As a British diplomat put it, after the hurt and acrimony of Copenhagen it was “both a healing process and a catharsis” to demonstrate that the United Nations was capable of achieving a strong agreement. (It even proved that the UNFCCC’s awkward “consensus rule” does not have to mean unanimity – the agreement was reached despite the remaining objections of one rejectionist country, Bolivia, which tried but failed to argue that it had an effective veto.)

The contrast in atmosphere with last year’s conference could not have been greater. Yet in reality what Cancun has done is to complete the process originally intended to end in the Danish capital. The Copenhagen Accord, frequently reviled, has been largely endorsed, with key text incorporated into the new agreements, filled out by further detail, much of which was also on the table a year ago.

So why did it take a year longer to achieve? Two critical insights have come to be accepted over the past twelve months. The first is that the world cannot allow itself to be dragged backwards by the inability of the American political system to cope with climate change. In the past, the failure of the United States to pull its weight in emissions reduction has been seen as a reason why others, particularly developing countries, should not do so. Now, China and others accept that they are just going to have to live with inadequate US effort, for the present at least; the global threat is too critical for action to be stalled in a futile wait for equity. The view now is that Congress will only come round to taking action when the costs to the American economy of remaining on a high-carbon path in a low-carbon world become too obvious to ignore.

Second, countries have reluctantly acknowledged that a legally binding agreement – whether a continuation of the Kyoto Protocol or a new treaty – is not possible at the present time. An artful fudge was concluded in Cancun by which decisions on both options are put off for another year. But few expect that either the United States or China will be willing to be bound to their targets by law in the immediate future; and Japan, Russia and Canada have made it abundantly clear that they are unwilling to extend the Kyoto Protocol unless Washington and Beijing are also in a legally binding treaty.

So the Copenhagen–Cancun climate regime does not look like the model architecture to which environmentalists have adhered for so long. In place of a legally binding treaty will be merely the “soft law” of UN decisions. Instead of a top-down global target set by scientific analysis, distributed between countries according to some formula of equity, countries will make their own bottom-up commitments, which may or may not – in fact, do not – achieve the global goal they have themselves agreed, and so will need constant upward pressure to be revised. There will be no penalties for failing to meet commitments; rather, the world will have to rely on the sanctions of domestic politics in each major country.

It is not ideal; it could yet be replaced in the future by a legally binding regime. But it need also not be the disaster some have been painting it. For now that the negotiators have gone home, the real issue appears through the mist. Cutting global emissions is not achieved by an agreement. That provides a crucial foundation of confidence, which is why Cancun should be seen as a vital success. But the real work will be done by hundreds of billions of dollars of investment in low-carbon energy and transport systems and forest protection. It is to delivering this that attention must now turn. •

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Well yes, in terms of its core ambition Copenhagen was indeed a failure. It failed to achieve a legally binding global treaty to cut emissions enough to limit global warming to 2°C above pre-industrial levels. Indeed, it failed to achieve a UN-endorsed agreement at all, and ended in a welter of chaos and acrimony that has still not fully subsided.

But looked at another way Copenhagen didn’t fail, and it hasn’t stopped action aimed at combating climate change. As a result of Copenhagen every major economy in the world has now made commitments to reduce emissions, and most are beginning to implement them. So far from global action being retarded, there are signs that it is now accelerating, and that Copenhagen is part of the cause.

It’s worth understanding this, because the next UN climate conference begins in Cancun, Mexico, later this month, and may well conclude without reaching any substantive agreement, even of the limited kind that is the most anyone now hopes for. In that event the cry will inevitably go up that two successive failed conferences demonstrate the impossibility of global action on climate. But it won’t be true; on the contrary, it is the simultaneous failure and success of Copenhagen that holds the key to understanding how future progress can be made.

So let’s go back and recall what did and did not happen in the freezing Danish capital last December, trying to untangle the reality from the many myths that have grown like ivy around it. (As one of those involved in the final negotiations, I can remember the traumatic events only too well; many of us dreamed about them for weeks afterwards – though they never turned out any better that way.)

First, it isn’t true to say that nothing was achieved in Copenhagen. The Copenhagen Accord, the agreement negotiated by a representative group of thirty heads of government on the penultimate day of the conference, was the first agreement endorsing the 2°C limit, and the first under which developing as well as developed countries committed to a significant slowing in their own emissions. It includes almost US$30 billion in funding for the poorest countries between 2010 and 2012, with a goal of $100 billion per annum in finance for those countries by 2020.

In itself the Copenhagen Accord is a thin document, no more than an outline text of a proper agreement. And of course it wasn’t endorsed by the conference as a whole, meaning that it does not have the status of a formal UN decision. That lack of endorsement – and the blank pages at the back where countries’ emissions targets were meant to be – understandably left observers last December claiming it was a damp squib.

But the picture is rather different today. In the months since the conference over 130 countries – two-thirds of the UN membership – have signed up to the Copenhagen Accord, and over eighty, representing over 80 per cent of global emissions, have entered emissions reduction commitments into its annexes. If implemented in full, these commitments will see global emissions peak before 2020, an achievement that is the essential foundation of any move towards the stabilisation of greenhouse gases. They are not enough to ensure the 2°C goal – together they amount to emissions cuts of 12 to 19 per cent on 1990 levels, compared to the minimum target of 25 per cent proposed by the Intergovernmental Panel on Climate Change – but they are far from insignificant. Not only do the annexes of the Copenhagen Accord represent the first set of properly global emissions reduction commitments ever made, some of them are also extremely far-reaching.

Indeed, the extraordinary thing about these commitments is that by far the largest reductions relative to existing trends are being pledged by the developing rather than developed countries. With an annual growth rate of 9 to 10 per cent, China’s commitment to improve the carbon intensity of its economy by 40 to 45 per cent by 2020 (or even to exceed this, as Premier Wen Jiabao noted in Copenhagen) will involve huge investments in energy efficiency and low-carbon fuels. Brazil’s target of a reduction of 36 to 39 per cent in emissions over its currently projected trends will require a quantum reduction in deforestation rates in the Amazon. Indonesia has made similar commitments to protect its forests; India has embarked on a huge expansion of solar power; South Korea has adopted the largest “green stimulus” package of any country in the world. Of developed countries, only Japan, with a commitment to cut emissions by 25 per cent by 2020 on 1990 levels, stands comparison.

It is these commitments that were the real achievement of Copenhagen. Not achievements of the negotiations – they were all announced before the conference even began – but of the fact of the conference itself. For there is no question that few countries would have made these commitments, and they would certainly not have made them as ambitious, if it hadn’t been for the pressure of the approaching summit. One of the criticisms made of Copenhagen was that it shouldn’t have been hyped up so much by the politicians; it was the heightened expectations, it is said – including the conversion of the event into a leaders’ summit, which it was never originally meant to be – that made the subsequent failure so much worse. But this is to ignore the fact that it was precisely those expectations, and the intense media and diplomatic pressure that accompanied them, that forced every major economy into making emissions reduction commitments in the run up to the event. Most of the developing countries had been denying up to that point that they had any obligation to adopt targets at all.

And the really crucial thing about the commitments is that they were domestic, not . They were made not as part of a deal with other countries, but as responses to domestic political pressures. In turn, this makes them much more likely to be implemented, because governments will be held accountable not by the nebulous forces of diplomacy but by the intense scrutiny of their media and political parties at home. Witness, for example, how Brazil’s Copenhagen commitments featured in its recent presidential election campaign, in which a charismatic environmentalist was one of the three candidates and won an unexpectedly large share of the vote. Watch the seriousness with which China’s twelfth Five Year Plan, the outline of which was published last week, will implement its Accord targets.

So this is why Copenhagen cannot be regarded as a (complete) failure. It is because of Copenhagen that the world is now beginning to embark on the first serious attempt in its history to bend the otherwise inexorable curve of rising emissions.

There is no question, of course, that the inability to achieve a legally binding treaty was a huge disappointment. Yet this was not really a failure of Copenhagen. For another truth that’s been much obscured is that the ideal of a legally binding treaty had become impossible long before the conference began. By the time Copenhagen got under way it was evident to all but the most blinkered observers – and the Danish government had made it abundantly clear in setting out the goals of the summit – that, while a treaty was still the ultimate goal, the most the conference itself could achieve was a political agreement signed by the leaders, incorporating the substance of a treaty but not its final legal form.

The ostensible reason for this reduced ambition was that the negotiators had run out of time to turn their lengthy and far-from-agreed negotiating texts into a legally watertight treaty. But in reality the reason was that it had become clear that the kinds of treaty to which the major countries were prepared to commit were very different, and simply too far apart to allow agreement.

For the developing countries the required post-2012 treaty already existed: it was the Kyoto Protocol. This required developed countries to take on legally binding emissions caps and developing countries to make entirely voluntary efforts of their own choosing. But signing up to Kyoto was out of the question for the United States, whose Senate had rejected it without a single vote in support the first time round. And no developed country, including the main Kyoto signatories – the European Union, Japan, Australia, Russia and Canada – regarded it as acceptable that they should continue to make legally binding commitments while the newly emerging economies, whose emissions were now rising fastest, were not legally bound to do anything at all.

In the end it was this fundamental divergence of view on the nature of a treaty – whether or not the developing countries were to be legally bound to take their actions in the same way that developed countries were legally bound by their emissions caps – which made achieving such an agreement in Copenhagen impossible. And this remains the case, which is why a treaty is no more likely this year or next than it was last.

The United States, of course, is in no political position to agree to a treaty even if the developing countries were prepared to. Following the collapse of the Senate energy and climate legislation in July, the United States is now one of the only countries that has no plans to implement its Copenhagen Accord commitments (a 4 per cent reduction on 1990 levels by 2020). It is let off the hook only because China and India are also unwilling to adopt legally binding targets at this time.

China’s position is particularly instructive. It is not that China is unwilling to adopt targets: it has entered its domestic targets into the Accord. It’s just that it is not prepared to be bound to these by treaty until it is sure that they can be achieved. This was why China famously removed from the Copenhagen Accord not just the goal of a 50 per cent cut in global emissions by 2050, but also the developed countries’ commitment to an at least 80 per cent cut in their own emissions in the same period. China’s reasoning is that if the developed countries cut by 80 per cent, and total emissions are cut by 50 per cent, that leaves only a defined volume of “carbon space” left in the atmosphere for its own development. And at this stage it really doesn’t know if it can achieve the economic growth and prosperity it wants within this space. And if it doesn’t know, it is not willing to be legally bound.

So if this is what Copenhagen achieved, but also why it failed, what are the lessons we should draw for climate change action today?

First, there is no prospect of achieving a top-down agreement – one whose principal goals are determined by negotiation, and which countries subsequently decide how they are going to implement at home. An agreement has to be bottom up: the sum of commitments made domestically in each of the major economies, not their cause. Second, and following that, it is at national and sub-national level that climate action will mainly take place over the next few years. The negotiations at the United Nations can at best merely supplement this.

Third, we need stronger commitments. Those made in the run-up to Copenhagen and entered into the annexes of the Accord are good, but they do not ensure a 2°C world. Sometime in mid-decade, if not before, these commitments will need to be ramped up, perhaps with additional targets for 2030 en route to 2050. And last, we shall almost certainly need a moment at which leaders are required once again to come together and make commitments, as they were in Copenhagen, if such a strengthening is to occur. We will need another hyped-up climate change summit on which NGOs, businesses, countries and others can target their campaigns: only this will force governments into stronger action.

So if the Cancun conference this month fails, don’t despair. It doesn’t mean action on climate change has stalled. The real progress on curbing emissions growth is occurring not in the negotiations but in domestic policy, in the major emerging economies and elsewhere. We will need a treaty at some time in the future to bring all this together and make it stronger, but it’s not likely to happen in the next three years, and certainly not before the next US presidential election. In the meantime, we can look back on the Copenhagen conference a year ago and say, with justification, that it wasn’t in fact as disastrous as has generally been assumed. On the contrary: it might actually prove to have been the turning point. •

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AS NEGOTIATORS meet in the Chinese port of Tianjin for the final preparatory talks before next month’s UN Climate Change Conference in Mexico – the follow-up to last year’s Copenhagen Summit – a remarkable debate is brewing in Europe. Governments and businesses are posing a radical question: should the European Union simply ignore the negotiations and move towards a low-carbon economy regardless?

The very idea that Europe might unilaterally push ahead of other countries in reducing its greenhouse emissions represents a remarkable reversal of the dominant view, not only in Europe but also throughout the developed world. It’s long been assumed that action on climate change had to proceed in a coordinated fashion. Curbing emissions was economically expensive, it was argued, hence countries or regions could not act unilaterally: to do so would simply drive industry overseas to less punitive markets. Only a new climate change treaty could secure the necessary action in individual countries. When failure at Copenhagen made it clear that such a treaty was not going to be agreed on any time soon, the dominant view appeared settled: radical emissions reduction plans would remain on hold. In Europe’s case, this meant that the European Union would retain its agreed target to reduce emissions by 20 per cent (on 1990 levels) by 2020, but no more.

Yet just a few months later Europe is debating whether or not the European Union should increase its 2020 emissions cuts to 30 per cent. A joint statement by the British, French and German environment ministers in favour of 30 per cent set off the debate; Denmark, Ireland and the European Union’s climate commissioner have all now backed the call. Even more remarkably, a group of leading European businesses have publicly stated their support.

How is this possible, when the European Union couldn’t agree on the 30 per cent figure during the negotiations in Copenhagen, at a point where it might actually have helped move other countries towards a deal? Three factors have shifted the argument over recent months.

First, European governments have had to acknowledge that the recession has made a 30 per cent cut by 2020 much less expensive than it once appeared. A drastic decline in economic output pushed Europe’s 2009 emissions 7 per cent down on 2008, leaving the European Union already more than 17 per cent below its 1990 level. This makes achieving its targeted 20 per cent cut by 2020 much easier and cheaper than originally anticipated. Indeed, the European Commission calculates that reducing by 30 per cent instead would now cost the European economy only a little more than the 20 per cent target was projected to cost when it was first agreed.

While the effect of the recession in cutting the European Union’s emissions has been good for the planet, it has been particularly damaging to Europe’s flagship climate policy, its emissions trading scheme, or ETS. The scheme works by capping the total emissions from power producers and industry, and then allowing firms to trade pollution allowances, thereby putting a price on carbon and giving an incentive to efficient reduction. But the recession has created a huge surplus of permits in the system, as firms find that with much lower output they do not now need their full allocation. Permits not used in the present ETS period can be carried over into the next period after 2012, so the surplus threatens to undermine the very purpose of the scheme, which was to force emissions reduction by 2020 through a scarcity of allowances. Analysis suggests that the ETS will achieve only a tiny 32 million tonnes of emissions cuts between 2008 and 2012, despite covering an annual 1.9 billion tonnes, around half of all emissions in the European Union. This could have been achieved by regulating a single power station over the same period.

And as the ETS carbon price bumps along at a mere €15 per tonne of CO2, European governments have begun to realise the implications. Such a price is simply not providing enough incentive for energy and industrial companies to invest in low-carbon technologies such as radical energy efficiency, wind and biomass. Indeed, it does precisely the reverse, encouraging the conventional high-carbon investments of gas and coal-fired generation. With Europe embarking on a wave of investment in energy supply that will last up to forty years, this threatens to lock in high European emissions for decades. In turn, this will make Europe’s long-term commitment to cut its emissions by 80 per cent by 2050 almost impossible to achieve.

And this is where a second factor has entered the debate. Not so long ago, radical long-term targets to cut the emissions of industrial nations looked like airy promises without much technological or economic basis. But a remarkable new study published by the European Climate Foundation, based on research by a number of highly respected analysts and undertaken in close cooperation with the European energy industry, has shown that an 80 per cent cut in Europe’s emissions by 2050 is not just technically feasible, it could be achieved at around the same cost as “business as usual.”

Taking four different scenarios for an almost fully “decarbonised” power sector – with different proportions of renewables, nuclear and carbon capture and storage – the Roadmap 2050 study shows that in forty years’ time technologies that already exist or are in commercial development could be supplying Europe with 40 per cent more electricity than now with the same level of reliability. With oil and gas prices projected to rise steeply over the period, a modest average carbon price of €20 to €30 per tonne of CO2 would make a decarbonised power system no more expensive than a high-carbon one powered by conventional fossil fuels. There would be no net cost to GDP, economic productivity would rise because of greater energy efficiency, employment would be slightly higher, and there would be huge gains in energy security.

The key to decarbonisation is the development of a European “supergrid” – an enhanced transmission network connecting power sources to demand across (and beyond) the continent. Such a grid would tackle the problem of “intermittency” suffered by individual renewable technologies: when the wind is not sufficiently powering turbines off the coast of Britain, electricity could be supplied from concentrated solar panels in Spain and North Africa; when low water levels restrict hydro in Scandinavia, biomass from Eastern Europe could make up the gap. Enhanced by “smart grid” technologies enabling the balancing of supply and demand on the system, such a grid would allow the widespread use of electric vehicles and electric heat pumps in buildings, contributing further to the overall reduction in Europe’s carbon emissions.

The investment required to implement the Roadmap 2050 vision is huge: an additional €3 trillion over forty years on an existing requirement of more than €4 trillion. Over the next ten years alone investment in new renewables and grid could hit €250 billion. But Europe’s policy-makers have been swift to identify the corollary – a huge potential for job creation to stimulate growth in a European economy still stuck in recession.

And here lies the third argument now being made in favour of a European push for lower emissions. For Europe’s energy and manufacturer giants, the benefits of a domestic low-carbon economy are global. Companies like Siemens, Alstom and Vattenfall see an clean-technology future and want to lead it. And increasingly European politicians are seeing in this a new political narrative for the troubled European Union, arguing that green technologies can give Europe a comparative economic advantage over the United States and other countries where climate legislation has stalled. They point out that China has become a huge exporter of both wind turbines and solar power; only with an expansion of Europe’s own market for new technologies will European companies be able to stay ahead. They acknowledge that higher energy prices will add to business costs, but point out that sectors exposed to competition are already largely protected through free allocations of emissions trading permits.

None of this is to say that the argument for stronger unilateral action has yet been won. There are powerful fissures in Europe through which the case could still fall. Politically, the demand is very much a North and West European one, with the new member states of Eastern Europe (led by Poland and supported by the right-wing government in Italy) deeply resistant to further action on climate. Eastern Europe tends to be much more dependent on coal, with a public far less interested in global warming. At the same time, while energy companies and high-tech manufacturers are attracted by the economic benefits of tougher targets, much of European business is opposed, fearful of higher energy costs.

Over the next few months a series of EU decisions will determine which way the continent turns. A new European infrastructure plan will be published next month, with an energy strategy due in the northern spring. The next seven-year EU budget will follow. The European Union’s twenty-seven member states will soon face a historic choice. Do they wait for agreement, and in the meantime allow Europe to continue down the high-carbon road? Or do they strike off now towards a low-carbon future? The answer they give will resonate well beyond Europe’s borders. •

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THE DRAMATIC occupation by Greenpeace campaigners of an oil rig in the freezing seas off the coast of Greenland this week marks the first skirmish in what may prove to be the defining environmental battle of this decade. On the one side, a multinational oil industry desperate for new drilling fields to meet the world’s insatiable demand for fuel. On the other, a global environmental movement anxious to find a new front on which to fight its stalled campaign against climate change. With Greenpeace’s action having halted drilling from the rig, at least temporarily, and Greenland’s prime minister weighing in to condemn its “illegal act,” battle lines have been drawn.

Located in Baffin Bay, an arm of the Arctic Sea between the west coast of Greenland and Baffin Island in the very north of Canada, the rig in question is operated by Cairn Energy, a small UK-based oil and gas exploration company. Last week Cairn announced it had found gas in thin sand – the possible precursor to oil – in the area. With oil majors such as Exxon and Chevron already buying licences to drill off Greenland, successful discovery of oil is almost certain to spark a new “black gold rush” in the region.

The oil industry’s desire to find new reserves in the Arctic is not hard to understand. Increasingly locked out of developing countries whose governments now prefer to control their own oil sectors, and plagued by political instability in oil-rich countries from Nigeria to Iraq, global oil companies view the prospect of finding oil in the Arctic – governed by the stable democracies of the United States, Canada and Scandinavia – with enthusiasm. They are already investing heavily in the high-carbon tar sands of Canada; the US Geological Survey estimates that the Arctic’s technically recoverable offshore reserves could amount to around ninety billion barrels, or up to 10 per cent of currently estimated “proven” reserves.

But the environmental case against exploration is even more powerful. The Arctic’s fragile ecology is already under pressure from the warming seas and fracturing ice masses caused by climate change. The region is rich in birdlife, with millions of birds passing through on their annual migrations, and is also home to many species of whale, including blue whales, minke and humpback, alongside seals, narwhals and walruses. With low temperatures, lack of sunlight and thick ice inhibiting the breakdown and dispersal of spilled oil, the environmental impact of an oil leak here could dwarf the BP disaster in the Gulf of Mexico. Ecologists warn that the contamination caused could be carried far inland by coastal species such as polar bears and foxes, which prey on marine animals. It is now more than twenty years since the Exxon Valdez ran aground in the Gulf of Alaska; despite the huge clean-up operation, local populations of marine mammals have yet to recover and some are nearing extinction.

And the Arctic Sea is a spectacularly inhospitable place for drilling. Following the Deepwater Horizon disaster in the Gulf of Mexico President Obama imposed a moratorium on drilling at a depth of 152 metres or more. But Cairn Energy has drilled to a depth of more than 300 metres from its rig off Greenland. Cairn’s ships are having to tow icebergs out of the way to avoid collisions with its rig. But it can’t do anything to divert the largest bergs, which means that the rigs themselves will have to be moved at short notice. Last month an ice island four times the size of Manhattan broke off the Petermann glacier north of Disko Island and will eventually make its way south through the Nares Strait into Baffin Bay.

Drilling in this area is only possible for the few months between July and early October each year; for the rest of the year the sea-ice becomes too thick to allow vessels to operate. This means that should a leak occur it may become impossible to drill a relief well until at least the following year, allowing oil to flood into the Arctic waters for months. And it would be impossible to mobilise the kind of clean-up resources that BP has applied to the Deepwater Horizon spill in the heavily industrialised area of the Gulf of Mexico. BP has used more than 3000 vessels in that operation; it is understood that Cairn Energy so far has an estimated fourteen in Baffin Bay. Industry experts warn that there are, in any case, no methods yet developed to recover spilled oil trapped underneath ice; the oil skimmers used in the Gulf of Mexico would simply be unable to reach it.

According to the US Minerals Management Service, the chance of a major spill over the lifetime of a block of exploration leases in Alaska is as high as one in five. And what will be the reward for such an environmental risk? Even if all the estimated Arctic reserves can be exploited, they would provide less than three years of global oil consumption at present rates.

For here lies the central problem. The oil industry is right to point to the continuously rising global demand for oil; but the answer cannot be an ever-expanding supply produced in ever more hazardous ways. And the reason is climate change.

Figures from the International Energy Agency make this clear. If the growth of energy demand continues on current trends, by 2030 oil consumption will have expanded by a quarter from current levels, inevitably requiring new discoveries. But these same trends, and their resulting greenhouse gas emissions, will lead to global warming of a catastrophic five or six degrees, well beyond the capacity of human society to adapt. By contrast, if the global temperature rise is to be held to a just-tolerable two degrees, global oil consumption would have to be only just above current levels by 2030, and already falling. Such levels of consumption can be met from within existing reserves. But more importantly, as the agency shows, they will require a significant development of alternatives to oil.

Such alternatives are beginning to become viable, notably in the development of electric vehicles and second and third generation biofuels. Electric and hybrid vehicles in particular are now under commercial production by all the big car manufacturers, and could become widespread over the next two decades. But the incentive for their development is the prospect of increasingly scarce and expensive oil, and this will only be retarded by the continued focus on developing new supply.

So Greenpeace’s demand for the banning of Arctic drilling is justified on both climate change and ecological grounds. But this does not mean it will be easy to achieve. Governments will always seek to avoid limiting production of an exploitable resource. When they wish to act at all, it is much easier for them grasp the other end of the stick, encouraging alternative sources and greater efficiency in use. That is why, in the field of electricity, emphasis has gone into developing renewables and nuclear energy and insulating homes and buildings. This depresses demand for coal and gas without requiring the awkward step of making it illegal to develop them.

Yet prohibiting resource use has been done – indeed, many of the environmental movement’s greatest victories have taken this form. The bans on whaling, prohibitions on cutting down ancient forests, the creation of national parks, the protection (just) of Antarctica – all provide precedents. They have required protracted public campaigns to pressure governments and the companies involved, but in the end have succeeded, even if in some cases only partially. In the field of electricity, too, the demand to ban unabated coal-fired power stations is beginning to achieve success in a number of countries.

So a global campaign to prohibit the exploitation of Arctic oil looks set to become the new focus for environmental concern. The deep anxiety and backlash against the oil industry caused by the BP disaster in the Gulf of Mexico provides a huge opportunity for the environmental movement. Yet in putting pressure on the US, Canadian, Danish, Norwegian and Russian governments, it will meet fierce resistance from an oil industry with deep pockets and even deeper contacts in the upper ranks of governments and legislatures. For a movement that’s struggled to mobilise public opinion on the scale required to combat climate change, this will be a huge challenge. But in every generation one issue comes to symbolise the wider battle over humankind’s exploitation of the natural world. The confrontation now taking place in the cold winds of Baffin Bay may mark the next frontier. •

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AS POLITICAL announcements go, it can’t have sounded to an innocent observer like a very big one. The US Senate would shortly debate a bill to regulate offshore drilling and provide incentives for home energy efficiency, declared Majority Leader Harry Reid in Washington last week.

But it was not in the content of the forthcoming bill that the significance of his announcement lay. It was in what Reid confirmed would not be in the draft law. No greenhouse gas emission targets, no cap-and-trade scheme, and no renewable electricity standard. In fact, though he couldn’t quite bring himself to say it, Reid’s announcement was close to being that there would be no climate change legislation in the United States for the remainder of Barack Obama’s presidency. If that proves to be the case, the ramifications would be global. It would shift the chances of reaching agreement on a comprehensive climate change treaty within the next three years to more or less zero.

To be sure, even as Reid was fixing the nails in the coffin of American climate legislation, desperate efforts were being made to push the lid open from the inside. The indefatigable Democrat senator John Kerry, one-time presidential candidate and now leading congressional climate campaigner, declared that it might still be possible to bring a climate bill before the “lame-duck” session of congress after the mid-term elections in November. The White House said that climate provisions could reappear in a “conference” merging Senate and House of Representatives proposals. The environmental NGOs said they would fight on. But few in Washington now give these hopes much credence. There simply aren’t enough votes in the Senate to pass a bill; and after the expected Republican gains in the mid-terms there will be even fewer. The tide of American concern about climate change never rose very high, and it seems now to be ebbing away still further.

How has it come to this? It was certainly not what was meant to happen. Barack Obama campaigned for the presidency on a strong climate platform. After eight years in which George W. Bush had stood resolutely against both domestic legislation and global agreement, Obama promised to cut US emissions by 14 per cent by 2020, returning them to 1990 levels. To do this he would introduce a cap-and-trade scheme covering the entire US economy. Emphasising the importance of American “energy independence,” he committed to major new investment in renewables and nuclear power. And the United States would rejoin the global climate negotiations.

Obama’s presidency started well. One of his earliest decrees was to give the Environmental Protection Agency authority to regulate carbon emissions under the Clean Air Act, long denied by Bush. Around US$70 billion of the president’s early fiscal stimulus package was for clean energy investment. Encouraged by the White House, the House of Representatives drafted and passed a comprehensive climate bill in June last year, named after its two Democrat sponsors, Henry Waxman and Ed Markey, with a headline 17 per cent cut in emissions by 2020 and further provisions to raise this. Senators John Kerry and Joe Lieberman took up the legislative baton in the Senate. And led by an active State Department, the United States convened a new climate forum to help move the formal negotiations forward.

But then, about a year ago, it all began to go wrong. Four different factors began first to slow momentum and then to reverse it altogether.

The first was the economic downturn. Accustomed to low energy and gasoline prices, the American public would always take some convincing to support measures that would raise both. So cap-and-trade architects ensured that there would be a price ceiling in their proposed scheme, and advocates emphasised the potential for new “green jobs.” But once unemployment started to rise, the counter-argument gained ground. Coal, oil and heavy industry business lobbies ran TV ads calling climate legislation a “job killer” and a “new energy tax,” and senators in industrial states began to run scared, protesting that the time was not right for climate legislation.

Then came the “climategate” scandal. The theft and leak of private emails from climate researchers at the British University of East Anglia, which appeared to show that data had been manipulated, had an impact on media reporting of climate science throughout the world; but nowhere with more virulence than in the United States. A major strand of American public opinion was never convinced of the evidence for human-made global warming; now an entire industry of climate sceptics and deniers swarmed over the allegations to make the argument that climate change was a myth. A freezing winter didn’t help – with the scientific sophistication for which it is known, Rupert Murdoch’s Fox News ran banner headlines during the cold spell asking “Global warming: has the President looked outside lately?”

Third was Copenhagen. To his credit, Barack Obama not only went to the UN climate conference in December but also committed to the Waxman–Markey emissions reduction targets (even without Senate endorsement) and to aid for developing countries. But the failure in Copenhagen to agree to more than a non-binding outline deal left many in Congress unconvinced that action at home would be reciprocated abroad, particularly by an increasingly assertive China.

And the final factor was healthcare reform. As Obama’s number one legislative priority took longer and longer to pass through the Senate, clogging up not just the autumn session before Copenhagen but also the New Year period after it, the space and moment for a new climate law receded. Burning up political capital on healthcare, the administration never put its full weight behind a climate law. (This has made Obama the object of fierce criticism from the environmental lobby, which has effectively accused him of scuppering the bill through lack of effort.) Kerry and Lieberman managed to recruit one Republican to the cause, Senator Lindsey Graham; but nobody followed, and in the end even Graham pulled out. Senate bills need sixty votes to pass, and with around ten Democrats resolutely opposed and – in the intensely partisan atmosphere of the present Congress – no Republicans in support, the Kerry–Lieberman bill found itself with nowhere left to turn.

Ironically, it was the BP oil spill in the Gulf of Mexico that signalled the end of the climate road. To many environmentalists the Deepwater Horizon disaster powerfully reinforced the need for the United States to wean itself off fossil fuels: if this was the price of the ever-expanding demand for oil, they argued, America needed to change course. President Obama himself tried to pivot the post-tragedy debate towards the need for US energy independence. But it all fell on deaf ears. The dominant congressional reaction to the Gulf spill has been a desire to punish BP and to ensure that oil companies in general provide larger compensation funds – hence the principal content of the bill announced by Senator Reid. Paradoxically, a relaxation of constraints on offshore drilling was one of the concessions to the Republicans that Kerry had included in his climate bill; but this could not survive the spill.

SO IS EVERYTHING now lost for US action on climate change? Not quite. The immediate focus of climate campaigners will be a concerted push to include in the forthcoming Senate bill a renewable electricity standard – a minimum federal requirement for the proportion of electricity to come from renewables. Though Senator Reid claimed this had no more support in the Senate than cap and trade, it has strong backing from the fast-expanding US renewable energy sector, and it could yet scrape through a combined energy bill with the House.

At the same time the Environmental Protection Agency will continue its drive to regulate carbon emissions under the Clean Air Act. No one expects the EPA to get very far very quickly – a combination of annual Republican attempts in Congress to deny its authority and business moves to contest its jurisdiction in the courts will ensure the pace of regulation remains grindingly slow. But it will at least ensure a constant background hum of action to reduce emissions; and if it succeeded, the EPA could cut a serious swathe through some of the worst polluters.

And the Obama administration will continue to take piecemeal action. Already its stimulus package is yielding significant new spending on areas such as home insulation and carbon capture and storage. The new bill will provide increased incentives to run trucks on natural gas and cars on electricity. Another push could yet be made to raise vehicle emissions standards, and to use air-pollution controls to close old coal-fired power stations. With the recession slashing energy demand, US emissions are likely to fall by around 10 per cent by 2020 even without a climate law.

But no one should be in any doubt about how tough this is going to be. As the Tea Party movement continues its apparently relentless rise, America’s right wing has found a new momentum, and action on climate change is one of its targets. Throughout the United States, incumbent congressmen and women who supported climate legislation last year are being targeted for retribution in the mid-terms. And perhaps not surprisingly, California is shaping up to be the biggest battleground. Under its relatively liberal Republican Governor Arnold Schwarzenegger, California in recent years has spearheaded action on climate by a number of US states, with low-carbon energy regulation and a proposed regional cap-and-trade system to enter into force in 2012. But all this is now under attack. A proposition (number 23) to be placed on Californian ballot papers in November’s elections will propose the repeal of the state climate law, including its cap-and-trade scheme. The new Republican candidate for governor, former eBay chief executive Meg Whitman, has said she will suspend the law even if the proposition fails. So with Democrat candidate Jerry Brown coming out strongly in the law’s favour, an almighty climate struggle looks set to play out on the west coast.

Despite the gloomy prognosis for the next few years, a number of American analysts continue to argue that the United States will come round to comprehensive low-carbon legislation eventually – perhaps in a second Obama presidential term (if that happens). They point out that continuing regulatory uncertainty will make already fragile investment in new energy supply increasingly difficult; it was, after all, the problem of operating under a patchwork of state policies, combined with the threat of EPA regulation, that pushed many energy and industrial companies into supporting a federal cap-and-trade scheme in the first place. That coalition of interests remains. At the same time, American high tech companies will increasingly complain that lack of US action is allowing China to take a technological lead in the new green industries, adding to the pressure for “green jobs” policies in Congress.

And eventually, it is argued, the scientific and energy-independence grounds for action on climate change will return to the fore as well, even in America. But even optimists don’t suggest that the world should hold its breath. •

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