Should play their part in just transition, principle of equity and historical global warming tax
Activists hold a silent protest against the draft agreement, during the COP29 United Nations Climate Change Conference, in Baku, Azerbaijan November 22, 2024. PHOTO: REUTERS
ISLAMABAD:
Climate Just Transition (CJT) is a buzzword these days. It urges the world to move away from unsustainable, climate-intensive practices and towards sustainable, climate-neutral and climate-friendly practices. The need for transition has grown as climate change-related disasters and impacts become more frequent. The cost, both monetary and human, is rising sharply.
For example, the 2022 floods cost Pakistan around $30 billion, and the human tragedy cannot be calculated. Climate change has further worsened food insecurity over the years. Pakistan is not the only country facing climate disasters or impacts; the same story is unfolding everywhere. In this context, the transition is a necessity, neither a luxury nor a choice.
However, the transition must be human-centric, not business-centric. It must be designed around human needs and grounded in fairness. Fairness demands a transition that gives due focus and respect to the needs of marginalised communities and groups, as well as poor and developing countries. The transition must not compromise people's decent livelihoods and opportunities to grow. Moreover, countries should not be pushed or lured by funding into commitments or actions beyond their capacity or historical responsibility. Thus, it will be a complex and tedious task, but with wisdom and fairness, it is achievable.
For that purpose, the scope of transition must be designed according to the countries' capacity, not the wishes of developed countries or the greed of the private sector. In this context, the Just Transition must be anchored in the first principle of Article 4 of the United Nations Framework Convention on Climate Change (UNFCCC). The principle states, "The parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country parties should take the lead in combating climate change and the adverse effects thereof." Therefore, there is broader consensus that the UNFCCC's first principle inspires the Just Transition concept.
A deeper analysis of the principle indicates that it was devised to achieve two objectives. First, to care for the needs of present and future generations; as noted, humans exploited resources without regard for future generations' needs. Second, to act according to capabilities and to ensure the implementation of common and differentiated responsibilities, as well as historical responsibilities. Common and differentiated responsibilities indicate that climate change is a shared threat.
However, determining each nation's responsibility requires considering historical responsibility and capacity, including financial, technical, technological and human resources. Historical responsibility was considered essential to create justice among present, past and future generations.
Unfortunately, the principle was never implemented in its true spirit. Developed countries refused to fulfil their responsibilities under the historical responsibility clause or to act on their commitments at the UN. The story began with their refusal to implement the binding commitments under the Kyoto Protocol to reduce GHG emissions. They never took it seriously, repeatedly postponed action, or watered down their commitments to reduce GHG emissions.
The same policy or strategy has been applied to financial commitments or promises. Instead of fulfilling their financial obligations, developed countries are trying to exploit the situation in their own interest and create opportunities for their companies and states. For example, they promote loans or expensive debt through private institutions or multilateral bodies. Oxfam reports on climate financing and debt are eye-opening and provide us with a clear picture of what is happening in the name of climate financing.
At the same time, they have begun introducing new measures and deploying tools to pressure developing and poor countries to take actions beyond their capacity and responsibility. For instance, the European Union has introduced the Carbon Border Adjustment Mechanism (CBAM). Through the CBAM, the EU imposes a levy on imported goods by comparing carbon emissions within the EU with those of the importing country for a given product.
For example, if producing one unit of a product emits 10 kg of carbon in the EU, but the same product is manufactured in another country at a lower price but with higher carbon emissions, it will be subject to a carbon levy. On the face of it, it is a policy to fight climate change and its related impacts. They also promote it as an innovative tool to fast-track the climate transition. In reality, it aims to maintain the competitiveness of EU companies and discourage them from investing outside the EU.
Developing countries too disagree with the EU. They see it as contrary to the principles of equity and historical responsibility. They argue that they have limited resources to adopt new technologies and energy sources necessary for the transition. On the other hand, developing countries view CBAM as discouraging FDI from EU companies and others. It has a detrimental impact on their dream of economic growth and development. In the long run, it also hampers the green transition agenda. If the EU wants developing nations to fast-track the transition, it must provide financial assistance without taxing them irrationally. This is a genuine concern and demand.
Despite the harsh environment and injustice, developing and poor countries remain committed to the Just Climate Transition because they are highly vulnerable to climate impacts and disasters. Against this background, developing countries have two choices. First, they can continue with their current practices and delay implementing the climate transition agenda. This will have severe implications for the global climate change agenda.
Second, build their own financial resources by introducing new import levies on goods from the EU and other countries, such as a historical responsibility tax on EU companies. A historical tax should also include private companies, which are major contributors to global GHG emissions and beneficiaries of the Industrial Revolution. Developing and poor countries should strongly pursue the concept of historical taxation at the upcoming COP in Turkey. This is rational, as developed countries promote the private sector as a leader in fighting climate change; they must also pay for their historical contribution to GHG emissions. As the host, Turkey can facilitate the process.
Before concluding the discussion, it is important to highlight one area of concern in the CJT debate. Unfortunately, planetary needs and boundaries are largely missing from the transition debate. The debate focuses more on reducing GHG emissions, promoting green and new energies, private-sector interests, and economic growth, with less attention to human needs. The planet seems to have been taken for granted, with a focus on business needs. This continued neglect of planetary needs and respect for boundaries is feared to have a detrimental impact on climate, sustainable development and the future of humanity and the planet. It also contradicts the rights of future generations. Thus, to make the transition just, we also need to balance human needs with planetary needs and boundaries.
In conclusion, we can draw four key inferences. First, securing support from all public groups, countries and society is essential. Without society's support, no transition can succeed, let alone the fundamental lifestyle changes it requires. Therefore, to ensure a just transition, we must balance the ambition to reduce GHG emissions with human needs.
Second, the West will not fulfil its commitments and will continue to divert attention and responsibility towards poor countries. The story is the same from the Kyoto Protocol to the Loss and Damage Fund. They will also continue to lure poor countries with financial incentives into commitments beyond their capacity. Third, developing and poor countries need to be innovative and develop ideas, such as historical taxation, to counter developed countries' strategies to shift responsibility or action. Fourth, this debate on a just climate transition must recognise and include planetary needs and boundaries and policies and actions must reflect those needs and boundaries.
THE WRITER IS A POLITICAL ECONOMIST AND A VISITING RESEARCH FELLOW AT HEBEI UNIVERSITY, CHINA