The world is witnessing a fast-unfolding climate change crisis, but unfortunately neither economic, environmental, nor epidemiological policy is coming together in the serious way it needs both domestically in countries in general globally, nor multilateral finance is making the much-needed shift from ‘billions to trillions’ to effectively deal with this existential threat. COP29 last year, and then more recently concluded ‘4th International Conference on Financing for development’ (FfD4) have all shown lack of needed multilateralism both in terms of meaningfully providing climate finance, and improving the sovereign debt restructuring framework, given a number of developing countries are highly debt distressed.
Another issue is the difficult geopolitical situation, given that while the intensity and frequency of climate change induced climate catastrophes are increasing rapidly over the last decade or so, unfortunately geopolitical conflicts are not being dealt with the urgency they need to tackled with, for not just relieving misery for the victims, but for also putting most attention on tackling the existential threat of climate changes crisis.
Reportedly, last month COP30’s chief executive indicated in this regard ‘“Climate is our biggest war. Climate is here for the next 100 years. We need to focus and … not allow those [other] wars to take our attention away from the bigger fight that we need to have.” Ana Toni, the chief executive of Cop30, the UN climate summit to be held in Brazil this November, is worried. With only four months before the crucial global summit, the world’s response to the climate crisis is in limbo.’
Moreover, for instance, highlighting issues with regard to the overall debt distress of the ‘vulnerable twenty group’ (V20), and the shifting of resources in a significant way from spending on economic resilience to debt servicing, the third edition of the ‘V20 debt review: an account of debt in the vulnerable group of twenty’ report that has been recently released pointed out ‘The debt and climate crises are coming together in a vicious circle. This is the clear conclusion of the third edition of the V20 Debt Review, the assessment tool of the CVF V20– a group which now represents the combined interests of 74 countries and 22.4 percent of the world’s population. The impacts of escalating climate extreme events are forcing many of our already heavily indebted countries to borrow more to finance unexpected disaster response and recovery. In turn, these climate shocks are weakening economic growth and public revenues, reducing the fiscal space which allows V20 countries to service already existing high debt, diverting capital from development financing, and constraining investment in essential priorities such as education, health, infrastructure, and climate resilience.’
The same report pointed out with regard to improving the global sovereign debt restructuring framework as ‘…the IMF and World Bank should refine the methodology for their debt sustainability analyses (DSAs), which are currently under review, to incorporate the critical transformative benefits of macro-critical resilience investments and valuation of natural capital. …Additionally, the IMF and World Bank should clearly highlight the volume of concessional capital and strategic debt relief that would be commensurate with the substantial investments countries require for achieving the Paris Agreement and the United Nations 2030 Agenda for Sustainable Development, since these details are often hidden in the technical minutiae of current DSAs . …[Moreover] these enhanced DSAs can form the basis for more ambitious debt restructuring in highly indebted and climate-vulnerable countries. This report shows that external debt servicing costs for V20 members in 2024 were three times that of 2014, crowding out investment in climate and development. Sixteen of our members spent more than 20 percent of government revenue on debt service payments in 2024, up from just two members in 2013.’
In the midst of a lacklustre multilateral spirit to effectively deal with the climate change crisis, the International Court of Justice (ICJ) gave a very significant statement in this regard. A recent ‘RFI’ published article ‘World’s top court paves way for climate reparations’ pointed out in this regard ‘In a historic statement, the International Court of Justice said climate change was an “urgent and existential threat” and countries had a legal duty to prevent harm from their planet-warming pollution. Countries breaching their climate obligations were committing a “wrongful act”, the court said in its advisory opinion, which is not legally binding but carries political and legal weight. “The legal consequences resulting from the commission of an internationally wrongful act may include… full reparations to injured states in the form of restitution, compensation and satisfaction,” said ICJ President Yuji Iwasawa on behalf of the 15-judge panel. …Campaigners and countries on the climate frontlines hailed a milestone moment in the fight for accountability from big polluters most responsible for global warming. “This is a victory for our planet, for climate justice and for the power of young people to make a difference,” said UN Secretary-General Antonio Guterres.’
The climate change crisis needs to be taken very seriously, as evidence continues to pile up globally about the fast-unfolding nature of the climate change crisis. In this regard, not only climate finance needs to increase significantly, but also greater debt relief needs to be provided for developing countries under high debt distress, especially those which have insignificant carbon footprint. Moreover, the global sovereign debt restructuring framework needs to be improved, especially in terms of adequately involving private creditors.
An important aspect in fighting the climate change crisis is investing in clean, green energy. In this regard a recent Guardian published article ‘World on brink of climate breakthrough as fossil fuels ‘run out of road’, UN chief says’ pointed out ‘The world is on the brink of a breakthrough in the climate fight and fossil fuels are running out of road, the UN chief said on Tuesday, as he urged countries to funnel support into low-carbon energy. …Solar power is about 41% cheaper than the lowest-cost fossil fuel alternative, and onshore wind generation is less than half the price of fossil fuels, according to a report from the International Renewable Energy Agency. …The UN secretary general, António Guterres, said: “We are on the cusp of a new era. Fossil fuels are running out of road. The sun is rising on a clean energy age.” Guterres said countries seeking energy security against geopolitical threats and lower costs for consumers amid a global cost-of-living crisis must choose renewables.’
