MONEY NOT TO BURN

Developing countries want $3.5 trillion to achieve climate goals, and one nation wants most of it

Obsession
Energy Shocks
Obsession
Energy Shocks

Flipping the world’s energy system from one based on burning carbon to one focused on avoiding emissions was never going to be cheap. Rich countries still have much higher per capita emissions than those in the developing world, but many are on a decarbonization course—achieved, to a large extent, via money spent on technology.

Now the challenge is to get developing countries on the same trajectory, even while they continue to grow their economies, and pull billions of people out of poverty.

Richer countries that have already benefitted from years of emitted carbon have already said they’ll support that transition. Now, a price has been placed on it.

An analysis of individual countries’ carbon cutting plans, by Carbon Brief, a UK-based company that reports on climate change, found that developing countries collectively wanted support worth $3.5 trillion to make the change.

Of that, $2.5 trillion is being demanded by one single country: India.

To those following the negotiations in Paris toward an international deal on climate change measures, this will come as no surprise. India has been highly protective of its right to keep up rapid growth in the years to come, and has committed to emissions cuts pegged to GDP, rather than independent of it. (China, by contrast, while it is currently the world’s biggest emitter, has promised to hit peak emissions by 2030.)

In order for India to achieve the growth it says it needs without huge reliance on coal, it needs massive support from the international community.

While trillions of dollars sounds like a big upfront cost, it’s also important to remember two things. First, it’s the spend for the 10 years from 2020, when current commitments run out, to 2030, working out to about $350 billion per year. That’s still a huge spend; but the other thing to remember is that energy is massively expensive anyway. Fossil fuels are currently subsidized to the tune of $490 billion a year, according to the International Energy Agency (pdf, p.7). For the Organization of Petroleum Exporting Countries (which doesn’t include US oil), oil revenues were $730 billion in 2014.

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