Paris Summit at risk of letting fossil fuel companies & Global North leaders off the hook for climate and inequality

The June 22-23 “Summit for a New Global Financial Pact” is being billed as the first step in a two-year roadmap to overhaul our global financial architecture, and is a crucial opportunity for world leaders to confront the climate crisis and global inequality.

Earlier this week a coalition of 150+ economists and policy experts including Yanis Varoufakis, Jason Hickel, Olúfémi O. Táíwò, Nader Habibi, and Isabelle Ferreras sent a letter to Global North leaders, calling on them to pay their fair share for a just energy transition with trillions in public reparations and to allow democratic and people-centred reforms to the global financial system they have a disproportionate control over.

As a first step, the economists propose redirecting funds from three parts of our economies that are driving climate change and inequality. Combined, a tax on extreme wealth, canceling public external debts in low income countries, and ending fossil fuel handouts would raise over $3 trillion annually to tackle these crises.

Civil society observers have noted that without path-breaking proposals and a democratic process, there is a risk that the Summit will reinforce the existing inequalities of the global financial architecture by allowing Global North countries and private banks and corporations to set the terms of debate.

Oil Change International experts and letter signatories provided the following statements:

Bronwen Tucker, Global Public Finance co-lead at Oil Change International: “World leaders need to hear loud and clear that any global financial architecture ‘reform’ that still allows public finance for fossil fuels is unacceptable. They must use the Paris Summit to keep their promises to end all international and domestic handouts for fossil fuels, and to make polluters pay their fair share of climate damages. There is no room – or credibility – for further “we can’t pay for it” excuses.”

Jason Hickel, Professor, ICTA-UAB: “Stopping climate breakdown is not rocket science. Governments need to stop subsidizing fossil fuel companies; international banks need to cancel the external debts of global South countries; and we need to tax extreme wealth. These steps would liberate trillions of dollars for public investment to achieve democratically ratified social and ecological objectives. Recent research shows that millionaires alone are on track to burn 72% of the remaining carbon budget for 1.5 degrees. This is an egregious assault on humanity and the living world, and none of us should tolerate it. We need to understand that it is dangerous to continue supporting an over-consuming elite in the middle of a climate emergency.”

Jwala Rambarran, Caribbean Policy Development Centre (CPDC): “While the Paris Summit signals a welcome willingness of the Global North to collaborate and cooperate with the Global South on international economic issues, we caution that lofty rhetoric and good intentions will not be enough to create a truly inclusive, resilient and sustainable global financial system fit for purpose in the twenty-first century. For that, we are of the firm belief that deep, systemic reform is needed, not tinkering on the edges of markets and multilateral institutions, as has been the usual practice.”

Alex Lenferna, Nelson Mandela University, Climate Justice Coalition: “Countries in the Global South are drowning in debt, which is driving austerity and undermining our ability to respond to the climate crisis. Climate finance cannot be in the form of more loans, deepening debt, and devastating austerity for the Global South. We need much more public money to drive a truly just transition. The Global North must pay their climate debt, and not use climate finance as a wolf in sheep’s clothing that advances their interests through green structural adjustment.”

Nezir Sinani, Recourse: “Defunding fossils, debt cancellation, and taxing the rich alone would raise at least $3 trillion a year. But a handful of wealthy governments hold most of the levers to make this happen. The Paris Summit won’t work unless they come ready to pull them, and to hand over the controls to build a democratic and transformative financial system fit for the crises we face.”

Sohanur Rahman, Executive Coordinator, YouthNet for Climate Justice. Youth Delegate to Paris Summit from Bangladesh: “More people than ever are struggling to afford basic needs and climate disasters intensify. In the face of this, people power has pushed climate reparations firmly onto the international political agenda. But the Paris Summit being held is not enough — we need rich nations to put real public money and financial system transformation on the table.”

Notes:

• Letter: 150+ economists and policy experts calls on Global North leaders to put real global financial system transformation on the Paris Summit agenda
• Briefing from Big Shift Global coalition, “MDBs Can’t Help Fix The Climate Crisis If They Still Fund The Cause.”
• Recent research by Oil Change International shows that while many countries are living up to their Glasgow commitment to end international public finance for fossil fuels, a small number of countries, including Germany, United States, and Italy are lagging behind.
• Research paper: The existing oil and gas fields and coal mines globally already contain more fossil fuels than the world can extract and burn under the Paris Agreement.