$1,000,000,000,000. It certainly looks like a lot of money to find every year. But let’s put it into context. The global oil and gas industry has made a trillion dollars annually in pure profit every year for the last 50 years.
There’s no sign of that ending soon. Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman al-Saud, told the Future Investment Initiative conference in Riyadh last week: “We will monetise every molecule of energy this land has, period.” I’ll come to fossil fuel taxes shortly.
The global picture is that a trillion dollars is less than 1% of global GDP. “Every day, finance ministers, CEOs, investors and development bankers direct trillions of dollars,” notes Simon Stiell, the UN’s top climate official. It’s a question of pushing those trillions in the right direction. One country, the US, has already committed a trillion dollars over three years to its own climate action.
So, the money exists. Delivering the trillions of climate finance would also be a bargain because, as Stiell puts it, it is “a fraction of the costs every nation will pay if we allow the climate crisis to keep running rampant, devastating more and more lives and livelihoods every year.” It is not simply that the world’s nations can afford to beat the climate emergency – it’s that they can’t afford not to.
However, this truth has yet to overcome the enormous political obstacles that have delayed climate action for so long and led us to find ourselves in “crunch time for real”.
So how can the trillion dollars a year actually be delivered? First, it is important to recognise this is not charity. Developing nations did not cause the climate crisis, and are already spending more than a trillion a year themselves to fight global heating. But without further funding from the rich nations who did set the climate ablaze, future fossil fuel burning will mean a hell for all.
Developing countries, bearing the brunt of climate-fuelled extreme weather, want the money to come as grants. Overseas aid payments from rich governments will therefore be part of the solution, as long as existing funds aren’t simply rebadged as green.
But a bigger contribution will need to come from the World Bank and other international development banks, probably as low-interest loans. The problem here is that these institutions are owned and funded by the same world nations that have struggled to accelerate action at previous climate Cops, and the recent World Bank meeting in Washington DC made only incremental progress.
These sources might be able to come up with $200bn-$400bn a year, say observers. But that’s not nearly enough and loans are hard to stomach for those poor nations already spending more on debt repayments than they are receiving in aid. Huge sums could be raised by so-called solidarity taxes, which are being increasingly discussed. These include a 2% wealth tax on billionaires, which officials believe could raise $250bn in Brazil alone.
Taxes on frequent flyers, international shipping, financial transactions and, of course, fossil fuels are also being discussed. But these would all require a global agreement, the same challenge that faces the climate negotiations themselves. Even the idiocy of spending $600bn a year subsidising fossil fuels – throwing petrol on the climate fire – has proven extremely hard to end.
This brings us to private sector finance – businesses making investments – which could provide a big chunk of the trillion dollars. But some see this as a get-out for rich countries. “They would probably like to count the sun, the moon, and grandpa’s old socks as climate finance too,” says Teresa Anderson at ActionAid International.
Another thorny issue is that under the UN’s climate treaty, the group of rich nations required to lead climate financing was defined in 1992. So countries that are today much richer and more polluting, such as China, Saudi Arabia, UAE and South Korea, are all classed as “developing” countries in climate terms. The EU, the biggest provider of climate finance, is clear that such emerging economies, particularly the oil-rich Gulf states, now need to accept a share of the responsibility and chip in significantly. It is also worth noting that, even before Trump won this week’s presidential election, the US was not a big provider of climate finance, even though it is the world’s largest economy.
It seems most likely that a Cop29 deal will agree a core of hundreds of billions in public finance, with private finance making it up to the trillion dollars. The issue is timing. It took years to deliver the last climate finance goal of $100bn a year, and escalating climate disasters show time is absolutely not on our side.
But the money exists, as does the technology. Now it is about the politics, and the pressure exerted on leaders by the people they represent. “Ultimately, it’s a political decision to move the world forward to a safer place for our children and safer place for everyone,” says Ani Dasgupta, head of the World Resources Institute.
Read more ahead of Cop29:
