With the COP28 event in the UAE having commenced on November 30th, the world is nowhere near close to capping global temperature rise to 1.5C above the pre-industrial level. One wonders whether this latest gathering of world leaders being hosted by one of the largest oil and gas producing countries in the world will prove more successful in phasing out fossil fuels than preceding ones. Another important issue worth keeping an eye on over the next ten days or so of COP28 events is what final shape the much anticipated ‘loss and damage’ fund for poor countries will take.
Given the current state of the conflict-ridden world, it is unlikely that richer countries with tainted historical emission records would be willing to put aside the needed funds to compensate the global south for climate induced havoc. We will most probably also not see the emissions reductions needed via voluntary pledges or via use of market-based mechanisms such as carbon trading, which allows one company to compensate another for offsetting their carbon emissions footprint by planting forests which sequester carbon. The problem with carbon trading is that it allows polluters to carry on polluting till such a time that the transition to cleaner fuels does not impinge on their bottom-line of making profits. While such ‘win-win’ schemes may seem convenient to big polluters, they are not adequate to significantly avert the threshold of irreversible ecological decline, or to provide adequate funds to pay for simultaneously growing climate induced damages.
What the world instead needs is an evident resolve to compel big emitters, be they in the public sector or the private sector, to pay a fair price for carbon emissions. It would obviously be hard to keep a tab on emissions by tens of thousands of companies around the world which rely on fossil fuels within their production processes. Moreover, carbon emissions from agriculture and livestock, from deforestation, waste management, or due to poor land use, are hard to assess and monitor, and hence difficult to tax. However, the number of the biggest emitters is much smaller. According to the Carbon Disclosures Project, around a hundred companies around the world have been responsible for pumping over 70% of global warming emissions since the past quarter of a century. The companies mentioned in this list included state owned Chinese, Indian, Iranian, Mexican, Saudi and Russian oil and gas companies. Amongst multinationals, America’s ExxonMobil and British owned Shell are the biggest emitters.
Besides fossil fuel companies, the global supply chains of multinational companies such as Coca-Cola or Walmart are also responsible for significant carbon dioxide emissions, according to researchers at the University College in London and at Tianjin University in China. For eg, emissions from Coca-Cola’s supply chain are estimated to be around what China roughly emits within its food sector, which keeps 1.3 billion people fed.
Neglecting the cost of carbon emissions enables big businesses to accumulate exorbitant profits while passing on the costs of environmental damages caused by their production processes to ordinary people, especially to the poor, who are least equipped to deal with climate change.
According to the reputable journal, Science, corporate induced carbon damages amount to trillions of dollars globally. So, it is high time for this environmental cost to be recognised and converted into taxable income which in turn can be used to pay for ‘loss and damage’ being caused by climate induced disasters. Effective carbon taxation of the world’s largest emitters would also significantly help reduce greenhouse gas emissions by immediately increasing the cost of producing fossil fuels. This in turn would incentivise carbon emitters to fast-track plans to use alternative green energy sources.
The means to finance a just carbon transition, and to compensate those who are bearing the brunt of climate threats they did not cause, are evident. What is lacking is the resolve and political will to do what is needed to halt global warming before this already alarming situation spins out of our control.
Published in The Express Tribune, December 1st, 2023.
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