Africa, with its negligible carbon emissions, is a victim of climate change but cannot stop it. In fact, to lift the continent's inhabitants out of poverty, African economies need to experience significant growth, fuelled by international aid that encourages both domestic and foreign companies to invest and create jobs in Africa.
Africa, with its negligible carbon emissions, is a victim of climate change but cannot stop it. In fact, to lift the continent's inhabitants out of poverty, African economies must grow substantially, fueled by international aid that encourages both domestic and foreign companies to invest and create jobs in Africa.
This simple truth has alienated almost everyone. On the political left, people acknowledge that Africa is a victim of climate change and support foreign aid. But they are skeptical of economic growth. In fact, a burgeoning movement among wealthy Western progressives argues that degrowth is the solution to climate change and many other ills. As for encouraging private investment, this is rejected as an ugly face of capitalism. On the political right, people like growth and investment but rebel against aid.
This has created an atmosphere of “let's just do it” among Western politicians and climate and development policy makers, who seem happy to ignore that 60 years of development policies and 30 years of UN climate talks have failed miserably. Much of Africa remains left behind, and global emissions continue to rise. These two challenges are now urgent. Since the COVID-19 pandemic, Africa has departed from the fastest-growing economic regions more quickly than ever before, and as temperatures rise, curbing global carbon emissions has become critical.
It's time to drop the pretense and admit that both international aid to Africa and the UN climate change approach are fundamentally flawed. The world's governments meet several times each year to promise aid to poor countries and to reduce carbon emissions, but there is no system in place to ensure that these promises are sufficient and effective, nor are there any mechanisms to enforce them. Given their dismal record, perhaps the main output of these meetings was empty talk.
In this “world of make believe”, global multilateral institutions feel entitled to expand their mandates regardless of what they have achieved. In parallel, the global corporate community pursues profitable greenwashing, touting its achievements and goodwill every year in Davos, Switzerland. Neither international institutions nor the World Economic Forum in Davos have proven effective in reducing emissions or catching up African economies. But the solutions to these challenges are right there, if we only grab hold of them. It will require an honest review of the major multilateral institutions. And most importantly, any solution will require a thorough reassessment of these organizations’ individual mandates.
Let’s start with the International Energy Agency (IEA), a small UN agency based in Vienna. The IEA has proposed an embargo on the extraction of new carbon-based energy. This embargo was enthusiastically supported by the young Swedish activist Greta Thunberg. The World Bank, which, like all bureaucracies, is eager to expand its role, has picked up the baton and is using its aid programs for poor countries as a means of coercion. Countries that receive World Bank aid must promise to leave their oil and gas in the ground. But is an embargo morally right? And is the World Bank the right institution to enforce reductions in carbon emissions? I believe the answer to both questions is a resounding “no.”
None of this is to doubt the importance of reducing global carbon emissions – in fact, it is so important that we must challenge our world of assumptions.
Despite the enthusiastic support of Thunberg and her young supporters, the IEA's proposal is morally outrageous. The oil, gas and coal currently extracted belongs primarily to high-income countries, including Australia, Canada, China, Germany, Norway, Russia, the United States and various countries in the Middle East. Recently discovered but unextracted fossil fuel reserves are concentrated in low-income countries. For example, Tanzania has offshore gas, Ghana has oil, Timor-Leste has gas, and Liberia, Namibia and Sierra Leone may have significant amounts of gas and oil.
Some of the carbon energy already discovered will be buried in the ground and become “stranded assets” – energy industry jargon for worthless. Should stranded carbon assets belong to the poorest countries on earth or the richest? The IEA proposes forcing the poorest people to give up an opportunity to earn an income, without even acknowledging that this is ethically questionable.
For decades, economists have conspired with IEA bureaucrats to prioritize the question of “what is efficient” over the distributional question of “who wins and who loses.” Until recently, most economists ignored the latter question as the responsibility of politicians. Such ignorance assumes that if the IEA is successful in imposing an embargo, other institutions and experts will take over and decide how to redistribute the wealth from winners to losers. That is irresponsible ignorance.
Certainly, the redistributive institution would not be the World Bank, because it does not have the mandate over high-income winners. Despite its willingness to venture into climate change issues, the World Bank is not the right institution to handle this issue. It would be better to focus on why Africa continues to lag behind, despite the World Bank's past efforts. Clearly, the World Bank needs to experiment with new approaches to economic development and growth. Besides Africa's failed and failing states, there are enough countries with good leadership, such as Botswana, Ethiopia, Rwanda, and Zambia, that the World Bank could support more effectively.
The only international institutions with sufficient power over the developed West, the wealthy Middle East, and China are the United Nations and the International Monetary Fund (IMF). The UN has tried to spur change through its climate change conference process for the past 30 years, but it is too weak to be effective. This leaves the only international institution with the reach and influence to do so: the less loved and feared IMF. Potentially, regular consultations, where IMF staff impartially review and comment on various macroeconomic policies, could be used for this purpose. The rapid watering down of then-UK Prime Minister Liz Truss’s unconventional economic plan at the 2022 IMF-World Bank annual meeting illustrates just how much damage hostile criticism can cause.
Will the IMF's criticism of the environmental and development policies of the United States and China, or of the latter's vassal Russia, have any significant impact on national policymakers? Neither Washington nor Beijing will follow the IMF's instructions, but they compete for influence over the poor half of the world. Africa is an important voting bloc in the UN General Assembly and a regular in the G20, while India and Indonesia are too populous to be ignored. Indirectly, this competition may make the two superpowers more sensitive to IMF criticism that highlights actions that go against the interests of poor countries. Among European countries, IMF criticism may be even more effective, in part because the fund has always been led by Europeans. Pressure on major carbon emitters such as the UK, Germany and Italy, and rich producers of fossil fuels such as Norway, could be very embarrassing for national governments.
Most governments of the biggest carbon emitters need to be on board, which means all actions must be focused on the interests of each government in office. Fearing criticism from the IMF is a first step, but it won't be enough. We may not even get there unless the IMF's 190 member countries agree to expand its Article IV mandate to include emissions policies in IMF consultations.
For IMF and other pressures to work, we need to significantly lower the short-term costs of carbon abatement for governments. One way to do that is to distinguish between reversible and irreversible environmental damage, and focus immediate action and resources on the latter. Embracing the former provides a temporary buffer to lower the cost of any meaningful change until next-generation technologies make non-carbon energy cheaper than oil, gas, and coal. This applies not only to electricity generation, but also to hard-to-substitute industrial uses and transportation, a point that advocates of a fossil fuel embargo seem to ignore in their campaign.
As we become more honest about what climate and development policies can achieve, and the speed with which they can achieve it, we should also not become purists. For example, preserving biodiversity is important, but this does not require protecting all species everywhere, regardless of the cost. Nature is resilient and repairable. Salmon, which thrived in the Thames in the 18th century, have returned in the 21st, despite disappearing in the 19th and 20th centuries due to severe water pollution. All we have to pay for 30 years of “pretending” is unpleasant but temporary damage to the environment, which the next generation can reverse. We can count on it to right our own negligence.
And finally, back to the question of why we should do it all: Westerners should act primarily to help the marginalized and desperate communities that are still so prevalent in the 21st century world. I work in Africa, where the younger generations are very conscious that a world of opportunity is just out of reach. The most enterprising take terrible risks to reach Europe, the promised land, only to be met there with indifference or worse. In Latin America, the same fate awaits those desperately trying to flee north. But Africans and Latin Americans cannot find hope in a collective exodus. Instead, their economies must catch up. And Westerners should play their role in supporting the collective journey to a better, more resilient future. That would be real climate justice.
