Raza Hussain Qazi
THE long anticipated Paris Summit, hosted by the French President Emmanuel Macronfor a New Global Finance Pact, came to a close on last Friday without a major announcement. However, the summit still represented headway in sending political signals on taxing the shipping industry on the greenhouse gas emissions produced from international shipping.
While the international shipping accounts for almost 3% of greenhouse gas emissions, according to the International Maritime Organization, tax on shipping alone could raise $100 billion a year.
The endorsement by the summit participants has provided Macron with a symbolic win and his idea oftaxation on international shippinghas been gaining traction and is likely to be adopted during the upcoming meeting of the International Maritime Organization in July 2023.
The two-day moot of world leaders as well as financial institutions’ heads provided yet another opportunity to find financial solutions to tackling climate change and poverty through drastic reforms in the international finance system.
The summit was the result of the collective efforts made by the H.E.Mia Mottley, the Prime Minister of Barbados, H.E. William Ruto, The President of Kenya and the French President. The leaders from the most vulnerable nations gathered at the summit collectively called for a complete transformation of the world’s financial system while sending strong political signals on taxing the shipping industry, to reform the global financial system and channel public funding towards addressing the most urgent polycrises of climate change, poverty and development.
The leaders from developing nations also called for far-reaching actions to raise more money by taxing the super wealthyand multinational corporations by adhere to the polluters pay principle.However, the leaders from the developed countries stuck to the old hypocrite mantra by paying lip service to reach out to the private finance sources and multilateral financial institutions for scaling up finance instead of devising a clear plan of action to tax the polluters and direct the money to the most vulnerable of the world.
The developing nations should make no mistake that the existing multilateral development banks are not the solution to the problem; rather they are a big part of the problem.The summit only emphasised on the ‘debt pauses’ for poor countries hit by disasters rather than full debt cancellation.What the world needs now is the actual actions such as undoing outdated Bretton Woods system and finalising agreements towards full debt cancellation for poor countries to make sure the money reaches those who need it the most without any conditions and strings attached.
In this regards, Pakistan is a case in point, which has been forced to take loans to recover from the most catastrophic climate induced floods of 2022 that submerged one-third of the country and left 33million gravely affected. Prime Minister Shahbaz Sharif’s participation has been remarkable as he not only highlighted Pakistan’s vulnerability but also supported small island states, including members of AOSIS which are facing the same predicament of climate disasters. Like Pakistan, the small nations also have to take loans to recover and rebuild each time they face natural catastrophes which lead to enormous loss and damage which exceeds 200% of their GDP in just a few hours.
The world must also move towards the idea of debt cancellation to enable developing nations to free up fiscal space for achieving their Sustainable Development Goals by embedding climate actions in their policy and development planning.
In order to reform the global financial system and channel public funding towards addressing the most urgent polycrises of climate change, poverty and development, we need far-reaching actions to raise more money from taxing the super wealthy and multinational corporations and making polluters pay.
A Fossil Fuel Non-Proliferation Treaty is the missing legal mechanism that the world needs urgently. There is also an urgent need to taxing the giantfossil fuel corporations that gained combined profits of over $153 Billion last year (2022). The fossil fuel corporations are the source of 73% of the total emissions which cause Climate Change.
It is also important that the Transitional Committee of Loss and Damage Fund which was agreed at COP27, makes clear recommendations at COP28 as to how to operationalize a fit-for-purpose Loss and Damage Fund. The funds, with a floor of 400 Billion USD a year, needs to be a standalone fund under the UNFCCC with additional, adequate, sustainable and predictable financing lines.
The Fund should be contributed by the developed countries, polluting industries i.e. Fossil Fuel, International Shipping and others, responsible for polluting the planet. This is to be complemented by New Collective Quantified Goals (NCQGs) being negotiated with a sub-goal on Loss and Damage finance included and aligned under UNFCCC. On top of all, the Global Stocktake of the Paris Agreement could create a political momentum to scale up mitigation ambition to avert Loss and Damages while ensuring adaptation finance to minimize Loss and damage.
While, we have so many right reasons to be disappointed by the outcomes of such summits, there are many points and opportunities out of theseevents that give us hope. The discussions on taxing the shipping industry are likely to gain further traction in maritime conference next month. In COP28 this year, we may see substantial progress on the way to an ambitious and comprehensive outcome on mitigation, adaptation as well as on the Loss and Damage Fund. There are many chances that a major headway would be made towards mobilizing finance for Loss and Damage at the Climate Emergency Summit which is being hosted by Secretary General Antonio Guteres in September this year.
—The writer is climate governance expert and works for global development organizations in spheres of research, advisory, policy analysis and legislative reforms
