Picture used for illustrative purposes only.

The next climate change summit to be held in Baku, capital of Azerbaijan, in November this has the challenging agenda of determining who pays for the climate finance, a prickly issue at the best of times. Though everyone recognised that the climate change crisis is a global one, and that it needs to be addressed urgently, there is no consensus how the transition to a green economy is to be managed.

The green technologies that are still evolving, mainly in the developed countries, need to be transferred to the majority of poor and developing countries. The developed countries, who have contributed the greatest proportion of industrial pollution in the form of carbon emissions over nearly two centuries, are not willing to accept the moral responsibility.  And despite their ability to finance the transfer of green technologies, they are unwilling to do so. They want emerging market economies like China and India to pay for the transition to a greener economy. The Western countries are unwilling to accept the burden of legacy in the matter of climate change. They — the Western countries — are fully aware that unless the whole world transits to green technologies, there is no way of averting the climate change disaster. So, they are thinking of ways of generating the financial aid for climate change without the West having to pay for it. US Secretary of Treasury Janet Yellen has set out to do exactly this, deflecting responsibility and apportioning responsibility of raising the funds.

Speaking at Belem, the gateway city to the Amazon in Brazil after attending the two-day finance ministers’ conference of G20 countries in Rio de Janeiro, Yellen said that the world needs $3 trillion per annum till 2050 to get to a low-carbon emission economy, and that in 2022 the rich countries had managed to contribute only $116 million, and 40 per cent of this came from multilateral developmental banks (MDBs) like the World Bank and the Inter-American Development Bank (IDB).

She said, “Neglecting to address climate change and the loss of nature and biodiversity is not just bad environment policy. It is bad economic policy.” But she refuses to push the rich countries to contribute much more than they are doing now for climate finance. She is suggesting that this has to be done through institutions like the World Bank, and that they should be empowered to raise more funds and roll out aid and loans to finance the transition to a green economy globally. She also suggests that the private sector has to play a more active role in the matter as well. What she will not have is that the governments of rich countries should step up their financial aid to the poorer countries.

She has also struck the positive note that the transition to a green economy is a great economic opportunity. That is, the green technologies that the West is developing can now be sold to the rest of the world, and the world should pay for these technologies. This will lead to a new round of financial transaction where the poor countries will be given loans by institutions like the World Bank to buy the new technologies from the West, and the poor countries will then pay back the loans.

The private sector too will make sufficient profits by selling their green wares to the poor countries. This will help in perpetuating the Western dominance of the world economy. The poor countries will continue to sell their raw materials, especially the rare and critical minerals which are key to powering the green technologies, and they will get the raw deal as before. The poor countries will be selling the raw materials and buying the green technologies based on these raw materials at a higher price.