Academic Webinar: Climate Compensation and Cooperation
FASKIANOS: Thank you, and welcome to today’s session of the Winter/Spring 2023 CFR Academic Webinar series. I’m Irina Faskianos, vice president of the National Program and Outreach at CFR.
Today’s discussion is on the record and the video and transcript will be available on our website CFR.org/Academic if you would like to share it with your colleagues or classmates. As always, CFR takes no institutional positions on matters of policy.
We’re delighted to have Arunabha Ghosh with us to discuss climate compensation and cooperation. Dr. Ghosh is an internationally recognized public policy expert, author, columnist, and institution builder. He’s the founder and CEO of the Council on Energy, Environment, and Water. He previously worked at Princeton University, the University of Oxford, the UN Development Program, and the World Trade Organization. He’s also contributed to the creation of the International Solar Alliance and was a founding board member of the Clean Energy Access Network, and he currently serves on the government of India’s G20 Finance Track Advisory Group, has co-chaired the World Economic Forum’s Global Future Council on Clean Air, and is a member of the Climate Crisis Advisory Group and on the board of directors of the ClimateWorks Foundation. And he is joining us—it is, I think, after 11:00 p.m. where he is, so we appreciate your doing this so late your time.
So, Dr. Ghosh, thank you very much for being with us today.
We saw in November a historic climate compensation fund approved at the UN climate talks. It would be great if you could give an overview of what it means to compensate developing countries for losses and damages caused by climate change, as well as share your recommendations for how countries can more effectively cooperate on such efforts and maybe the interplay between mitigation, adaptation, and compensation—how are we attacking all of these things.
So over to you.
GHOSH: Well, good day to everyone out there. It’s good evening at my end. It’s nearing up on midnight. But thank you, Irina, for having me as part of this conversation and thank you to the Council on Foreign Relations.
I think the way you framed it right at the end is really the way to start—how does mitigation, adaptation, and compensation all come together? Before I dive into the specific issue of loss and damage I want to just up front state for those listening in that I see climate change and the responses to climate change as not one market failure but at least three market failures that we are simultaneously trying to solve for.
The first market failure is that climate risks are nonlinear in nature and, therefore, we don’t have the normal approaches to insuring ourselves against climate risks. You can predict the probability of an earthquake of a certain intensity in a particular region without predicting an exact time of an earthquake but you can actually insure it by looking at the averages.
But you can’t do that with climate risk because the risks that we face today is less than the risks that you will face in 2030 and then it will exponentially rise in 2050. So your normal approaches towards insurance don’t work. That’s market failure number one.
Market failure number two is, put very simply, money does not flow where the sun shines the most. We have a severe problem of climate-related investment in absolute terms not being sufficient globally and in relative terms significantly insufficient, especially in the regions where you actually have very good natural resources, particularly sunshine, for solar power, and the very same regions where sustainable infrastructure needs to be built between the tropics where countries continue to be developing and need to raise their per capita incomes.
The third market failure is that even as we move towards or at least expend efforts towards moving to a more sustainable planet, we haven’t really cracked the code on how do we narrow the technology gap rather than widen it. And this matters because, ultimately, the response to climate change, while it’s a global collective action problem, because it is nationally situated it does raise concerns about national competitiveness, about industrial development, about access to technology and, of course, the rules that will—that would embed our moves towards a more free and more sustainable marketplace at a global level. And if we cannot crack the code on how technologies are developed and technologies are diffused and disseminated then it will continue to serve as a hindrance towards doubling down on developing the clean-tech technologies of tomorrow.
So it’s against this backdrop of multiple market failures that we have to understand where this whole loss and damage story comes through. Loss and damage has been discussed for decades, actually, in the climate negotiations. It was put formally on the agenda in 2007. But it was only at COP27 in Sharm el-Sheikh in Egypt that there was finally an agreement amongst all the negotiating parties that a loss and damage financing facility would be set up.
Now, what is loss and damage itself? Is it the same as adaptation? Clearly, not. It refers to the adverse impacts that vulnerable communities and countries face as a result of a changing climate including the increase in incidence and intensity of natural disasters and extreme weather events, as well as the slow onset of temperature increase, sea level rise, and desertification.
So it’s not just the hurricane that comes and slams on the coast. It’s also repeated rounds of drought which might be impacting smallholder farmers in another part of the world.
Now, adapting to a changing climate is different from compensating for the damages that you’re facing and that is why there was this call for a separate financing facility for loss and damage.
Now, this is the agreement thus far but it’s not—it’s not a done deal yet. What the decision did was basically said there will be now a transition committee developed dedicated to loss and damage with equal representation for rich and poor countries, and so on and so forth, but that transition committee would then have to figure out the funding arrangements, the institutional arrangements, where would this money sit, figure out how alternative sources of funding would come through only through existing mechanisms and ensure that it all gets delivered by COP28, which will be held in the UAE later this year.
Now, my belief is that a political decision, while it’s a strong signal, it’s only, you know, just—you’re just getting off the blocks and several other building blocks will be needed to make this work properly.
Number one, we will need a much more granular understanding of hyperlocal climate risk. Today, if you wanted to buy a house in Florida, for instance, there’s a high chance that there will be a neighborhood by neighborhood understanding of flooding risk, hurricane risk, et cetera, which is then priced into the insurance premiums that you had to pay for purchasing that property.
But in many other parts of the world, when you look at climate models they treat entire countries as single pixels, which is not good enough. My own organization, CEEW, has trying to develop the first high-resolution climate risk atlas for India, a country of a billion and a half people.
We now have a district-level vulnerability index looking at exposure to natural disasters sensitivity based on the economic configuration of that district and the adaptive capacity of the local communities and the administration.
Based on that then we can say where do you need to double down on your efforts to build resilience. But that kind of effort is needed across the developing world in order to actually understand what it means to climate-proof communities and what it means to actually understand the scale of the problem that loss and damage financing facility will have to address.
The second thing that has to happen is more development of attribution science. What is attribution science? Basically, a bad thing happens and then you figure out using the latest science how much of that bad thing happened because of the changed climate.
Now, here’s the problem. Only about—about less than 4 percent of global climate research spending is dedicated, for instance, to Africa but nearly 80 percent of that spending is actually spent in Europe and North America.
So what I’m trying to say is that even as we try to build out attribution science we need a lot more capacity that has to be built in the Global South to understand not just global climate models but be able to downscale them in a way that we’re able to understand what the next hurricane, the next flooding event, the next cyclone means in terms of the impacts of climate change.
The third thing that has to happen is something called Early Warning Systems Initiative. Basically, the idea—it was unveiled at COP27—is to ensure that every person is protected by early warning systems within the next five years or so. So the next time a tsunami is coming you’re not reacting after the fact but you’re able to actually send out information well in advance.
I’ll give you an example. In 1999 a big cyclone—super cyclone—hit an eastern state of India, Odisha, and about ten thousand lives were lost. A huge effort was put in for early warning systems subsequently along with building storm shelters, et cetera. So twenty years later when a similar sized cyclone hit the same state in 2019 less than a hundred lives were lost. Ten thousand versus a hundred. So this is the scale of impact that properly designed early warning systems can do to save lives and save livelihoods.
And, finally, of course, we have to build more resilient infrastructure. So the next bridge that is being built, the next airport that is being built, the next bridge that is being built, or a highway that’s being built, all of that is going to get impacted by rising climate risks.
So how do you bring in more resilient infrastructure? There’s something called the Coalition for Disaster Resilient Infrastructure that India has promoted. It has about thirty-five countries as members already and many multilateral institutions. It itself has started a program on infrastructure for resilient island states—for the small island states.
So what I’m trying to tell you here is that the loss and damage—when we talk about compensation it’s not just the monetary resources that are needed. There’s a lot of technical resources needed to do the hyperlocal climate risk assessment, the infrastructure that is needed to do early warning initiatives, the scientific capability that is needed for attribution science, and the sort of organizational administration capability at a district level but also all the way at an international level.
If all of that comes together then maybe we have a better architecture rather than just an announcement around compensation. But that just solves or begins to solve the first market failure.
Let me maybe pause there and we can use the rest of the hour to talk about this and the other market failures I highlighted.
FASKIANOS: Fantastic. Thank you so much. It really is daunting what needs to happen for sure in all the three market failures.
We want to go now to all of you for your questions. You all should know how to do this. You can click the “Raise Hand” icon on your screen to ask a question. On an iPad or a Tablet click the “More” button to access the raise hand feature and when you’re called upon accept the unmute prompt and state your name and affiliation and your question. Please keep it brief. And you can also write a written question in the Q&A box and, please, you can vote for questions that you like but if you do write a question it would be great if you could include your affiliation along with your name so that it gives us context.
So the first question I’m going to take we’ll go to Morton Holbrook.
Morton, please identify yourself.
Q: Hi. I’m Morton Holbrook at Kentucky Wesleyan College in Owensboro, Kentucky.
Thanks, Dr. Ghosh, for your presentation. I confess I haven’t paid enough attention to COP27. Can you enlighten me as to what the United States committed to and, more importantly, whether the Democratic bill—the bill passed in Congress in December was able to add—actually commit funds to the loss and damage project?
GHOSH: Should I answer that, Irina, or are you taking a bunch of questions at a time?
FASKIANOS: No, I think it’s better to take one at a time—
GHOSH: One at a time? OK.
FASKIANOS: —so we can have more in-depth—
GHOSH: Sure. Sure. Thank you, Morton.
Well, the decision on loss and damage was agreed to by all the member states negotiating at COP27. But, as I said earlier, this only suggests the setting up of a financing facility. How it’s going to be funded is yet to be determined. Will this be a reallocation of overseas development assistance that is redirected towards loss and damage or is this new money that’s put on the table? All of that has to be decided.
In fact, the developed countries did take a position that some of the larger developing countries that are big emitters should also contribute towards this loss and damage financing facility.
Of course, on the other side the argument is that these are also the countries that are continuing to be vulnerable. So there is a difference now that is coming up in the conversation around loss and damage around vulnerability versus developing in the sense that even emerging economies could be vulnerable to climate change, whereas developing countries might be poorer than emerging economies that are also vulnerable to climate change but in some cases might not be as vulnerable.
So the focus is actually on vulnerability in terms of the exposure to climate risks and, as I said earlier, the sensitivity of the communities and the economic systems.
Now, with regards to the U.S. legislation, I am not sure of the legislation you’re referring to for December. The one I’m aware of is the Inflation Reduction Act that was passed prior to COP27. But if there is something specifically that you’re referring to that was passed through Congress in December then I’m not aware of it.
FASKIANOS: OK. Let’s go to Clemente Abrokwaa.
Q: Thank you. Can you hear me?
FASKIANOS: We can.
Q: Oh, good. Thank you, Dr. Ghosh. Very interesting your explanation or discussion.
I’m from Penn State University and I have two short questions for you. One is base compensation. How would you monitor that? If you give a bunch of money or a lot of money to a country, especially those in the third world societies, third world countries, how would you monitor where it goes? Who controls the funding or the money? And I have a reason for—reasons for asking that question.
And the second is I was a little surprised about the—what you said about the 80 percent of the money given to Africa is spent in Europe, unless I got you wrong. Yeah, so those—why should that be if that’s true?
GHOSH: So let me answer the second question first. That is, I was referring to climate—global climate research spending that happens. Of all the global climate research spending that happens less than 4 percent is dedicated to climate research on Africa. But that climate research 80 percent of that less than 4 percent is actually spent in research institutions in Europe and North America.
So it wasn’t about money going to Africa for climate. It’s about the climate modeling research that goes on. So the point I was trying to make there was that we need to build up more climate research capacity in the Global South, not just in Africa and Asia and South America and so forth, in order to become better at that attribution science when it’s related to the extreme weather events but also to understand in a more localized way the pathways for more climate-friendly economic development pathways.
For instance, my institution CEEW, when we did net zero modeling for India we were looking at multiple different scenarios for economic development, for industrial development, for emissions, for equity, for jobs impact, et cetera, because we were able to contextualize the model for what it meant for a country like India, and now we’re doing similar—we’ve downscaled our model now to a state level because India is a continent-sized country. So that’s the point I was trying to make there.
With regards to how to monitor the compensation, now, I want to make two points here. Number one is that, of course, if any money is delivered it should be monitored, I mean, in the sense that it’s—transparency leads to better policy and better actions as a principle.
But we should be careful not to conflate compensation for damages caused with development assistance. Let me give an analogy. Suppose there is—someone inadvertently rams their car into my garage and damages my house. Now, I will get a compensation from that person. Now, whether I go and repair my garage or whether I go on a holiday as such should not matter because what matters is that the damage was caused and I was due compensation.
That’s different from my neighbor coming and saying, I see that your garage, perhaps, needs some repair. Let me be a good neighbor and give you some money and help you rebuild your garage. In that case, it would be unethical for me to take that money and go on holiday.
So there is a difference between compensation for loss and damage and money delivered for development assistance. However, I want to reiterate that once that money reaches any—whether it’s a developing country government or a subnational government there should be—there should be mechanisms put in place for transparently monitoring where that money is going. That should be reported whether it’s in a—I have often argued for climate risk assessments to be—annually reported at a national level. So the expenditure on all of this should also be reported. That should be tabled in a country’s parliament.
So I think it’s important to use democratic processes to ensure that monies are deployed for where they are meant to be. But it should not be a reason that if I cause you damage, I will not pay you unless I think you are good enough to receive my money. No, I caused you damage. I owe you money. That is the basic principle of loss and damage.
FASKIANOS: Thank you.
I’m going to go next to Lindsey McCormack, raised hand.
Q: Hi.
I would love to hear your thoughts on lessons from the successful response to Cyclone Fani in 2019. I believe you mentioned it was over a million people were evacuated in India and Bangladesh, saving many lives. You know, I am a student at Baruch College in New York and you probably saw that terrible blizzard upstate. People were stranded and died. And I was just comparing their response capacity and the preparedness in that situation versus in the cyclone where you have over a million people moved out of harm’s way. I’m really interested to hear what goes behind making that kind of preparation possible.
GHOSH: Well, thanks for the question, Lindsey. This is extremely important.
I think what happened—before I talk about Cyclone Fani let me go back again twenty years. There was the super cyclone in 1999 and then just a few years later there was also the tsunami in 2004 and, of course, there have been natural disasters from time to time. In fact, between 1990 and 2005 there were about 200-odd extreme weather events that we faced in India. But since 2005, we’ve already faced well over three hundred. The frequency of extreme cyclones has gone up 3X between the 1980s and now.
So there is this constant need, obviously, to upgrade your systems but that investment that was put in in early warning systems at a sort of regional scale using satellites, using ground sensors in the sea, et cetera, help to monitor and help to predict when—the movement of cyclones’ landfall and so forth.
Along with that is—has been a lot of local administration capacity building of how do you then get this word out and how do you work with local communities. So there are, for instance, again, Odisha women run self-help groups who have become managers of storm shelters so when the community voices are telling people to get out of harm’s way it has, perhaps, more social capital attached to it.
In another part of the country in a hilly state in Uttar Pradesh—Uttarakhand, I’m sorry—there is a community-run radio station that sends out information about forest fires and things like that.
The third thing has been around the rebuilding. So saving of lives is one thing but saving livelihoods is another critical issue and that’s why it’s not just getting people out of harm’s way but often, for—the early warning helps to get livestock out of harm’s way as well because, you know, for a small marginal farmer losing their cattle itself becomes a major loss of livelihood.
So these are ways in which there have been attempts to ensure that the scientific or the technical capacity building is married with the social capital and the local administrative capital. But that does not mean that this is consistently done all the time. It’s all work in progress and a lot more needs to be done in terms of the coverage of—and that’s why this Early Warning Systems Initiative that was talked about in COP27 is important because you’ve got to—I mean, we, again, are working with some private sector entities that provide early warning systems for hundreds of millions of people. So how do their—how do our ground-level data and their sort of AI-based kind of modeling capacity marry together to offer those services to much larger numbers of people, literally, in the hundreds of millions.
So it’s very important that this becomes—and since the title of this conversation is about climate compensation and cooperation I would argue that this is a no regrets approach towards bridging the North and the South.
2022 has demonstrated that a long-held assumption that the rich would escape and the poor would somehow adapt is kind of gone. You know, we’ve all been slammed with extreme events and I think, of course, there will be positions on which the North and the South and the East and the West will be on different sides of the table. But building a resilience against nonlinear climate risk is a no regrets approach on which we could certainly be cooperating.
FASKIANOS: Thank you. I’m going to take a written question from Caden Hicks, who is at Lewis University.
Of the 197 nations involved in these annual conferences of the parties when wealthy and powerful nations such as the United States and China do not meet their pledges are there any consequences for them? If they decide to drop their participation in this council how would they—what would the consequences be?
GHOSH: This is at the heart of the climate problem. I talked about three market failures and there is one political failure, which is that we don’t have an accountability mechanism, so to speak, that can hold everyone to account, the largest polluters but also everybody else. And that’s why the climate regime is different from the trade regime, which has a dispute settlement mechanism, or the international financial regime where you have annual surveillance of what you’re doing in managing your fiscal deficit, for instance.
So when it comes to holding actors to account, I see that we need to make efforts both within the FCCC framework and with outside. Within the FCCC framework, the Article Fifteen of the Paris Agreement is something that can be leveraged more to ensure that the Compliance Committee has greater powers, that those that are not compliant are able to then—for instance, in Article Six, which has yet to be operationalized in terms of internationally trading of carbon credits, if you are not compliant with your domestic nationally determined contributions, then Article Thirteen compliance should demand that you have to buy more carbon credits than otherwise would have been possible. That’s one idea.
The second is that the—and I’ve written about this recently—that we need to stop making the COPs just platforms for announcing new initiatives, that every alternate COP should be designed as an accountability COP, which means that we come there and we report not just on what we are emitting and automating in terms of the biannual update reviews, but have a genuine peer review conversation as it happens in many other international regimes.
Right now no one asks tough questions and no one answers tough questions. So it’s—I mean, I said this quite publicly at—in Sharm el-Sheikh that, unfortunately, the COPs have become mutual admiration societies. Every year we come and make announcements. We form some initiatives. We say something will happen on methane, something will happen on finance, something will happen on agriculture and forests. And the next year we come and make new announcements. We never really ask what happened to the announcement you made twelve months ago.
So how do we shift from being mutual admiration societies to mutual accountability societies? But beyond the COP process I think there are two other ways in which parties can be held to account. Number one is domestic legislatures and domestic courts. It’s important that the pledges that are being made are legislated upon at a national level so that parliaments can hold executives to account, and if that is not happening then you can go to court and hold your governments to account.
But, equally, it’s not just about state parties. There are the nonstate actors. And last year I also served on the UN secretary-general’s high-level expert group on net-zero commitments of nonstate entities, which means the corporations that are promising to get to net zero, or the cities and the states and the regions that are promising to get to net zero, and we laid out some clear principles on what it would mean to claim that you’re headed towards net zero. Where are your plans? Where are your interim targets? Where are your financing strategies? How is this linked to your consumer base so you’re not just looking at scope one or scope two but also scope three emissions.
So there are ways in which then the shareholders and the consumers of products and services of corporations can hold them to account. It’s a much more complicated world. But in the absence of the FCCC haven’t been able to deliver genuine compliance. We’ve got to get creative in other ways.
FASKIANOS: I’m going to go next to Stephen Kass, who has raised his hand. Also wrote a question but I think it’d be better if you just shared it yourself.
Q: I’m an adjunct professor at Brooklyn Law School and at NYU Center on Global Affairs.
As you know, COP27 included these remarkable but belated obligations to make payments but without any enforceable mechanism or a specific set of commitments.
Some years ago the New York City Bar Association proposed an international financial transaction tax on all transfers of money globally with the proceeds dedicated to climate adaptation. This would not be intended to replace the COP27 obligations but I wonder how you feel about that proposal.
GHOSH: This is, again, a very interesting question, Stephen, because the need to be creative of—about different sources of money that can capitalize a loss and damage financing facility or an adaptation financing facility is absolutely essential because governments—I mean, we recognize that governments have limited fiscal resources and it has become harder and harder to get any money—real money—put on the table when it comes to the pledges that have been made.
So I have recently been appointed to a group of economists that are looking at this issue. There is this approach, of course, of taxing financial transactions. There is another idea around taxing barrels of oil. Even a single dollar on a barrel of oil can capitalize a huge amount of fund. There are other ways, taxing aviation or the heavy kind of—heavy industries that—you know, shipping, aviation, et cetera.
Then there are approaches towards leveraging the special drawing rights (SDRs) on the International Monetary Fund, which are basically a basket of currencies that can then be used to capitalize a—what I’ve called a global resilience reserve fund. So you don’t make any payout right now from your treasuries but you do use the SDRs to build up the balance sheet of a resilience fund, which then pays out when disasters above a certain threshold hit.
So these are certainly different ways in which we have to be thinking about finding the additional resources. See, when it comes to mitigation—this goes back to Irina’s very first point—when it comes to mitigation there is—at least it’s claimed there are tens of trillions of dollars of private investment just waiting to be deployed and that brings me to that second market failure that I referred to, that despite those tens of trillions of dollars waiting to be deployed, money does not flow where the sun shines the most.
But when you pair it with, say, adaptation, let me give you an example. India has the largest deployment of solar-based irrigation pumps and it plans to deploy millions of solar-based irrigation pumps so you’re not using diesel or coal-based electricity to pump water for agriculture.
Now, is a solar-based irrigation pump a mitigation tool or is it an adaptation tool or is it a resilience tool? I would say it’s all of the above. But if we can define that through the International Solar Alliance, it’s actually trying to also fund the deployment of solar-based irrigation in sub-Saharan Africa as well.
So the point I’m trying to make here is if we can find ways to aggregate projects, aggregate demand, and reduce that delta between perceived risk and real risk, we can lower the cost of finance and drive private investment into mitigation-cum-adaptation projects. But when it comes to pure compensation, the kind that we are talking about when it comes to loss and damage, disaster relief, et cetera—especially when climate shocks have compounding effects—that you’re not just doing an after the event, you know, pitching a tent to house the displaced population, but we’re building in real resilience against even the slow onset of the climate crisis, in some aspects. Then we have to get a lot more creative about the resources because private resources are not flowing there and traditional kind of vanilla-style public resources don’t seem to be available.
So your idea is very much one of those that should be considered.
FASKIANOS: So I’m going to take a written question from Allan Victor Cortes, who’s an undergrad at Lewis University: To what extent do you believe that small motivated groups can truly make a global impact on the climate scene? What incentivizes larger bodies, be it states or multinational corporations, to listen to these collaborations of small governments or firms and their proposed environmental solutions?
GHOSH: This is a very interesting question because it has a normative dimension to it and an instrumental dimension to it.
The normative dimension—I was having another public event just yesterday where we were talking about this—is what is the value—when you’re faced with a planetary crisis what is the value of individual or small group action?
The value, of course, is that there is agency because when we talk about, say, lifestyle changes, and India announced this national mission called Mission LiFE in October in the presence of the UN secretary-general—Lifestyle for Environment—the idea was how do you nudge behavior, to nudge behavior towards sustainable practices, sustainable consumption, sustainable mobility, sustainable food.
You can think about creating awareness. You can think about giving more access to those products and services and, of course, it has to be affordable. But there is a fourth A, which is that it only works when individuals and communities take ownership or have agency over trying to solve the problem. But that is one part of the story.
But there is an instrumental dimension to it, which is what I call the enabling of markets beyond just the nudging of individual or small group behavior. So, again, let me give an example of—from India but which is applicable in many other parts of the world.
It is the use of distributed renewable energy. Now, distributed renewable energy is smaller in scale, smaller in investment size, even less on the radar of large institutional investors, and yet has many other benefits. It makes your energy system more resilient. It actually creates many more jobs. We calculate that you create—you get seven times more jobs per megawatt hour of distributed renewables or rooftop solar compared to large-scale solar, which creates more jobs than natural gas, which creates more jobs than coal, and it is able to drive local livelihoods.
So we mapped this out across India of how distributed renewables could drive livelihoods in rural areas whether it’s on-farm applications or off-farm applications, small food processing units, textile units, milk chilling and cold chain units, and so on and so forth, and we were baffled when we realized or we calculated that the market potential is more than $50 billion. In sub-Saharan Africa the market potential of solar-based irrigation is more—about $12 billion. So then suddenly what seems like really small individual efforts actually scales up to something much larger.
Now, if we can figure out ways to warehouse or aggregate these projects and de-risk them by spreading those risks across a larger portfolio, are able to funnel institutional capital into a—through that warehousing facility into a large—a portfolio of a number of small projects, if we are able to use that money to then enable consumer finance as has been announced in today’s national budget in India, then many things that originally seemed small suddenly begin to gain scale.
So we, as a think tank, decided to put our own hypothesis to the test. So we evaluated more than one hundred startups, selected six of them, paired up with the largest social enterprise incubator in the country, and are now giving capital and technical assistance to six startups using distributed renewables for livelihoods.
Within two and a half years we’ve had more than thirteen thousand technology deployments, 80 percent of the beneficiaries have been women who have gone on to become micro entrepreneurs, and India is the first country in the world that’s come out with a national policy on the use of distributed renewables for livelihood activities.
So the normative value is certainly there about agency. But the instrumental value of converting that agency into aggregated action is also something that we should tap into.
FASKIANOS: Thank you. I’m going to go next to Tombong Jawo, if you could ask your question—it also got an up vote—and identify yourself, please.
Let’s see. You have to unmute yourself. You’re still muted. OK. We’re working on that.
I’m going to take a quick question from Mark Bucknam, who’s the chair of Department of Security Studies at the National War College.
What is the best source for statistics on how much money is being spent on climate research?
GHOSH: There are multiple sources depending on where you—I mean, the study I was referring to came from a journal paper that was written by Indra Overland, “Funding Flows for Climate Change Research.” This was in the journal Climate and Development.
But I would think that the IPCC—the Intergovernmental Panel on Climate Change—would probably have some estimates aggregated in terms of this and you could check there. But let me also check with my modeling teams to see if they have better sources and get back to you on this.
FASKIANOS: Fantastic, and we will be sending out a link to this webinar—to the video and transcripts—so we can include sources in that follow-up.
So since Tombong could not unmute I will ask the question. Tombong is an undergraduate student at Cavendish University Uganda.
Climate compensation and cooperation is undoubtedly a step in the right direction if all stakeholders adhere to the laid down rules and regulations. However, what mechanisms are put in place to ensure that it gets to the people who matter the most and not diverted for political gains by politicians?
GHOSH: I mean, this is similar to the question that Clemente asked earlier, and I understand and I think it’s important now that we start thinking about what are the national-level efforts that would be needed to build in the monitoring of where the funds go and what kind of infrastructure is built.
So you can do this at multiple levels and this, again, goes back to the first thing I said about loss and damage, that we need this hyperlocal assessment. Let’s say a hundred thousand dollars have been given to a small country for resilience. Now, how you deploy that needs to be a conversation that first begins with the science. Now, where are you going to be impacted the most? What is the kind of climate risk that you’re going to be impacted by? Is it a flooding risk? Is it coastal degradation? Is it crop loss? Is it water stress?
Accordingly, the monies should be then apportioned. Once it’s apportioned that way it should immediately get down to a much local-level kind of monitoring. That requires itself a combination of state-level reporting but I would argue also nonstate reporting.
So, again, we spend a lot of our efforts as a nonprofit institution tracking not just emissions but also tracking how moneys are deployed, the scale of projects, where the projects are coming up. We do a lot of ground surveys ourselves. We do the largest survey in the world on energy access, that data that helps to inform the rollout of energy access interventions.
We’ve now paired up with the largest rural livelihood missions in two of our largest states to ensure that this work around distributed energy and livelihoods and climate resilience is tied up with what the rural livelihood missions are promising at a state legislature level.
So I think that it is very important that the science dictates the apportionment of the funds but that there is a combination of government reporting and nongovernment assessment to track the progress of these projects.
Of course, with advanced technology—and, I mean, some have proposed blockchain and so forth—can also track individual transactions, whether it’s reaching the person who was intended to be reached, and so on and so forth, and those kinds of mechanisms need to be developed regardless of this loss and damage financing facility.
If we talk about offsets, all the activity in voluntary carbon markets that are going on, the level of rigor that is needed for when, so you’re trying to offset your flight and saying, well, a tree is going to be planted in Indonesia for this long-haul flight that you’re taking, how do you know that that tree truly was planted?
And also if trust is broken then it’s very hard to rebuild and that’s why, again, I said earlier in answer to a different question that transparency has its own value in addition to improving the trust of the market. But it has its own value because it guides policy development and policy action and individual action in a far better way.
FASKIANOS: Thank you. I’m going to go next to Charles Fraser, who has raised his hand.
Q: You can hear me?
FASKIANOS: We can now. Thank you. But identify yourself. I know you also wrote your question. So—
Q: Sure. I’m a graduate student at the Princeton School of International Public Affairs.
My question is about access to finance issues. The UNFCCC has produced—has decreed other climate funds in the past, the Green Climate Fund and the Adaptation Fund for example, and often beyond issues of how much money is mobilized to those funds issues about how recipients can access the funds is a prominent thing that’s discussed. How do you think that the—this new fund on loss and damage can be set up to address those issues and, perhaps, demonstrate ways to get around those problems?
GHOSH: Firstly, in the case of the loss and damage financing facility we should make sure that it is not designed as a development assistance fund because, as soon as you do that, then you get into all those other questions about is this—is this going to be spam, should we really send it there, are they really ready to receive the money, and then so on and so forth.
It has to be a parameterized one in the sense that if certain shocks are hitting vulnerable communities and countries above a certain threshold it should be able to pay out and that’s why that hyperlocal climate science and the attribution science is absolutely critical.
On top of that it has to—you know, this is not an investment fund in the sense that this is not a fund manager that has to then see where do I get best returns, and is the project application good enough for me to invest in this, whether it’s a mitigation project or adaptation project. No. This is a payout fund.
So most of the effort for loss and damage financing facility, in my opinion—I don’t sit on the—that technical steering committee that is designing it—but in my opinion most of the effort has to go in figuring out what was the vulnerability, what was the baseline, and how much about that baseline did the—was the damage caused and therefore how much has to be paid out.
That is really where a lot of the effort has to go, and the second effort that has to go goes back to what Stephen Kass was suggesting in terms of alternative ways to capitalize this, because with rising climate risks we will quickly run out of money even if we were able to capitalize it with some amount of money today.
So these two will have to be the basis and the governing board has to basically decide that is the science that is guiding our understanding of a particular event robust enough for us to make the payout. It should not be contingent and that’s—it’s the same as one, say, an investigator from an insurance company does before a payout is made for a house that’s burned down.
But if you keep the victim running around from pillar to post asking for the money that they deserve as compensation, then it will quickly lose legitimacy like many of the other funding schemes that have come out of the climate regime thus far.
FASKIANOS: I’m going to take the last question from Connor Butler, who’s at the University of Wisconsin Whitewater.
In the near future do you see wealthy developed countries collaborating with poorer lesser-developed countries in order to build a resilience toward and combat climate change, or do you think that the North will always work together without involving the South?
GHOSH: Connor, thank you for this question because this gives me a segue into my third market failure, which is should we build or are we building a sustainable planet which widens rather than narrows the technology divide.
I analyzed about three dozen so-called technology-related initiatives emerging in the climate and energy space over the last decade and a half and there were only four that did any kind of real technology transfer and that to—none at scale.
Basically, what happens is when you talk about technology, when you talk about cooperation on new technologies, usually these initiatives get stopped at, you know, organizing a conference and you talk about it.
Sometimes you put in a—there’s a joint research project that begins. Very few times there’s a pilot project that actually you can physically see on the ground, and almost never does it get used at scale.
So I have been increasingly arguing for technology co-development rather than technology transfer, because it’s a fool’s errand to hope that the technology will be transferred.
Now, why is technology co-development important not just from the point of view of Global South? It’s important from the point of view of Global North as well.
Let’s take something like green hydrogen. It is a major new thrust in many economies. The U.S. Inflation Reduction Act provides a $3 subsidy for production of green hydrogen. India has just announced the largest green hydrogen mission in the world aiming to produce 5 million tons of green algae by 2030.
But green hydrogen is not just—it’s not easy to just take water and split it. You need a lot of energy. To make that—to split the water you need electrolyzers. For that, you need critical minerals. You need membranes that are developed in certain places. You need manufacturing capabilities that can build this out at scale. I mean, India alone will need 40 (gigawatts) to 60 gigawatts of electrolyzers by the end of the decade.
So, ultimately, if we have to build a cleaner energy system and a cleaner economic system we will actually have to move away from islands of regulation towards a more interdependent resilient supply chain around clean energy and climate-friendly technologies.
So rather than think of this as a handout to the Global South, I think it makes more sense—and I can talk about batteries, critical minerals, solar panels, wind turbines, green hydrogen, electric vehicles—and you will see again and again we are actually mapping economy by economy where strengths, weaknesses lie and how the complementarities come together.
We can see that this technology co-development can become a new paradigm for bridging the North and the South rather than technology transfer being a chasm between the North and the South.
FASKIANOS: I think that’s a good place to conclude, especially since it is so late there.
This was a fantastic conversation. We really appreciate your being with us, Dr. Ghosh, and for all the questions. I apologize to all of you. We could not get to them all. We’ll just have to have you back.
And I want to commend Dr. Ghosh’s website. It is CEEW.in. So that is the Council on Energy, Environment, and Water website and you can find, I believe, a lot of the studies that you’re talking about and your papers there.
So if people want to dig in even further they should go there, also follow you on Twitter at—oh, my goodness. I need—I need—I think it’s midnight here.
GHOSH: So ghosharunabha. It’s my last name and my first name—at @ghosharunabha
FASKIANOS: Exactly. Right. So thank you again for doing this. We really appreciate it.
The next Academic Webinar will be on Wednesday, February 15, at 1:00 p.m. Eastern Time with Margaret O’Mara, who is at the University of Washington, and we will be talking about big tech and global order.
So, again, thank you, and if you want to learn about CFR paid internships for students and fellowships you don’t have to be in New York or Washington. We do have virtual internships as well. You should please reach out to us, and we also have fellowships for professors. You can go to CFR.org/Careers and do follow us at @CFR_Academic and come to CFR.org, ForeignAffairs.com, and ThinkGlobalHealth.org for research and analysis on global issues.
So, again, Dr. Ghosh, thank you very much for today’s conversation and to all of you for joining us.
GHOSH: Thank you, Irina. Thank you, CFR. Thank you very much.
(END)
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