Laurence Tubiana: With coordinated climate policies, we can support peace and security

French economist Laurence Tubiana examines the options available to Europe in order to keep climate targets on track

Sun, 25 Sep, 2022 - 23:06

Laurence Tubiana

Russia’s war on Ukraine reveals a new dynamic of non-alignment in the international system. Western leaders find themselves more isolated on the global stage than they expected.

When the United Nations General Assembly (UNGA) has taken votes to condemn Russia’s aggression, China and many others have abstained or opposed them.

Major democracies like Brazil, Indonesia, India, Senegal, and South Africa have hedged their positions on the war.

And by hosting and sending high-level delegations, Russia has been competing with the European Union and the United States for influence in various regional blocs, intensively courting members of the African Union and the Association of Southeast Asian Nations.

Why are so many countries wary of taking sides, even after seeing the unspeakable suffering Russia has inflicted on civilians in Ukraine?

Danger zone

Part of the reason is a widespread perception of European double standards and Europe’s uneven diplomacy on issues such as Covid-19 vaccines, debt relief, migration, and climate financing. Moreover, many fear alienating Russia, given the vast leverage that it has over energy and commodity prices.

By upending Europe’s energy landscape and highlighting its dangerous energy dependencies, the war underscores the volatility of today’s fossil-fuel geopolitics.

In the run up to November’s UN Climate Change Conference in Egypt (COP27), and beyond it, the new non-alignment will become apparent in the sphere of energy diplomacy. It will be important to remember that the world’s commitment to the 2015 Paris climate agreement is a direct threat to Russia’s petrostate economic model and broader geopolitical strategy of cultivating profitable energy dependencies.

At the onset of the invasion, Russia was the largest exporter of oil and gas to the EU.

Several months in, skyrocketing prices resulted in the EU accounting for 70% of Russia’s record fossil-fuel export revenues, reinforcing the Kremlin’s belief that Europe would ultimately find it too costly to resist the aggression.

But the EU has shown resolve in supporting the Ukrainian people and doubling down on decarbonization within the framework of the European Green Deal. For example, its REPowerEU plan, agreed in response to Russia’s war, has further deepened the bloc’s institutional commitment to the Paris agreement.

Butterfly effect

And yet, measures to close Europe’s immediate energy-supply gap have lent additional momentum to the new non-alignment. It has contributed to energy — and commodity — price inflation — just as the Kremlin intended when it engineered a natural-gas shortage in Europe.

As Europeans have rushed to buy non-Russian oil and liquefied natural gas in already-tight global markets, countries like Bangladesh and Pakistan have struggled — just as they were suffering scorching heatwaves — to pay for the LNG needed to power their electricity grids.

Similarly, oil scarcities produced record-breaking profits of $59 billion for the fossil-fuel industry in the second quarter of this year, while pushing up energy costs in many heavily indebted economies and emboldening non-aligned exporters like Saudi Arabia.

And more broadly, Europe’s rush to diversify its short-term energy supply is triggering a scramble for new fossil-fuel infrastructure, undermining the global multilateral push toward decarbonization, along with the EU’s own credibility.

Between Germany’s pledge to invest in new gas fields in Senegal and the EU’s inclusion of gas in its sustainable-finance taxonomy, there have been unhelpful mixed signals, damaging the prospects for a cohesive European approach to climate diplomacy.

Non-alignment offers developing countries and emerging markets new avenues to boost their autonomy in foreign and energy policy. Indirectly, that will reduce pressure on Russia and allow it to pursue a war of attrition, rather than seeking a rapid end to hostilities.

And as we learned from this summer’s drawn-out negotiations over Ukrainian grain — which the Kremlin repeatedly scuttled, and has since threatened to abandon — Russia will continue to seek advantageous bilateral deals and other forms of leverage wherever it can.

That does not bode well for the macroeconomic picture, or the Paris agenda. Global recession fears and rising interest rates have immediate implications for climate action, especially as it relates to the crucial issues of finance and debt.

Sovereign debts have been rising throughout the pandemic, leaving 60% of low-income countries at risk of debt distress. Yet under current conditions, it will be difficult for advanced economies to make the domestic case for expanding grant aid to other countries, or for those same recipient countries to take on more debt in the form of concessional climate finance.

Europe, for example, is under enormous fiscal pressure across the board. Shoring up the credibility of its climate-finance framework when it has so much else on its plate will not be easy. One top priority, of course, is to keep supporting Ukraine militarily, and to increase defense spending within the EU. Another is to prepare for winter. The expert consensus is crystal clear: The risks of supply shortages are real, and no amount of alternative gas imports will offset them.

A way forward

To avert shortage-driven crises, Europe will need to roll out comprehensive energy-savings schemes that could include shutting down some gas-consuming industrial facilities; leveraging alternative supplies; fuel switching; and a rapid deployment of renewables, heat pumps, and home renovations.

A related priority is to prevent the energy crisis from creating a broader social crisis. Intense upward pressure on the cost of living will require strong — and hugely costly — social-policy measures to manage inflation, and targeted energy-efficiency programs to address fuel poverty.

But Europeans should recognize that it is in their interest to rise to the global climate finance challenge. In 2009, advanced economies committed to providing $100 billion per year to support climate-related investments in developing countries. But this threshold still has never been crossed, and according to the OECD, the rich world is still $17 billion short to this day.

While Europeans aren’t solely responsible for this failure, they must recognize how it looks to the rest of the world when they mobilize far greater sums for themselves in response to crises like COVID-19, and the war in Ukraine.

These are not auspicious times for multilateralism. What we achieved with the Paris agreement in 2015 could not have been done in 2022. With hindsight, 2015 — also the year of the UN Sustainable Development Goals and the Iran nuclear deal — may be remembered as a high point for international cooperation.

But the deleterious effects of climate change are gathering pace, regardless of diplomatic alignments. The Paris agreement has become a guardrail for collective action — one that must stand even when other arrangements are shaking.

By pursuing coordinated climate policies, we can also create new conditions to support peace and security, and new forms of co-operation. It won’t be easy, but we have no choice.