(picture courtesy of Colin Read in “Understanding Sustainability Principles and ESG Policies)

The conclusion of the most recent Conference of Parties (COP) 28 in Dubai was momentous in what it accomplished and what it did not. The most glaring accomplishment is its demonstration of how far away we are in dealing with two almost-existential problems.

For the first time, the 197 nations and the European Union unanimously agreed that the planet cannot attain a desired limit for global warming of 1.5 degrees Celsius nor a never-to-be-crossed limit of 2.0 degrees by 2050 that these same nations pledged in 2015 as part of the Paris Agreement. 

The problem with the Paris Agreement is that it was not specific on the science of how the planet would ensure temperatures do not rise to more than two degrees above the pre-industrial levels of 1850-1880. The hard work remained on the how once the what was established. 

In the eight years since the Paris Agreement, two contributions were made to the discussion. 

One was a recognition at COP 27 that those whose economies benefited the most from use use of fossil fuels in their industrial growth should assist those who have not yet benefited from economic growth. These nations are poor or are in regions that have not received the huge investments enjoyed by the developed world. Some of these nations are also very climate vulnerable, perhaps through rising sea levels. None of these nations have the capacity to invest in the new clean technologies necessary to slow global warming, and yet all are also desperate to enjoy a standard of living that the rest of the world takes for granted. 

This notion of compensating those who sacrifice the most from global warming through payments from those who benefited the most is called the damage and loss principle. A Damage and Loss Fund was proposed at COP 27 and some modest contributions from developed nations were pledged at COP 28. That is a step in the right direction. 

This notion of compensation for those harmed by those who did the harm is a well-understood principle in domestic tort law. It does not state that those who benefit must relinquish all their gains. It only requires that their gains do not come at the expense of those hurt by their actions. This sound common law principle is enshrined in the domestic laws of most democracies because it follows a simple economic principle. If we are to maximize the size of the economic pie, we must ensure that those who expand their piece of the pie do not do so by taking away the fruits of others, at least without compensation. 

This principle was also enshrined in international law when a smelter in Canada was sued for pollution that drifted into a neighboring region in the United States. As a personal aside, the Consolidated Mining Company (Cominco) smelter in Trail, British Columbia was the major employer of a town from which my father’s side of my family lived, and where my grandfather had been mayor. The smelter lost the suit in 1941, but the world gained a new international principle, which, from the legal perspective, forms the scaffolding for the Damage and Loss Fund. 

COP 28 took the Fund a little further by actually soliciting contributions to the fund. Some countries offered up a few million, while contributions from others tallied a hundred million. England, France, Italy, Germany, and the COP 28 hosts, the UAE, each contributed about $100 million. Canada contributed $12 million and the U.S. contributed $17 million. 

Well, that’s a start, kind-of. The cost to stick to the pledges made in Paris to have a 50% reduction in carbon emissions by 2030 (compared to 2005 base levels) and carbon neutrality by 2050 are in the order of about $60 trillion. That is about a hundred thousand times higher than current pledges. Clearly there is a huge disconnect. Mind you, it also took 28 meetings of nations to finally state that a solution to global warming requires us to burn less fossil fuels. Maybe in another quarter century we can muster the courage to conclude the world is round.

And, yes, the estimated costs to transition to energy sustainability are staggering. They don’t even remedy the damages that will occur along the way. They merely stop things from getting worse, but also provide global economies with other benefits such as the almost complete elimination of air pollution and the lives lost to it each year. It seems highly unlikely, though, that the developed world would be willing to invest about 10% of its GDP each year for a decade to solve this problem, especially when a global leader such as the U.S. offered a one-time contribution that is less than one-millionth the necessary sum. 

But, it is a step in acknowledging that an important precedent in international law has been violated for the last 82 years, even though too few people or nations have to now considered the invisible greenhouse gasses of carbon dioxide, methane and water vapor to be pollution. 

The second ahh-ha moment at COP 28 is a statement that the world must develop a fossil-fuel transition plan. This is language that the most climate-vulnerable nations found discouragingly vacuous. They instead argued for a phase-out of fossil fuels. The petroleum extracting nations of the world instead preferred the transition language because it gives them no firm goals or timeline and it arguably allows them to continue to extract oil if only they can mitigate some of the damage of hydrocarbon combustion by removing from the air after the fact the carbon dioxide they produce. So-called carbon capture then allows them to continue business as usual. Indeed, oil extraction is expected to continue to rise for at least another decade, and oil companies are continuing to invest in state-subsidized exploration and oil field development investment at an almost record rate for the foreseeable future. 

Such investment is problematic for a few reasons. First, oil companies already have proven reserves that exceed the maximum extraction if we are to stick to the pledge of carbon neutrality by 2050. Second, carbon capture is incredibly resource intensive, which more than negates any efficiency fossil fuel advocates imply. We would need to create immense new energy sources to power the carbon capture that permits the profits of petroleum companies. Finally, such continued investment in oil exploration and in carbon capture is taking off the table a necessary source of funds for a true transition to energy sustainability. The wealthy nations will surely be able to meet whatever modest and non-aspirational goals we set for ourselves. We are doing so by depriving the world’s least developed nations an opportunity to invest in clean technologies so they don’t make the same mistake we (mostly unwittingly) made in our periods of rapid economic growth. 

Scientists and economists have developed pathways that will create both a more prosperous and sustainable future. The problem is that economies today will have to make significant sacrifices today to provide a better future for economies two generations from now. Few societies are willing to make such intergenerational transfers because those voters two generations from now are not voting yet today. We mostly fail to see, though, that the high level of affluence we enjoy today was in large part because of cheap energy that fueled the Industrial Revolution for the past century and a half. The carbon discharges of past generations created our wealth, but we are loath to take a small part of that wealth to reduce the inevitable costs that are not profoundly affecting us today but will hurt our grandchildren and stymy the growth of nations that never had their place in the economic sun. 

We could all come together in the spirit of the Bretton Woods Conference of 1944 that established a new world financial order, and the World Bank and International Monetary Fund, so that the bonds between allies would forever remain strong and we would mutually support shared prosperity. Now is the time for a New Bretton Woods Conference to forge a transition to sustainable economies and offer a path so that less developed countries do not follow the unsustainable path that benefited us so substantially. Given the divisiveness within and between nations is this era of world history, such does not seem likely.