Paris Summit: For the sake of justice and environment, an open letter from experts

“We, the undersigned economists and policy experts, believe that for the summit to make progress towards this much-needed goal, the global north leaders who hold both an outsized say in our global financial architecture and an outsized historic responsibility for climate change must come with serious proposals for public international reparations. “Unlocking and redistributing public trillions is of course only part of what is needed — our international monetary, trade, tax and debt rules are systematically skewed towards the global north, allowing wealthy countries to drain a net $2 trillion a year from low-income peers. We need a dramatic transformation of this system to one that is rights-based, people-centred, democratic and transparent.”

“Unfortunately, the most prominent proposals from global north leaders in the lead-up to the summit show there is a risk it [may become] an effort to simply rebrand existing approaches. So far, the World Bank Group Evolution Roadmap, Just Energy Transition Partnerships, and the global north [countries’] negotiating positions on the climate ‘loss and damage’ fund all rely heavily on the idea that governments can incentivise private banks and corporations to build climate solutions and spur development with only small public contributions and rule tweaks. “From the ‘Billions to Trillions’ agenda to the still-unfulfilled $100 billion-year climate finance promise, we have seen this approach fail again and again, with far less private money leveraged than promises and profits prioritised over climate and inequality benefits — or often, even basic human rights safeguards.”

“Global north leaders show they are serious about charting a new path by using the summit to begin shifting funds away from the parts of our economies that are most dramatically driving our current crises: (1) Stop funding fossils — instead make companies pay for their damages: While low-income households around the world have been pushed further into poverty over the last few years, oil and gas companies made record profits and wealthy countries continued to heavily subsidise them. This does not just defy economic justice, but climate science too: in the International Energy Agency (IEA) scenario that maintains a 50 per cent chance to limit global heating to 1.5°C, there is a rapid phase-out of fossil fuels, and no new investments in new fossil fuel production or LNG [liquefied natural gas] infrastructure. Ending fossil fuel handouts in high-income G20 countries alone would raise about USD $500 billion a year. And prominent estimates of a permanent answer to fossil fuel ‘windfall’ taxes range around $200–300 billion a year. There is also already momentum to stop a particularly influential form of fossil fuel support, international public finance. Pledges so far would end a key $38 billion a year that plays an outsized role in enabling [a] large fossil infrastructure lock-in in wealthy countries and shift it towards renewable solutions. If a few key laggard countries, including Japan, Germany, Italy and the United States, keep their overdue promises to do this at the summit, it will go a long way to cementing fossil fuel-free public finance as a global norm. (2) Cancel illegitimate global south debts: The last few years of global crises have compounded already untenable debts in many developing countries, draining public funds that are critically needed to deliver both vital social services and climate action. These debts are also unfair, having been incurred through our neo-colonial global financial system or, in many cases, during colonisation. [The] two very first steps global north leaders can take at the Paris Summit are to unconditionally cancel public external debt for at least the next four years for all lower-income countries (estimated at $300 billion a year), and to support rather than block the development of a new multilateral mechanism for sovereign debt cancellation and workout under the United Nations. (3) Tax the rich: The wealthiest 1 per cent have captured two-thirds of [the] new global wealth created in the last two years, all while we are likely seeing the biggest increase in global inequality and poverty since World War II. Progressive taxes on extreme wealth starting at 2 per cent would raise $2.5 to $3.6 trillion a year, and related proposals to crack down on tax dodging would significantly augment this. Global north leaders can show they are serious about this by starting with an initial ‘1.5% for 1.5°C’ tax on extreme wealth and dedicating this to the new ‘loss and damage’ fund, and by agreeing to advance a universal and intergovernmental UN tax convention.”