Climate justice: Is the world ready to compensate Pakistan?

The establishment of the Fund for Loss and Damage by COP27 has been lauded as a great achievement of Pakistan's foreign policy. This fund will address losses and damages due to climate change in developing countries. Pakistan expressed its hope that the fund's operationalisation would reduce disparities in the climate finance architecture. Pakistan vows to contribute constructively to global climate change negotiations and policy actions.

Pakistan's Foreign Minister Bilawal Bhutto Zardari has remarked that including the fund on the COP27's agenda is a sign of optimism. Amid all the hopes of equitable treatment to deal with the existential threat of climate change, here the question arises: is the world ready to compensate Pakistan for a man-made crisis?

Despite being one of the most vulnerable countries to climate change, Pakistan has championed the case of climate justice not only for itself but all G77. Pakistan has to pass a lengthy process between conceptualising an idea and turning it into policy action. Certain constraints make the practical possibilities of climate justice a long and tortuous process. Before discussing these constraints, we first need to understand what Pakistan expects in terms of climate justice. The tentative features of climate justice are debt relief, time-bound financing for energy transition, de-growth and cutting down emissions in the Global North.

When a highly indebted developing country like Pakistan is affected by climate change, debt relief becomes an essential part of policy response to meet its emergency needs. Repayment of loans coupled with the cost of rebuilding makes it difficult for an economy to recover. A Debt Service Suspension Initiative (DSSI) was carried out by World Bank and International Monetary Fund (IMF) in 2020 to let countries use financial resources to fight the Covid-19 pandemic. Such an initiative was not extended to extreme climate events, with Pakistan currently needing a fiscal space to adapt to climate shocks and debt relief would be crucial to overcoming the fiscal deficit.

One of the biggest constraints for any international initiative for debt relief is the Russia-Ukraine war and the international economic situation developed consequently. According to the Organisation of Economic Cooperation and Development (OECD), the world's leading economies are going through a recession and steep inflation due to the Russia-Ukraine war. It has cut growth by more than previously predicted. The OECD further remarked that central banks need to hike rates to overcome inflation, predicting that major central banks' policy rates would be increased at least four per cent in 2023. Although the World Bank has warned that such a rate hike would hurt the economy of developing countries the most.

In this regard, another constraint is the geopolitical rivalry between eastern and western creditors. The Paris Club is a group of rich western creditor countries. Their biggest apprehension is that debt relief would end up benefitting Chinese firms, which have been funding infrastructural build-ups in developing countries for the past decade.

China, on the other hand, shows concerns that if it proceeds with a cut in principal and interest payments, then the money would go to American dominant financial institutions like the IMF and World Bank. These apprehensions between both sides have hurt debt relief efforts which began under the DSSI. The International Energy Agency (IEA) has urged countries worldwide to speed up their transition to clean energy to ward off the disastrous effects of climate change. Energy is profoundly essential in poverty alleviation, it achieves better health and education facilities, builds infrastructure and industries, ensures food security and deals with extreme climate events. Finding ways to ensure these essentials in developing countries while avoiding high-carbon emissions is one of the biggest challenges in today's world.

Transitioning to clean energy is crucial for sustainable development in Pakistan and other developing countries. However, the strength of the investment in the energy sector is weaker because of the public health crisis, which also triggered a global economic recession. All around the world, there is less fiscal space to support economic activities. The Covid-19 pandemic has heightened pressure on financing and major investment players, practically reversing progress in expanding access to clean energy in developing countries.

The historical Carbon Dioxide (CO2) emissions in the atmosphere are due to economic activities carried out by highly industrialised countries or the Global North. Yet developing countries or Global South are facing most of the wrath unleashed by climate change due to these emissions. The general consensus among developing countries is that the Global North should lead efforts to reduce carbon emissions and bear more responsibility for helping the Global South through the financing of infrastructure, clean energy and other emerging technologies.

The US alone is responsible for 25 per cent of global emissions, the highest in the world. It also plays an important role in climate negotiation and global policy-making. The US has come up with a climate law which roughly offers $400 billion worth of incentives to finance the transition to green energy. It also includes subsidies for manufacturing electric cars and promoting industries such as renewable energy and batteries. French President Macron has expressed concerns that such policies will create fragmentation in the West. It will disrupt market competition through massive subsidies to American companies and will undermine European industries.

“Perhaps this law will solve your problems but it will make mine worse,” he said.

He has called on the EU to formulate the ‘Buy European Act,’ which will offer similar subsidies to domestic industries. Thus, the economic interests of the West make the transition to green energy very complex.

Leading COP27's agenda was a historic moment for Pakistan. It urged the developing countries to mobilise on the issue of climate justice. The Pakistani officials highlighted the urgency to tackle climate-related issues, or else they will continue suffering the consequences of climate change. Pakistan's robust foreign policy action on climate change is commendable. At the same time, Pakistan needs a holistic approach which looks at climate change from all angles going from micro to macro. It should also aim to address a constructive aspect of climate security, i.e. something is considered a security problem when it is securitised. The securitisation would allow policymakers to view Pakistan's environmental challenges through a three-level framework: local, international and structural.