5/5/23, 3:02 PM How Deep Is the North-South Divide on Climate Negotiations?

ations? - Carnegie Europe - Carnegie Endowment for International Peace

How Deep Is the North-South Divide

on Climate Negotiations?
Sinan Ülgen
October 06, 2021
Article

At their core, climate negotiations continue to be shaped by equity concerns between postindustrial
countries in the Global North and emerging economies in the Global South. The debate is largely over
which countries have contributed most to greenhouse gas (GHG) emissions and how the costs of
mitigating and adapting to climate change should be shared. How effectively the principle of equity will be
embodied in global efforts to combat climate change will help determine the scope and ambition of these
efforts.

Tallying Past and Present Emissions Amid Equity Concerns

Industrialized and postindustrialized nations are responsible for a great share of the historical carbon
dioxide (CO2) emissions in the atmosphere today (see figure 1). The United States has emitted more
carbon than any other country to date and is responsible for 25 percent of historical emissions. Next in
line are the twenty-seven countries of the EU (plus the UK), which are responsible for 22 percent of global
CO2 emissions. Meanwhile, China’s historical contributions are estimated to be around 12.7 percent. By
contrast, India (3 percent) and Brazil (0.9 percent) have not been large contributors to global emissions in
a historical sense. Similarly, the contributions of African countries (3 percent combined), relative to the
continent’s population size, has also been very small.

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In addition, the Global North continues to have much higher per capita emissions than much of the world
even today (see figure 2). The United States ranked high among postindustrialized countries in 2019 with
16 tonnes of CO2 emissions per capita, just behind Australia (16.3 tonnes per capita) and ahead of
Canada (15.4 tonnes per capita). The figures for Europe generally fall between 5 and 10 tonnes per
capita depending on the country. Hydrocarbon-based economies like Russia and members of the Gulf
Cooperation Council in the Persian Gulf like Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates
also rank quite high, some of them even higher than countries in the Global North.

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Equity concerns essentially stem from the asymmetry between countries’ emissions and their respective
burdens to respond to climate change (including the costs of emissions mitigation, adaptation, and other
impacts and risks). Most human-driven GHG emissions in the atmosphere are from economic activities
performed in or for affluent countries. Yet a more significant burden of the impacts of climate change is
carried by poorer nations weathering climate-induced environmental shocks.

A further dividing line in climate negotiations is a result of the contrast between past emissions and future
emissions. While industrialized and postindustrialized countries in the Global North are responsible for the
majority of past emissions, these countries led by the EU are implementing policies to reduce their GHG
emissions. At the same time, the emissions of most developing nations (particularly China) remain on an
upward trajectory. This second group of countries will not reach peak emissions for another decade at
least. As a result, developing countries share the responsibility for reducing future emissions. These
juxtaposed trends also create issues of generational justice.

These differences coupled with the immediacy of the effects of climate change also shape the diplomatic
groups engaging in multilateral climate negotiations. Subgroups among countries in the Global South and
issue-based coalitions of countries in the Global North and South have emerged on the basis of common
concerns. Less developed economies and small island nations, which are already facing the existential
threat of climate change, are demanding immediate answers from postindustrialized and developing
countries alike. The members of the Organization of the Petroleum Exporting Countries are urging
postindustrialized economies to embrace policies that reduce welfare losses in nations that rely on
petroleum exports.

Although all uphold the principle that developed and developing countries have different responsibilities
for mitigating carbon emissions, as established at the 1992 Rio de Janeiro Earth Summit, the four
countries in the BASIC grouping split when Brazil and South Africa accepted greater responsibility than
India and China. More recently, however, China announced in September 2020 (to widespread praise) its
intention to achieve carbon neutrality by 2060, and Chinese leader Xi Jinping further unveiled plans to
curtail (or even end) Chinese funding for overseas coal power plans in September 2021. Yet the equity
principle in the global debate over adjustments to climate change still leads to several important,
commonly held policy positions among developing countries on mitigating GHG emissions, adapting to
climate change, and financing the climate transition.

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Mitigating Climate Change

First, developing countries generally expect postindustrialized nations to lead efforts to reduce GHG
emissions. In multilateral climate negotiations, India articulated the basic positions on climate change held
by many emerging economies on the respective roles of developed and developing countries. As
Sandeep Sengupta has put it:

First, the primary responsibility for reducing greenhouse gas (GHG) emissions . . . rested with the developed world. . . .
Second, the emissions of developing countries were still very low and needed to grow to meet their future development
[needs]. . . . Third, any formal agreement on climate change needed to provide for technology transfer and funds for
developing countries to help them address this challenge.

Latin American countries have also regularly emphasized that their historical contributions to the problem
of climate change are minimal and that developed countries therefore bear more responsibility for working
to mitigate its effects and otherwise help developing countries adapt with financing, technology, and other
resources. In Latin America, the term climate justice is used to express the need for developed countries
to pay their environmental and ecological debt to developing countries affected by climate change and
help them remedy its effects.

Meanwhile, African countries have emphasized their need to be free to pursue economic development at
least to some degree through new and existing deposits of fossil fuels. These countries firmly believe that
it is unjust for immediate and severe mitigating targets to be erected without any form of compensation or
financial aid. The African continent has plenty of fossil fuels, but the global shift away from hydrocarbons
may cause further economic losses. According to a United Nations University report, oil, gas, and
minerals contribute to over half of African GDP and account for around 70 percent of African exports. As
the global economy transitions to greener, more renewable energy systems, African countries with large
deposits of fossil fuels will pay a high price for not extracting these resources, a price for which they
believe they should be compensated.

In addition, African countries will increasingly face the social, economic, financial, and governance
challenges of responding to climate disruptions. They believe that the Global North has failed to
acknowledge the extent of this economic stunting and these structural inequities. Some of these countries
are vulnerable and have few resources, so they require regional and international assistance. Despite
these considerations, any mention of the special vulnerabilities of African countries was excluded from the
text of the Paris Agreement. African countries have been attempting to rectify this ever since.

China has also backed the position of developing countries writ large, emphasizing the historical
responsibilities of postindustrialized nations. At an April 2021 climate summit convened by U.S. President
Joe Biden, Xi stated:

Developed countries need to increase [their] climate ambition and action . . . they need to make concrete efforts to help
developing countries strengthen the capacity and resilience against climate change, support them in financing, technology,
and capacity building, and refrain from creating green trade barriers, so as to help developing countries accelerate the
transition to green and low-carbon development.

Yet China’s position on climate change remains controversial given its current and rising levels of carbon
emissions. China reportedly emitted an estimated 27 percent of global GHG emissions in 2019—more
than twice as much as the second-ranking country (the United States with 11 percent) and more than the
combined emissions of all developed nations. China’s emissions ballooned by a factor of more than three
in the past three decades, according to the Rhodium Group.

More generally, developing countries insist on the recognition of the UN-enshrined principles of “common
but differentiated responsibilities” and “respective capabilities” between postindustrial and developing
countries for reducing GHG emissions. This claim takes into account differences in countries’ historical
contributions to global emissions as well as developing countries’ need to have flexible policy options for
spurring economic development.

But the future paradigms of economic and urban development will likely be very different from past ones.
As things stand, policymakers around the world lack a proper understanding of how development in a
climate-disrupted world will look. It is difficult for many developing nations to craft policy responses to
address this new reality and these uncertainties. Their development goals and strategies remain
embedded in past experience, which in all likelihood will not provide an adequate vision to drive
sustainable growth in the future.
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Adapting to Climate Change

Although developing countries have put equity concerns on the agenda for climate negotiations,
postindustrialized countries have largely done the agenda setting, which thus far primarily has focused on
mitigating climate change, as opposed to adapting to its effects through resilience. The vast majority of
green finance is earmarked for climate mitigation initiatives, which lower emissions from existing sources.
For example, according to San Bilal and Pamella Eunice Ahairwe, the European Investment Bank
allocated only $432 million for climate adaptation, even as it poured more than ten times that amount
(nearly $5.3 billion) into climate mitigation efforts. These mitigation-focused initiatives allow funders to
earn solid returns on their investment. The benefits of decreasing those emissions are felt around the
world, resulting in widespread societal returns. Funds to help communities adapt to and weather the
effects of climate change, on the other hand, are often used for initiatives with more localized benefits. As
a result, these projects typically have lower financial incentives and more concentrated societal benefits,
making them less appealing to potential funders.

Yet developing nations want the disproportionate burden of weathering the impact of climate change and
the costs of adaptation to take center stage in the climate debate. Emerging economies are calling on
developed countries to honor their financial pledges and help them build resilience. Under the Paris
Agreement, developed countries pledged to furnish $100 billion per year for climate action. According to
the Organisation for Economic Co-operation and Development, the pledged money actually flowing to
developing countries may have reached nearly $80 billion in 2019. This figure nonetheless has been
controversial. India has, for instance, raised issues with the skewed flows of climate financing. After all,
the bulk of climate finance (more than 90 percent) continues to be tapped for climate mitigation even
though developing countries need funds focused on adaptation.

Financing Climate Assistance

The support of postindustrialized economies will be critical for helping developing countries—through
financial assistance, capacity building, and technology—as the latter undergo a green transition.

Consider, for instance, how most of the obligations of African countries under the Paris Agreement are
conditional on such support. The African Development Bank has estimated that African countries will need
$20 billion to $30 billion per year for climate adaptation until 2030 or so. This amount could increase to
$50 billion per year by 2050 even if temperature rises are kept in check (below 2 degrees Celsius),
according to a 2015 UN report. Meanwhile, the acceleration of climate disruptions suggests that even the
most advanced climate models still may be underestimating the pace and extent of climate disruptions.

A host of developing countries have explicitly tied the availability of climate finance to their mitigation
ambitions. For example, in a 2019 report, the Indian government argued that in contrast to its significant
needs, global financial flows to India were miniscule. The document explicitly tied India’s ability to meet its
Paris Agreement obligations to access to climate financing, stating, “in order to respond to the worldwide
call for stepping up climate actions, [there will need] . . . adequate provision of means of implementation
to developing countries. Climate finance is a key pillar in enabling climate actions.

A welcome development has been the newfound enthusiasm of China and the United States for allocating
more funding to help countries adapt to climate change. China has prioritized efforts to help the world’s
least developed countries, such as African nations and small island states. Ahead of the 2015 UN Climate
Change Conference in Paris, Xi established the China South-South Climate Cooperation Fund to provide
20 billion renminbi ($3.1 billion) to help developing countries tackle climate change. Subsequently, at the
summit itself, Xi elaborated on his commitment, stating that China would implement ten low-carbon
industrial parks, 100 climate mitigation and adaptation projects, and 1,000 training opportunities on
climate change for participants from developing countries. Climate policy is a pillar of Beijing’s charm
offensive to increase its soft power worldwide as well as an economic policy aimed to enhancing market
access for Chinese goods.

The EU and more recently the United States have been among the leading contributors to the instruments
of climate finance. In 2019, the EU provided the largest share of external public funding for climate
projects to the tune of 23.2 billion euros (about $26 billion). Meanwhile, Washington has promised to
significantly increase its contributions to climate finance for developing nations to around $11 billion per
year.

Pricing Carbon Emissions

In addition to the prevailing divisions over mitigation responsibilities and climate finance allocations,
another highly divisive issue between developed countries and the developing world is the potential
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g Endowment for International Peace

impact of the carbon pricing schemes that several countries in the Global North are gradually
implementing.

Postindustrialized countries view carbon pricing not only as a tool to raise additional public revenues but
also as a way to account for the negative externalities of carbon emissions. To this end, some have
suggested the creation of a global carbon pricing mechanism, in the form of a tax or an emissions trading
system (ETS). With carbon taxes, regulators set a price on carbon by defining a tax rate on GHG
emissions or the carbon content of fossil fuels, while emissions reductions depend on the corresponding
measures taken by companies. For instance, the International Monetary Fund states that large GHG-
emitting countries need to introduce a carbon tax of $75 per ton or more by 2030 to be consistent with the
goal of limiting global warming.

An ETS—a cap-and-trade system—puts a ceiling on the total level of GHG emissions and allows firms
with low emissions to sell their surplus allowances to those who emit more. Under an ETS, the market
determines the price, while regulators determine the quantity of emissions reductions. The effectiveness
of the ETS model remains debated, with some claiming that it allows larger polluters to continue polluting
the atmosphere by acquiring emissions rights.

The chief strength of such a global price mechanism for carbon is its potential ability to shift the burden for
mitigating the harm caused by climate change onto the market players that are responsible for this harm
and can reduce it. Such mechanisms would encourage producers in all countries to adopt low- or zero-
carbon technologies by sending an economic signal instead of dictating who should reduce emissions and
how they should do so. Such price mechanisms would remove uncertainty for the private carbon-offset
markets, which companies and individuals use to compensate for their emissions. Specifically, supporters
claim that a price that is applied simultaneously in all countries may help level the international playing
field.

Meanwhile, critics argue that global carbon pricing tends to treat inevitable and unavoidable emissions
like electricity generation for consumption in poor households on par with other categories of emissions
and fails to allocate emissions rights fairly between developing and developed countries. A global ETS
would leave less room for developing economies to burn fossil fuels to meet their economic needs. The
increase in energy costs that would arise from reduced fuel consumption in wealthier countries may curtail
economic activity in markets that cannot absorb such price changes. In countries where the economic
structures depend on energy-intensive activities that are heavily exposed to international competition,
industries fear that competitive disadvantages in international markets could result in job losses.

For these reasons, developing countries tend to reject ETSs for sidelining the multilaterally agreed-upon
international regime and establishing ad hoc norms. They view ETS schemes as protectionist measures
at odds with the rules of international trade. They want multilateral negotiations to lead norm creation, as
these focus not just on mitigation targets but also on minimizing subsequent welfare losses.

A second and more recent policy option discussed in developed countries is a domestic carbon tax levied
together with border adjustments on imports from countries that do not impose an equivalent carbon duty
on their producers. Led by the EU, supporters of this approach view it as an efficient way to let the
consumers of postindustrial economies take responsibility for their GHG footprint both domestically and in
the emissions of other countries. The underlying logic rests on an expectation that unilaterally imposed
border adjustments would provide a building block toward global price mechanisms by incentivizing
exporting countries to impose equivalent domestic carbon taxes to prevent companies from paying taxes
at the importing country’s borders. Proponents propose that the revenue collected at the border could be
channelled to overseas climate aid programs to prevent the mechanism from functioning as a de facto
tariff.

From the perspective of developing countries, however, a carbon border-adjustment mechanism

incorporates several pitfalls. A carbon tax may raise the price of energy-intensive products such as steel
and cement, which would increase construction costs and imperil infrastructure projects in developing
countries that import these products. When imposed only by the importing countries, domestic carbon
pricing would hinder the competitiveness of exporters. Developing countries have less capacity to offer
offsets to their companies in the industrial sectors that would suffer a resulting competitive disadvantage
against international competition. Moreover, border adjustments can act as tariffs because if carbon taxes
are imposed at the importing country’s border, rather than within the exporting country, the importing
country gets to keep the tax revenue with no assurances over how the funds would be used. In light of
these considerations, developing countries view these types of policies as a disguised form of
protectionism.

Conclusion
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Ultimately, the cleavages in international climate negotiations between the Global North and the Global
South are driven by the need for an adequately ambitious global response to climate change. In other
words, the current agenda of the Conference of Parties’ (COP) gatherings under the UN Framework
Convention on Climate Change may not be comprehensive enough to tackle this structural and critical
challenge. COP meetings like the upcoming Glasgow Climate Change Conference in October and
November 2021 provide a forum for exchanging views and deliberating about climate mitigation and
adaptation.

But these global discussions need to be more open and ambitious and must account for the needs of
developing countries, not just postindustrial ones. There are other important matters these deliberations
cannot ignore. For instance, there is a need to address issues like climate-induced migrations and an
overhaul of the international regime governing the treatment of refugees. These discussions should also
include proposals to reform the intellectual property rights regime to incentivize a clean development
agenda for the developing world. A fair settlement on the burdens of adjusting to the realities of climate
change can only emerge if a broader policy agenda can be constructively promoted.

Carnegie Europe is grateful to the Open Society Foundations for their support for this work.

Carnegie does not take institutional positions on public policy issues; the views represented herein are
those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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