As the world endeavours to decrease greenhouse gas emissions, a significant query has arisen: how much money should rich nations pay to poor ones responsible for the global rise in temperature?
According to recent research conducted by the University of Leeds and the University of Barcelona, economically advanced nations (including the most industrialised ones) are obligated to provide $192 trillion to less affluent countries by 2050.
This staggering sum represents the debt owed by wealthy nations for their excessive carbon dioxide emissions, which has resulted in an imbalanced burden of climate change impact on the poorer nations.
Compensation for an ‘unfair burden’
The funds, totaling approximately $6 trillion annually or roughly 7% of the global Gross Domestic Product (GDP), would be allocated as restitution to countries with lower emissions who are required to expedite the decarbonisation of their economies beyond regular expectations.
Recognising the significance of providing financial compensation for the losses and damages suffered by climate-vulnerable nations due to the disproportionate carbon dioxide emissions of others, this aspect has gained increasing importance in international climate change negotiations. During the COP27 discussions held in Egypt last year, delegates reached an agreement to establish a Loss and Damage Fund aimed at assisting countries affected by climate change.
The study was led by Dr. Andrew Fanning, Visiting Research Fellow in the Sustainability Research Institute at the University of Leeds, and Research & Data Analysis Lead at the Doughnut Economics Action Lab in Oxford.
He said, “For the world to avoid the worst impacts of climate change, all countries must urgently stop burning fossil fuels and other activities that emit greenhouse gases into the atmosphere. But not all countries have contributed equally to this problem.
“It is a matter of climate justice that if we are asking nations to rapidly decarbonise their economies, even though they hold no responsibility for the excess emissions that are destabilising the climate, then they should be compensated for this unfair burden.”
As per the ‘Compensation for atmospheric appropriation‘ report, research on carbon inequalities shows that some countries are overshooting their fair share of the remaining carbon budget and hold disproportionate responsibility for climate breakdown.
Level of Compensation
The study suggests that the UK could face a compensation liability of $7.7 trillion for its disproportionate CO2 emissions until 2050. This would amount to an annual payment of approximately $3,500 per capita throughout that period. In the case of the US, it could be obligated to pay $80 trillion over the specified timeframe, resulting in an annual per capita payment exceeding $7,200 until 2050.
India, having historically emitted low levels of carbon, could potentially receive compensation amounting to $57 trillion, which equates to nearly $1,200 per capita each year until 2050.
Evidence-based system for assessing losses
The compensation system employed in this study is founded on the principle that the atmosphere is a shared resource, accessible to all in an equitable and sustainable manner.
To quantify the monetary value of losses experienced by countries with lower carbon emissions, the researchers initially obtained the most up-to-date estimates of global “carbon budgets” from the Intergovernmental Panel on Climate Change (IPCC).
These carbon budgets represent the amount of carbon that can be emitted while still achieving specific climate targets, such as limiting global warming to 1.5 degrees Celsius. Since 1960, the cumulative carbon budget is estimated to be 1.8 trillion tonnes of CO2.
Next, the researchers calculated a fair share of this total carbon budget for 168 countries, taking into account their respective population sizes. This equality-based calculation aimed to determine what each country’s portion should be. They then compared each country’s fair share allocation with its historical CO2 emissions since 1960, as well as a scenario in which the country transitions to net-zero emissions by 2050.
The analysis revealed that some countries adhered to their fair share allocation, while others, particularly industrialized nations in the global North, had significantly exceeded their allocation. In essence, these countries appropriated the fair shares belonging to other nations in the shared atmospheric commons.
For instance, the UK surpassed its fair share by 2.5 times, while the US exceeded its fair share by over four times. On the other hand, India utilized less than a quarter of its fair share.
Loss faced by low-emitting countries
Using carbon prices from the latest IPCC scenarios, the researchers were able to put a monetary value on each country’s excess emissions in a world that respects the 1.5°C climate target.
That total figure was $192 trillion (within a range of between $141 trillion and $298 trillion), with the global North responsible for 89%, or $170 trillion, and the remainder from high-emitting countries in the global South, especially the oil-producing states, such as Saudi Arabia and United Arab Emirates.
Under the scheme, that money would be divided among the low carbon-emitting countries based on how much of their fair share allocation they would lose.
Dr. Fanning said, “We find 55 countries would sacrifice more than 75% of their fair shares, including most of sub-Saharan Africa and India. Our results show this group of low-emitting countries would be entitled to receive an average compensation of $1,160 per capita per year, in a world that keeps global warming below 1.5°C.”
“Meanwhile, countries that would have less of their fair shares appropriated would likewise be entitled to less compensation. We find 13 countries that would sacrifice less than 25% of their fair shares under our net zero scenario, including China, which would be entitled to receive $280 per capita per year, on average.”
“It is a matter of climate justice that if we are asking nations to rapidly decarbonise their economies, even though they hold no responsibility for the excess emissions that are destabilising the climate, then they should be compensated for this unfair burden,” said Dr. Fanning in conclusion.