Daily Management Review

Climate Policies That Work for Everyone, Not Just the Rich


Ajay Banga began his five-year term as president of The World Bank on June 2nd. The Biden-appointed, former Mastercard CEO also brings a new focus for the international financial institution: climate change. And developing nations are concerned.

centrale électrique fonctionnant au charbon - photo d'illustration - Creative Commons - Pxhere
centrale électrique fonctionnant au charbon - photo d'illustration - Creative Commons - Pxhere
The World Bank’s main clients, countries making up the developing world, worry “the Bank will be diverted from its core development agenda. The emerging world certainly wants more cash for climate mitigation and adaptation but not if it is at the expense of finance for energy, transport, schools and hospitals.”

They also worry this means no more financing for energy projects that many countries have been counting on to bring desperately needed electrification, industrialization and economic growth. This has created a new schism between developed and developing nations about what an energy transition looks like. Daniel Yergin, vice-chairman of S&P Global, sums up this rift:

"The new North-South divide reflects disagreement over climate and transition policies, their impact on development, and who is responsible for cumulative and new emissions and who pays… For developing countries, what seems a singular emphasis on reducing emissions needs to be balanced against other urgent priorities—health, poverty, and economic growth."

Decisions regarding climate change initiatives come top-down from wealthy countries that seem to equate the size of their budgets with the right to dictate. These are also the countries responsible for today’s climate crisis and many are not even applying their preaching within their own borders. 

But developing nations are trying to stand up to “net-zero carbon now” directives and push for energy transitions that include realistic energy mixes.

Not Practicing What You Preach

A study from The World Inequality Lab found that the richest 1% of the world’s population creates more carbon emissions than the poorest 50%. The richest 10% of countries consumes 20 times more energy than the poorest 10%.

Sub-Saharan Africa is home to some of those “poorest” countries and to 1.1 billion people sharing a power generation capacity equal to Germany’s 83 million citizens. If sub-Saharan Africa were to triple its electricity consumption overnight using only natural gas, annual global emissions would only increase by 0.62% – less  than Spain’s annual emissions.

Leading up to COP27, environmentalists told rich countries not to negotiate new gas supplies (the least pollutant fossil fuel) with African representatives. Even though the entire continent contributes less than 4% of global greenhouse gas emissions.

As professors from the Colorado School of Mines observe, “One increasingly common theme primarily from wealthy countries… is a vow that they will cease public funding for all (or nearly all) fossil fuel projects in less developed countries, even as they continue financing… fossil fuels in their own.” And herein lies the credibility problem of rich countries.

The US recently approved Alaska’s Willow Project. Drilling is expected to produce enough oil to release 9.2 million metric tons of carbon pollution annually. In 2022, shuttered coal-fired power plants across Europe were reopened. The IEA says this increased the EU’s coal power generation “which is expected to remain at these higher levels for some time.”

And with coal accounting for 54% of Australia’s energy mix and no plans to stop exporting coal, Australia is a good example of a rich nation being a bad example. As representative Joel Fitzgibbon stated, “Our coal is the world’s best. People want it. Countries need it. Self-interest will come first every time.

Costly Coal

Coal remains in high demand despite its high environmental and health costs. The IEA notes, “Coal sits in the centre of climate and energy discussions because it is the largest energy source globally for electricity generation and for the production of iron and steel and of cement, as well as the largest single source of carbon dioxide (CO2) emissions.”

While most developed countries have moved to close coal plants and mines, “coal is still king” in China, India and Indonesia. Global demand increased by 1.2% in 2022 with China accounting for more than half.

A study in Energy Geoscience found that, “In comparison, coal is the energy source that emits more nitrogen oxides, sulfur dioxide, carbon dioxide, heavy metals, and particulate matter per unit of energy than other fuel sources.

Those living near, or working in, coal mines suffer from higher rates of morbidity from lung diseases, cardiovascular disease, kidney disease and cancer. After coal is mined, it is crushed, chemically washed, then transported. Particles are released into the air and water is contaminated at each step.

But coal combustion is the deadliest and most environmentally damaging stage of coal use. Coal power plants generate, and release into the air, coal ash containing radioactive elements, arsenic, mercury, lead, etc. An estimated 52,000 people in the US, 670,000 in China and up to 115,000 people in India die prematurely each year due to particulate matter emissions from coal-fired plants.

Basic Needs First

The IEA estimates that up to 2.8bn people use dirty fuels to heat their food and homes using wood and charcoal in Africa, wood and animal dung in South Asia and coal in East Asia. Some 2.6m people die annually from household smoke.

Leaders of developing nations want to address such problems and raise living standards. India is building a $60bn natural gas distribution system to reduce its reliance on coal. For many, tapping into natural gas is the key to “reduce indoor pollution, promote economic development and job creation, and, in many cases, eliminate the emissions and pollution that come from burning coal and biomass.

To this end, the African Union is expanding energy infrastructure. The goal is to use untapped gas reserves in countries such as Tanzania and South Africa to provide electrification to the 600 million Africans without access to electricity and revenues to bring development. 

President of the African Development Bank, Akinwumi A. Adesina, best describes this approach to meeting basic needs while respecting climate objectives:
"Africa needs to have an energy mix that allows it to have access to electricity, and energy, to have affordability for its population, and most importantly, to be able to have the security of supply for industrialisation… Moving from coal to natural gas… would reduce your emissions by at least between 45 to 48%."

Climate Colonialism

In September 2022, the European Parliament voted against an oil pipeline proposal linking Uganda with Tanzania. Ugandans, who see the pipeline as necessary for economic development, protested. Thomas Tayeba, deputy speaker of parliament, described the vote as, “the highest level of neocolonialism and imperialism against the sovereignty of Uganda and Tanzania” and “economic racism”.

He explained the hypocrisy:
"Various member states in the EU continue exploring, developing and have increased production and use of fossil fuels in recent months. There are over 9000 oil and gas production licenses in the USA, including plans to drill in Alaska and the Artic sea. Fifty three licenses have recently been issued in the North Sea and Germany has revived its coal plants."

This new North-South divide has spawned a term: climate colonialism. According to philosopher Olúfẹ́mi O. Táíwò, climate colonialism is the “deepening or expansion of foreign domination through climate initiatives that exploits poorer nations’ resources or otherwise compromises their sovereignty.” Telling countries how to use their resources is reminiscent of the 1900s when the US and Europe were industrializing while extracting natural resources from their colonies.

And excluding all nonrenewable energy projects from development finance is a form of climate colonialism that does not reflect the reality that energy transitions might look different in different countries. For nations currently dependent on coal, switching to gas would be a huge step towards reducing emissions and improving the quality of life of citizens.

written by Alex Johnson