The Global North must follow the Global South’s lead

With her ambitious Bridgetown Agenda to reform the international financial architecture, Barbadian Prime Minister Mia Amor Mottley has become a powerful advocate for climate justice. But she is not the only world leader rising to meet the profound challenges we face today. A new generation of leaders from the Global South are making their voices heard.

Kenyan President William Ruto, for example, is forging a new path toward climate-positive growth in Africa: By taking advantage of its abundant natural resources and realizing its green-manufacturing potential, the continent could supply the developed world with goods and services to accelerate the clean-energy transition. In Latin America, Colombian President Gustavo Petro has called for a new Marshall Plan to finance global climate action. And Luiz Inácio Lula da Silva, now in his third non-consecutive term as Brazil’s president, aims to tackle hunger, poverty, and inequality, promote sustainable development, and reform outdated global governance arrangements during his country’s G20 presidency in 2024.

After a decade of protectionism and fragmentation, these initiatives seek to build a global consensus around enacting sorely needed reforms. The post-Covid-19 world is currently experiencing what the G20 has called “cascading crises,” including a dramatic surge in energy and food prices, unmanageable debt burdens in the world’s poorest countries, and a record number of climate disasters. Developing countries need at least $1 trillion annually to make significant progress on the climate transition and to achieve their development goals. But the costs of inaction are even greater.

Our collective future hinges on a dramatic increase in funding, and the place to start is a levy on windfall revenues from fossil fuels. The global oil and gas industry’s revenues were around $4 trillion in 2022, according to Fatih Birol, the Executive Director of the International Energy Agency – an astonishing $2.5 trillion more than the average in recent years.

Where has this money come from? The short answer is consumers. Some of the world’s richest companies are raking in bumper profits from a cost-of-living crisis – largely fuelled by high energy prices – that has disproportionately affected the poor and vulnerable.

And the international community must use this levy to kickstart a wider financing program for the developing world, based on the principle that rich, historically large polluters with the capacity to pay should contribute more to help poorer countries adapt to global warming. Not only should aid budgets be raised, but the International Development Association, the World Bank’s financing facility for the poorest countries, must also receive a generous replenishment next year.

Providing $90 billion in concessional finance for low-income countries is at the heart of the proposals from the economist N.K. Singh and former US Treasury Secretary Lawrence H. Summers in their two volumes of reports to the G20, the first proposed ahead of the recent G20 summit in New Delhi. As they argue, the system of multilateral development banks (MDBs) must increase its overall capacity, which means tripling its annual commitments to $300 billion in non-concessional finance for middle-income countries.