Innovation by the advanced economies allows for Global South to move up the economic ladder and leapfrog to new tech fast – helps them both economically AND implement their own green changes

Up to here, the green agenda being proposed has focused mainly on advanced economies, on the principle that rich countries should take the lead in the transition. Still, as we saw in Chapter 7, the green transition cannot be shouldered by advanced economies alone. To say so is not only to push back against the narrow degrowth proposal to mitigate climate change by shrinking rich countries’ economies. Apart from sociopolitical considerations, strictly from a technical standpoint advanced economies cannot keep global temperatures within safe levels on their own. Figure 8.2 displays CO2 emissions by country, and shows that climate neutrality by rich nations would perhaps have been sufficient in the 1950s. Today, however, the United States, Europe, and Japan combined directly account for less than a third of global carbon emissions. Moreover, most of the economic growth going forward is set to happen in developing countries, which are currently powered mostly by highly polluting technologies like coal and gas. In simple terms, most of the current and future CO2 emissions are produced in developing countries, and any credible green strategy to fight climate change must take this into account. To be fair, leaders in most developing countries are well aware of the dangers associated with unfettered greenhouse gas emissions and the catastrophic consequences of climate change. They are likely, however, to be exposed to constant choices between well-known development options that are polluting but cheaper, and a more expensive and uncertain green transition which may pay off only in the longer run. Perhaps counterintuitively, this dilemma is likely to be made indirectly worse by the climate activism of advanced economies, through a sort of global “rebound effect.” In simple terms, as rich countries phase out highly polluting technologies such as coal and gas from their energy and transport mix, the global prices for these commodities will drop. While carbon pricing is designed to avoid a rebound at home, the price collapse might very well encourage developing countries to take advantage of these cheap resources, frustrating the overall global climate effort. The question could be asked: Given that developed countries used these resources in the past, why should the Global South hold back? To put it bluntly, there is no realistic scenario in which developing countries, which account for over 80 percent of the world population, can emulate the carbon-intensive development path of rich countries like the United States yet avoid global climate catastrophe. As they move up the income ladder, developing countries must instead aim for “leapfrogging,” skipping the journeys taken by rich countries with all their intermediate technological steps and proceeding directly to innovative, low-carbon solutions. This “green development” policy might sound outlandish, but technological leapfrogging has happened frequently, including in recent history. For instance, in the field of information and communications technology, large parts of sub-Saharan Africa have skipped phone landlines altogether, avoiding all the costs that setting up that infrastructure would entail. Instead, mobile phones have become widespread. Soon, these became the favored platform for basic payment services through SMS, bypassing another costly infrastructure: a physical banking system. Mobile payments effectively leapfrogged credit card technologies. Several emerging economies, including China and India, rely on QR codes and mobile phones for payments to a larger extent than rich countries do. Once high-speed internet is provided through space by low-orbiting satellites, such as SpaceX’s Starlink, which recently became operational, creating a broadband infrastructure on the ground might no longer be needed, and could be leapfrogged. Specifically on the energy dimension, it makes sense in rural parts of sub-Saharan Africa not to build capillary electricity grids from scratch; solutions such as mini-grid systems based on solar photovoltaic, small hydropower, and small wind are not only cheaper but offer more resiliency in conflict-ridden areas.59 Green development based on leapfrogging will be particularly important given the path dependency of technology. If a developing country builds coal power plants today, these will remain in operation for decades. With the investment considered locked-in, a switch to low-carbon solutions will be feasible only in the very long term.60 How could this international conundrum be solved? To many internationalists, the solution is simply an international treaty setting binding carbon reduction targets, and perhaps even introducing a global carbon price. We saw in Chapter 7 why this is extremely unlikely to happen. Because broad-based decarbonization treaties cannot realistically be binding, they will inevitably run into trouble, or lead to noncompliance every time that short-term economic (and therefore political) incentives are at odds with longer-term green objectives. Green Deals in rich countries can be designed in a way to shift short- term incentives, also making green development more pressing, palatable, and incentive-compliant in poorer nations.61 The key is for green pioneers— the advanced economies—to leverage their large markets. Combined, the OECD countries command two-thirds of total world demand. This number goes down to half if the set is limited to G7 members, or 60 percent if it includes both the G7 and China, which has all the credentials to be an ambitious early adopter in climate mitigation.62 The EU is the biggest export market for goods coming from roughly sixty countries, and the United States is that biggest market for another thirty. Credible Green Deal plans should therefore be flanked by carbon border taxes, which levy taxes on imports based on how much CO2 was emitted in producing them, effectively acting as carbon pricing at the border.63 A carbon border tax serves as a strong economic incentive: it nudges other countries to embrace a green agenda or else risk losing revenues from their most important export markets. Aside from internationalizing greening efforts, carbon border taxes will also serve other purposes, including avoiding what is known as carbon leakage.64 In simple terms, the tax provides a disincentive for rich-country firms to shift production abroad to avoid tight environmental regulations at home, only to later reimport products for domestic consumption. This, as we saw in Chapter 1 (Figure 1.1), has been a great concern for degrowth advocates, who point to the deceptive gap between production- and consumption-based emissions.65 Finally, carbon border taxes will add to the environmental revenue stream, helping to finance Green Deal investment plans, and activist government agendas more broadly.66 Beyond carbon border taxes, there are other ways to internationalize Green Deals while leveraging the strength of large domestic markets. These include regional and bilateral trade deals, which going forward should include climate and environment chapters and targeted, binding green provisions. There are, however, countries which simply are not in a position to shoulder the initial investment costs of a green transition. This remains true even when accounting for the fact that, by moving first, advanced economies will reduce the cost of low-carbon technologies, and therefore the overall costs of climate mitigation for others. For these “least developed countries,” green pioneers should earmark parts of their foreign-aid spending to finance the investment in climate mitigation and adaptation. This can potentially offer a lot of leverage. At roughly €75 billion in 2019, Europe is collectively the largest donor of international aid in the world, providing over half the total global official development assistance—and that sum does not include financing through (regional) development banks, which likewise should progressively tie their loans to green requirements. Along similar reasoning, it is very likely that in the aftermath of the Covid-19 pandemic, rich countries will need to engage in substantial debt relief or cancellation for least developed countries, going beyond the debt freeze decided by the G20 at the height of the pandemic. Some of this financial relief could be made conditional on climate action, once again tilting short-term economic incentives in favor of green development.67 One last potential avenue of criticism remains to be addressed before this section comes to a close: the argument that the proposed internationalization of Green Deals will hamper much-deserved growth and well-being in countries that desperately need it. The fear is that rich countries will metaphorically “pull up the ladder” of fossil-based development, after having climbed it themselves. Two points should be made on this subject. First, while climate change is surely a global problem, its consequences are expected to be particularly dire in developing countries, which are projected to see droughts, flooding, famine, pests, and forced migration. Policies designed for climate mitigation, then, and especially adaptation, are perfectly aligned with the interests of citizens in the Global South, and this will become very evident in a not-so-distant future. Developing countries realistically have only two paths ahead of them: green development or climate catastrophe. Carbon border taxes and related measures simply make this binary choice more evident. Second, old polluting technologies like coal, charcoal, wood burning, and kerosene are directly detrimental to human health and well-being. People in rich countries learned this the hard way, but there is no reason that developing countries should not benefit from the scientific knowledge that has advanced since then. Unsurprisingly, in all climate mitigation models, poor countries are those where co-benefits from the green transition are the largest, in terms of reduced health conditions and deaths from air pollution. Nobody expects poor countries to walk the entire historical path, or “ladder,” of Western medicine, going through ancient nonsensical practices like bloodletting or trepanning. Rather, international organizations and NGOs strive on a daily basis to make widely available the products of modern medical science, such as antibiotics and basic vaccines. Likewise, foreign aid does not fund steam-powered cotton-spinning projects in rural communities in Africa just because those were steps taken by the West in its technological development. Since 2016, the United States bans the imports of products if child labor is used to make them—surely a good thing, even though this was a common practice in the West during the early days of the Industrial Revolution. Concerning climate change and potential catastrophe, along similar lines of reasoning, it should seem reasonable to encourage adoption of green technologies in the developing world, including through carbon border taxes, on the basis of the latest advancements in climate science research.