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GVS exclusive interview with Dr. Jeffrey Sachs on the global environment crisis

Managing Editor GVS is joined by eminent economist Dr. Jeffrey David Sachs for an exclusive chat on climate change issues and their implications.

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Najma Minhas: Pakistan releases around 1 percent of carbon emissions, while a country like the United States releases around 29 percent. We know that, historically, due to the process of industrialization, it is the Global North that is responsible for the vast majority of climate change. Do you think it is fair game for developing countries to ask for climate reparations?

Dr. Jeffrey Sachs: The rich countries have a responsibility to the poor countries for the damage that they are incurring and for the extra costs that they are going to incur to make society safe from these disasters. There are three kinds of investments for climate safety, and I want to distinguish between them. One is energy transformation or sometimes called mitigation. It means decarbonizing the energy system, and every country is really responsible for that. The second is what we call adaptation, which is living in this terrible new reality. And the third is what is called losses and damage. The cost of Pakistan’s disastrous floods this summer is enormous: more than $30 billion, or more than 10% of the gross domestic product. This has consequences that are going to be with Pakistan for years to come. So, the question is, how do we get this done?

All three of those categories, whether it is the energy system, change adaptation, or responding to losses and damages, require financing. My own view is that two of these categories, losses, damage, and adaptation, really are the responsibility of the rich world that caused this mess. On the mitigation side, my view is that every country has the obligation not to pollute. So, I do not think anybody gets a free pass on polluting. What countries need for the first category of mitigation is long-term, low-interest loans so that they can make the energy transformation. But with the floods in Pakistan, the extreme hurricanes and typhoons, and the droughts that Africa has suffered, the poor countries need to tell the richer countries that “time is up, and we are finished talking; pay up right now.” We are now going to COP27 in Sharm el Sheikh, hosted by Egypt, and Egypt is on top of this. It is time for the G77 and China to raise their voices very, very strongly. There is no more time for talking. We need the money now because the disasters are now and they are not in the future.

Read more: Climate Change: Past, Present and Future

Najma Minhas: While you refer to the fact that some kind of funding needs to be made available, are you referring to loans rather than funding?

Dr. Jeffrey Sachs: No, funding for losses and damage is granted. Because this is a disaster, the loans come for the energy transformation, because when you build an energy system, people pay for power over time. What’s needed here is low-interest and very long-term loans, not three-year euro bonds or five-year euro bonds with backbreaking interest rates, but 40-year loans with very low-interest rates because that’s manageable, but not for the other categories: losses and damages and adaptation. Countries like Pakistan need the money; they need grant financing, and the rich countries should be taxing themselves under an international formula that reflects how they have contributed to this mess.

Najma Minhas: Do you have any thoughts on that formula in terms of who puts the money in and how it gets distributed? Where does the pot go, ultimately?

Dr. Jeffrey Sachs: If you take the floods, it is a very elastic example. What do we know about the causes of the flooding? Well, clearly, there are global factors at play because it was global warming that led to the massive monsoon that Pakistan incurred. There are other factors at play—deforestation in the upper Himalayas, faulty infrastructure that reduces drainage, and melting glaciers.

So, a good starting point is to try to assess how much of this flood damage is globally caused and how much is locally caused, because that is what we call attribution. At least half of the floods in Pakistan are going to be due to global factors, and that is at least half of the 30 billion or more that the rich countries that are responsible ought to be paying. I believe that we should be levying an assessment based on those historic historical emissions. We can calculate those as we have records back to 1850. In this way, a country can pay a small amount per ton of CO2 that it has emitted in the past that is responsible for a significant part of these losses into a fund, and that fund goes to countries to help them adapt and to respond to disasters.

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Najma Minhas: In 2009, the rich countries pledged $100 billion by 2020 per annum for specifically this reason, but they did not put any money in. How does the Global South, which is suffering particularly from these effects, actually strategize to get this money? What do they need to do?

Dr. Jeffrey Sachs: They need to get together on a plan. I do think that the G77 is a good place for this, and there are many like-minded countries because I speak with lots of governments. The small island developing states are suffering from rising sea levels, storms, and so on, and they are making demands as well. Brazil has been a country in the lead on this case for historical responsibility. Brazil, especially if President Lula is reelected as president, is going to be a real champion of this cause. Indonesia is the host of the G20 this year, and it understands what is at stake. Egypt is the host of COP27, and it also understands what is at stake. So, I think that even in the few weeks until the climate conference, and then which is followed immediately by the G20, it is necessary to insist on this. Back in 2009, the G7 really ran the show. Developing countries are becoming a larger and larger part of the world economy and world politics. I think they will be a larger and more decisive part of decision-making as well if there is a common voice.

Read more: Why climate change needs to be taken seriously?

Najma Minhas: Bilawal Bhutto, Pakistan’s Foreign Minister, has referred to the Green Marshall Plan. What exactly is this? What do you think is the likelihood of something like this coming about?

Dr. Jeffrey Sachs: The Marshall Plan refers to US foreign aid to Europe after WWII. It was named after General George Marshall. It was a lot of money spent at the time, and it helped rebuild Europe. It had geopolitical purposes for the United States as well. The problem with the Marshall Plan now is that the US has become incredibly ungenerous. Internationally, the US is one of the main reasons why we do not have any of these funds because even after the pledges are made, I know in the back rooms, the US is the foot dragger on all of this more than almost any other country. So, we are not going to have a Marshall Plan in its literal meaning that the United States is somehow going to show farsighted generosity.

I would also name it differently and call it the Sustainable Development Fund. It is the climate justice fund, and it is absolutely needed, not because of aid, not because of charity, although those are fine, but because of historical responsibility. If this were a court of law within a country, those who are suffering would sue those who have created these damages. But since we are in an international context, we do it through diplomacy.

Read more: Pakistan would rather be bridge between China, US: Bilawal

Najma Minhas: Given the fact that taking money out of someone’s purse today is a bit more difficult, there are suggestions for other kinds of out-of-the-box ideas, such as debt cancellation. Similarly, for a country like Pakistan, GSP plus and the fact that European countries could contribute the amount that they are due to pay in terms of GSP plus, which would be trade for Pakistan and Pakistan would make money; what do you think about ideas like that?

Dr. Jeffrey Sachs: I’m never against something that can actually be negotiated at the end. I like to think of things a little bit more straightforwardly, which is that we know that the damage comes from greenhouse gas emissions, we know where the greenhouse gas emissions came from, and we know the scale of the problem. We can therefore calculate a kind of assessment that could be seen as a fair, sensible, efficient, and proper response, as if this were a court of law, adjudicating liability for damages. So, I like the clean approach. On the other hand, the clean approach is not delivering right now. There is a question-how to really get this done diplomatically and geopolitically? I would not say no to anything that is going to work.

Najma Minhas: What is the feasibility of that happening? Are developed countries thinking about these kinds of ideas, or are they not thinking at all? What we see happening in the developed countries is they talk and make pledges but in terms of actual bang on the buck, what are we going to get from them?

Dr. Jeffrey Sachs: In the United States, there is real resistance because our politics are profoundly libertarian, meaning rich people say leave us alone; we don’t have any responsibility to anyone anywhere, within our country or internationally. The US is quite frustrating in this regard. But other countries understand that there is real logic to this, and it makes sense. They get it. Maybe the politicians do not think this is easy, but I think people see this issue coming to heed because, for a long time, the climate was something terrible that was going to happen in the future, but now we are in the middle of this climate change. It is not something about the future; it is the here and now.

The rich countries cannot keep running. Developing countries also have a big responsibility to change the energy system. This is a global effort that is needed right now, but when it comes to these damages and these adaptation costs, the rich countries are going to have to face the truth. I think it can get done. Right now, the mood is terrible because we are talking about war and destruction in Ukraine and tensions between the US and China. So, it’s an awful situation because these countries are not behaving properly. They are focused on conflict rather than on problem-solving. I think the rest of the world is really focused on the problems and the need for solutions. We, therefore, need the voice of 150 countries that says to the rest of the few rich countries (really rich countries) that you have got to step forward. The world cannot go on this way with you acting with impunity. I think, eventually, it is going to work.

Najma Minhas: Earlier, you mentioned that the US is not feeling so generous now. But really, the Marshall Fund was all about the United States foreign policy, rather than any climate-driven or any kind of generosity that the US did what it did. So, maybe we need more of a foreign policy element to climate change before anything takes place there.

Dr. Jeffrey Sachs: The US is looking for friends these days; developing countries need to tell the US, “look, you want to be a friend, we have got floods, we have got typhoons, we have got rising sea levels, get real, do not talk to us about wars and sanctions and so forth. How about our problems?” And I think that that would make a real difference because our diplomats would hear an earful of something really useful.

Read more: Climate Change and its subsequent sociopolitical unrest

Najma Minhas: So, my final question to you is, what role do corporates play in this climate justice equation?

Dr. Jeffrey Sachs: First of all, we are really going to make an energy transformation because we have to. So, corporations that drag their feet and think that they are living in the 20th century are going to find that they lose over the long term. Those that bet on electric vehicles, hydrogen, or zero-carbon energy are going to be the ones that are going to lead the way. Elon Musk is the one that bet on electric vehicles before others were thinking about it, and he became a gazillionaire. And I would say to businesses, that is the right way to go. The other thing I would say to businesses is not to lobby against climate sanity, especially the oil, gas, and coal companies. They played a terrible role in stopping or slowing the response, and they must not play politics that way with the future of the planet.

A slightly different version of the interview will appear in the October 2022 Magazine issue.

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