Rethinking Climate Finance for the Developing World
For decades, rich countries have urged developing countries to shift away from fossil fuels while failing to heed their own advice or offer meaningful funding. Kenyan President William Ruto’s recent call to establish a new “global green bank” is the sort of thoughtful proposal that developed countries must seriously consider.
CAMBRIDGE – Speaking to the Financial Times at the June 22-23 Summit for a New Global Financing Pact in Paris, Kenyan President William Ruto called for the establishment of a “global green bank” that would assist developing countries in mitigating the effects of climate change without further exacerbating their already-unsustainable debt levels. This thoughtful and important proposal is one that rich countries must consider if they are serious about tackling climate change, fostering peace, and promoting prosperity in Africa and the rest of the developing world.
Until recently, developing economies’ only bargaining chips were their abundant natural resources and cheap labor. But climate change has enhanced low-income countries’ bargaining power and altered the dynamics of North-South relations. Developing countries are no longer willing to be bullied into taking on massive debt to finance green development, especially when cheaper alternatives are available.
Affluent countries’ ongoing efforts to persuade low-income countries to assign a higher value to the global commons than they themselves have done are doomed to fail. Although incentives have aligned in some cases, aided by the falling costs of solar and wind energy, developing economies often find it far more cost-effective to follow in the footsteps of advanced economies and rely on fossil-fuel technologies.