Path to and beyond COP26 : why it’s important and what needs to happen Pt III

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Time to change the economic system


We are in a critical climate moment. As discussed in parts I and II of this post we know that we need transformative change. We know we need all actors to play a pivotal role. We know that we need to prioritize knowledge and voices of Indigenous peoples and traditional groups, who have a deep and inherent connection to the earth. We also know that we need political buy-in and multilateral commitments for a crisis that knows no geographical boundaries. Most of all, we know that we need wholesale systemic change – social, political, and economic. Let’s discuss that last point.


As Naomi Klein puts it in her book ‘On Fire’, “debates about climate action remain trapped in a paradigm that equates quality of life with personal prosperity and wealth accumulation.” We know, however, (and by we, I am referring to not just you and I, but politicians from all ideological perspectives, as well as economists and academics) that this perverse view of economics is no longer attainable, sustainable nor desirable. As the number of rich shrink, while simultaneously growing their wealth by billions, the vast mass of people living in poverty snowballs. The current global economic system exploits the planet and its resources for the benefit of very few, while those most disadvantaged will be the worst impacted by climate change.


Klein argues that in this respect “there is much to learn from Indigenous-led movements” like Buen Vivir, which she describes as a “focus on the right to a good life as opposed to the more-and-more life of ever-escalating consumption and planned obsolescence.”


Phasing out coal, moving away from extractive policies including fossil fuels and biofuels, moving towards a needs-based approach to resource consumption, towards renewables with an emphasis on community-based and small-scale renewable energy transitions will need to be part of the solution. Moving away from fossil fuels is the bare minimum, but it is not the magic bullet to save the planet from destruction. We need to do more. It is not good enough to replace one form of large-scale extraction (fossil fuels) with another just because it is the easier option the lesser of two evils. Non-fossil fuel extraction and exploitation also has negative, irreversible impacts on the planet’s carrying capacity, if not in the short term, in generations to come. Deforestation one major extractive activity but there are others. So effective solutions start with transforming the global economic model.


Major key adjustments need to be made to the global economic system, and national economies and development policies can begin to immediately reflect a wholescale commitment to striving for rapid and radical emissions reductions, and aiming for Net Zero by 2030. The UN says that countries will have to commit to at least 45 percent emissions reductions by 2030 if we are to have any chance of limiting global warming to 1.5 degrees. Climate Council of Australia argues that this will need to be more like a 75 percent reduction by 2030, with Net Zero by 2035 based on current risk assessments. However, a new assessment conducted by Breakthrough, the National Centre for Climate Restoration argues that there is no carbon budget for 2030 as we are already overdrawn and that based on past emissions we are already on track to reach 1.5 degrees by 2030. Net Zero by 2050 is too late, yet loose ‘targets’ made by countries like Australia are locking us into climate catastrophe.


Released in a briefing paper earlier this year, Breakthrough argues that we will need to reach Net Zero by 2030 to keep warming below 2 degrees, a fact that has been argued by many climate scientists and advocates including Greta Thunberg. It states, “The world needs to be at zero emissions by 2030 for the 2°C target, based on three assumptions: 1. Mitigation expenditure no more than 3% of GDP; 2. No geoengineering; 3. Climate sensitivity is not low (Lamontagne et al, 2019. Nature Climate Change, 9:290–294).”

Whatever the commitment, to reach Net Zero we need a complete transformation of the global economic system. The CSIRO says, “Reaching Net Zero will require a fundamental reimagining of everything we do. It will require a new energy system, new modes of transport, new fuels, new materials, new modes of financing investments, new ways for industry sectors to interact and new ways of living on a scale – and at a pace we have never come close to achieving before.” But it’s not enough to assume that we can technologically innovate our way out of this. We also need a reimagining of society to transform the way, scale and speed at which we consume. To quote journalist Sarah O’Connor,


“To this new world, let’s not go back to a past that wasn’t working anyway !”


The global capitalist system that rewards competition and the exploitation of nature for the accumulation of individual wealth can no longer be logically and ethically argued as best system for an economy bounded by social injustices and planetary restraints.


In the near future, greater, more radical changes to the global economic system will need to be made. There are many proposals that policymakers and economists can consider, for example: degrowth, the social and solidarity economy, regenerative economy, and a circular society (which not only incorporates a circular economy, but also social and environmental factors including knowledge that impinge just outcomes).

It may be that no one single alternative model will be appropriate to transition markets to Net Zero, instead, key elements of the various significant models can be incorporated into one cohesive response that can be tailored to different contexts, so as not to reinforce the economic growth approach, but to level global equity, respond to fundamental needs and eliminate extreme poverty. With the last factor, it is instrumental to evaluate multidimensional poverty (environmental, wellbeing, social cohesion, health, education, sanitation, etc), not just economic poverty.

The path to Net Zero is not a linear one. It involves all actors – civil, governmental, business and organisations -and it requires rapid, radical systemic change to transform society, industry and politics in a just manner.

G7 and Climate Change: an unsurprising fail for change

The G7 is a group of seven of the world’s richest industrialised countries which meets annually to discuss pressing issues always headlined by the global economy, security and energy. This year saw climate change and health highlight the agenda for the leaders, which is significant given that the world’s most affluent countries and biggest emitters are largely responsible for climate change.

However, this is mainly because climate change and COVID have proved to be two of the biggest threats to the global economic system – which, if we are honest, overshadows any moral imperative to address these crises. Leaders explicitly state a recognition of “climate change and growing inequalities as key risks for the global economy”. A historical look at global action on both ecological and health crises demonstrates that are not a priority until they begin to destabilise the global economic order.

The slogan of the summit was the familiar post-COVID catch-cry “build back better”, but what exactly are we building back? Despite acknowledgements to “level-up economies” and including a focus on inclusion and green technology, the language coming out of the summit has not been game changing. The neoliberal rhetoric is ubiquitous.

More than a few experts have argued that if we are to fight future climate and health crises, we need to address the structural and systemic causes. However, the communique coming out of the summit from our world’s most powerful leaders show a commitment to anything but that.

In a piece in Climate Policy following the Climate Ambition Summit in December 2020 four former senior members of the United Nations Framework Convention on Climate Change (UNFCCC) secretariat demanded that “Real action rather than lip service” by phasing out coal and put an end to fossil fuel subsidies and establishing a 2030 interim CO2 target. As co-author Michael Zammit Cutajar stated, “We cannot continue kicking the can down the road to climate safety. ” Yet, that is precisely what is being done by the world’s richest countries hiding under an economic safety net.

On climate leaders have promised to “commit to net zero no later than 2050, halving our collective emissions over the two decades to 2030, increasing and improving climate finance to 2025; and to conserve or protect at least 30 percent of our land and oceans by 2030”, which responds to the UNFCCC report to establish interim 2030 targets, but whether or not immediate and effective strategies – that is the “real action” in the form of urgent domestic policies and regulations – follows suit is yet unknown.

The key points on climate coming out of the communiqué are as follows, however, one must pay attention to the non-committal and sometimes exclusive language that may open up any loopholes for tangible action. We must keep in mind that language use is a vital factor in International Law:

  • Ahead of the 15th Conference of the Parties of the Convention on Biological Diversity (CBD COP15), the 26th UN Climate Change Conference of the Parties (UNFCCC COP26) and the fifteenth session of the Conference of the Parties to the UN Convention to Combat Desertification (CCD COP15), we commit to accelerating efforts to cut greenhouse gas emissions and keep the 1.5°C global warming threshold within reach, strengthening adaptation and resilience to protect people from the impacts of climate change, halting and reversing biodiversity loss, mobilising finance and leveraging innovation to reach these goals.
  • [In line with the Paris Agreement] we collectively commit to ambitious and accelerated efforts to achieve net zero greenhouse gas emissions as soon as possible and by 2050 at the latest, recognising the importance of significant action this decade…we have each committed to increased 2030 targets and, where not done already, commit to submit aligned Nationally Determined Contributions (NDCs) as soon as possible ahead of COP26, which will cut our collective emissions by around half compared to 2010 or over half compared to 2005.
  • Domestically, we commit to achieve an overwhelmingly decarbonised power system in the 2030s and to actions to accelerate this. Internationally, we commit to aligning official international financing with the global achievement of net zero GHG emissions no later than 2050 and for deep emissions reductions in the 2020s.
  • We will phase out new direct government support for international carbon-intensive fossil fuel energy as soon as possible, with limited exceptions consistent with an ambitious climate neutrality pathway, the Paris Agreement, 1.5°C goal and best available science.
  • Domestically, we have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitments.
  • International investments in unabated coal must stop now and we commit now to an end to new direct government support for unabated international thermal coal power generation by the end of 2021.
  • We reaffirm our existing commitment to eliminating inefficient fossil fuel subsidies by 2025.
  • Sustainable, decarbonised mobility and to scaling up zero emission vehicle technologies, including buses, trains, shipping and aviation.
  • We will take action to decarbonise areas such as iron and steel, cement, chemicals, and petrochemicals, in order to reach net zero emissions across the whole economy.
  • We recognise the need for an urgent step change in the deployment of renewable heating and cooling and reduction in energy demand…[and[] welcome the Super-Efficient Equipment and Appliance Deployment (SEAD) initiative’s goal of doubling the efficiency of lighting, cooling, refrigeration and motor systems sold globally by 2030.
  • We commit to ensuring our policies encourage sustainable production, the protection, conservation, and regeneration of ecosystems, and the sequestration of carbon.
  • We support an ambitious post-2020 global biodiversity framework to be adopted by parties at CBD COP15 which sets ambitious goals, strengthens implementation, and enhances regular reporting and review.
  • We adopt the G7 2030 Nature Compact in support of the global mission to halt and reverse biodiversity loss by 2030.

What should have been on the agenda is possible pathways to a new global economic system (or economies) that will better help ensure both social justice globally, while effectively fighting climate change and ecosystem destruction.

Despite growing calls to abandon old ideas of economic growth as a solution to global ills, the G7 communiqué expressed renewed calls to reinvigorate our economies by “promoting growth into the future”. Leaders promised to “increase the prosperity and wellbeing of all people while upholding our values as open societies.”

We cannot continue to prioritise growth as a fix-all solution. To meet the increasing ecological and social challenges of the 21st century, we will need to end the pursuit of exponential growth, and look towards economic models that are that regenerative, collective, collaborative decolonial, and new values-driven.

A global economy that focuses on collective wellbeing of both people and nature is the only way we can use economics to tackle the mess we are in. There are many alternative to development models, such as Buen Vivir, which advocate plural economies within a larger global wellbeing-oriented economy to fundamentally address collective social and ecological wellbeing locally, and scaling that up. Perhaps the G7 is an outdated concept for our 21st century challenges, and needs to be opened up to thinking from other ‘undeveloped’ economies.