Fairness considerations in global mitigation investments
Least-cost abatement locations do not determine fair contributions to mitigation finance
Read the published paper ↗doi.org/10.1126/science.adf0067
Who should contribute to mitigation finance
Global mitigation investment pathways modelled for the IPCC's Sixth Assessment Report (AR6) reach climate goals in a cost-effective manner. They show where investment should occur, but they are agnostic about who should finance it. Where abatement is cheapest and who should pay for it are two different questions.
We ask how regional contributions to global cost-effective mitigation investment needs change when equity considerations are applied. We also ask what direction and magnitude of interregional financial flows each consideration implies. Keeping the geography of least-cost abatement distinct from the distribution of contributions is what makes the fairness judgement visible. Adequate capital and liquidity are globally available, as the 2.4 trillion USD of world energy investment in 2022 estimated by the International Energy Agency shows.
Six unweighted equity indicators across ten regions
We take modelled regional cost-effective annual mitigation investment needs for 2020–2030 from the IPCC AR6 WGIII Technical Summary. We derive 'fair share' regional contributions for all ten IPCC regions under six indicators grouped in three considerations. Responsibility is measured by cumulative CO2 emissions from fossil fuels and industry over 1850–2019 and 1990–2019. Capability is measured by GDP per capita and capital stock per capita in 2019. Needs are measured by deprivation in decent living standards and by the share of population facing acute climate risk in 2030.
Responsibility indicators translate shares of cumulative historical emissions directly into shares of total contributions. Capability and needs indicators are scaled by regional GDP, so that each region contributes a share of its GDP in proportion to its indicator value relative to others. Needs indicators are first inverted, because they measure deprivation. We consider it morally defensible for regions with higher needs to contribute a proportionally smaller share. We do not combine the equity considerations or weight the indicators. Instead, we present the allocation for each consideration and provide an accompanying tool that lets users select and weight indicators themselves.
Fair shares diverge from least-cost geography
We find that current mitigation finance is both inadequate and unfair. Total global cost-effective mitigation investment needs range from approximately 2.31 to 4.57 trillion USD per year over the decade (PPP USD, 2015). Recent mitigation investment averaged roughly 0.72 trillion USD per year over 2017–2020. The IPCC assesses that flows must increase globally by a factor of three to six to meet average annual needs until 2030.
With the exception of responsibility since 1990, fair-share contributions under every equity consideration would be far higher than cost-effective needs in North America and Europe. They would be lower in Africa, South and Southeast Asia, and Latin America. We estimate interregional flows of 248–1,581 billion USD annually during 2020–2030 to meet fair-share contributions. Capability- and needs-based allocations require flows of 657 billion to 1.581 trillion USD to regions dominated by low- and middle-income countries. Even under responsibility since 1990, the indicator most favourable to regions of the Global North, annual interregional flows for mitigation alone must increase to 250–570 billion USD in the near term.
Fair allocation differs from least-cost location
Our results indicate that interregional flows must be scaled up no matter which combination of our selected equity considerations and indicators we consider. The requirement for transfers therefore does not rest on choosing one particular notion of fairness.
Continued neglect of differentiated responsibilities, capabilities and needs in the regional allocation of mitigation investment contributions risks lose-lose outcomes. Interregional cooperation will be necessary to move past this gridlock. Our work describes one pathway towards consensus, by embedding distinct considerations of distributive justice in the derivation of 'fair' regional contributions to globally cost-effective mitigation investment needs. Ultimately, we find that distributive justice in global climate mitigation will require substantial interregional finance flows.
@article{pachauri_fairness_2022,
title = {Fairness considerations in global mitigation investments},
copyright = {All rights reserved},
issn = {0036-8075, 1095-9203},
url = {https://www.science.org/doi/10.1126/science.adf0067},
doi = {10.1126/science.adf0067},
abstract = {Current mitigation finance flows are inadequate and unfair},
language = {en},
urldate = {2022-11-18},
journal = {Science},
author = {Pachauri, Shonali and Pelz, Setu and Bertram, Christoph and Kreibiehl, Silvie and Rao, Narasimha D. and Sokona, Youba and Riahi, Keywan},
month = nov,
year = {2022},
pages = {eadf0067},
}