Colombia Makes History at COP28

A Fossil Fuel Non-Proliferation Treaty

Good morning from Nairobi!

I’m getting ready to go to COP28 in Dubai, UAE in a few hours. And, of course, I have two things on my mind: phasing out fossil fuels and transformative climate finance. Let’s start with fossil fuels. I was thrilled to see that yesterday (December 2), President Gustavo Petro announced that Colombia would formally join the bloc of nation-states seeking to negotiate a Fossil Fuel Non-Proliferation Treaty. Colombia is now the 10th country to call for an international treaty to phase out fossil fuels with a comprehensive just transition framework. This is historic because Colombia is the first major fossil fuel exporter to endorse the Treaty initiative.

This is what President Petro said at COP28 when he announced Colombia’s endorsement of the Fossil Fuel Non-Proliferation Treaty initiative.

“It is a paradox that, at this table, together with populations that could disappear, there is a country like us, which also depends on oil, and which is committed to endorsing a treaty that implies zero new exploration projects in the world. My own society would say 'how would the President produce such economic suicide?', given that we depend on oil and coal. But this is not economic suicide. We are talking here about an 'omnicide', the risk of extinction of life on the planet. Here we are avoiding 'omnicide' on planet Earth. There is no other way, the rest are illusions. There is a very powerful economic power around oil, coal and gas. And they act to prevent changes, to maintain, in a suicidal way, their possibilities for more years of profit in the short term. Today we face an immense confrontation between fossil capital and human life. And we must choose a side. Any human being knows that we must choose life. I have no doubt which position to take: between fossil capital and life, we choose the side of life."

Colombia now joins Vanuatu, Tuvalu, Fiji, Solomon Islands, Tonga, Niue, Timor-Leste, Antigua and Barbuda, and Palau calling for a Treaty to phase out fossil fuels, in addition to The European Parliament, The World Health Organisation, 101 Nobel laureates, 100 cities and subnational governments, hundreds of scientists, health institutions, faith groups, civil society organizations, and more than half a million individuals.

Colombia is taking a leadership role that many countries in the Global South can learn from. In a way, Colombia has the same structural deficiencies that challenge most countries in the Global South. Colombia’s export revenues mainly come from raw materials, cash crops, and low value-added manufacturing (crude oil 23%, coal 10%, gold 6%, coffee 6%, cut flowers 3%, etc), while its imports tend to be much more diversified products, including refined oil products, core crops like corn and wheat, and high value-added manufactured products like industrial machinery, automobiles, and pharmaceutical products. Colombia’s structural trade deficit puts downward pressure on its exchange rate, which in turn pushes the country into an endless cycle of external borrowing to desperately stabilize its the exchange rate (otherwise imported products bring inflationary pressures to the domestic economy), which accelerates the external debt vicious cycle. Colombia’s debt service has routinely hovered around 30% of export revenues.

Colombia’s Right to Development

The dominant narrative that is being pushed by fossil fuel companies in the Global South is that our countries have a right to development and have the right to use our natural resources and our territorial sovereignty to develop. They also play the emissions game by convincing our governments that we shouldn’t listen to Global North-funded climate activists who want to deny us our sovereign right to development since we didn’t exceed our carbon budget, so we should be allowed to continue the extraction of fossil fuels so we can develop and thrive. This is a dangerous distraction aimed at securing additional demand for fossil fuels in a world that is set to decarbonize and shift away from fossil fuels. It is also designed to lock the Global South into an obsolete, expensive, inefficient, unhealthy, uncompetitive, uneconomical energy system.

Therefore, it is precisely because Colombia has a right to development that it should choose to diversify its economy, invest in food sovereignty and agroecology, invest in renewable energy sovereignty, and invest in high value added industrial policies. I discussed this in a recent podcast interview with Climate Justice Central, as well as in an interview with African Arguments and this Your Voice podcast.

Demand for Colombian oil and coal is stalling and will decline rapidly in the next couple of decades. What should Colombia do today to avoid a major crisis when its export revenues collapse while its debt service continues to rise. Therefore, it is precisely because Colombia has the right to development that it should take a new development strategy that reduces its external debt burden, builds resilience, and produces a more sophisticated economic development model that leads to structural transformation.

The Fossil Fuel Production Gap

The latest Production Gap report published earlier last month confirms once again what the scientific community has been telling us about the importance of phasing out fossil fuels. We are currently on track to extract and burn twice as much fossil fuels in 2030 than what we’re allowed to if we’re going to meet the climate challenge of keeping global temperature below 1.5 by the end of the century.

The findings from the production gap essentially validate all the work we’re doing on the Fossil Fuel Non-Proliferation Treaty. First, we must stop the deployment of additional fossil fuel architecture (in reality we’e adding $500 billion of new capital expenditure CAPEX in fossil fuels), and Second, we must rapidly phase out fossil fuels starting with coal, then oil, and gas. That is exactly what Colombia intends to do by leading the concert of nations by signing a treaty.

Collective Suicide Pact or Financial Fraud?

A couple of days before COP28 was officially open, the BBC reported that the host of COP28, the UAE, was planning to double dip by simultaneously hosting the most important climate summit and also signing lucrative oil deals with presidents and prime ministers from around the world. I was asked to comment on this for Middle East Eye, so here is what I had to say).

In a way, this is not surprising, fossil fuel companies and their lobbyists are engaged in a systemic campaign of distractions, obstructions, manipulations, and pure criminal activity. And I do not use the term 'criminal' lightly. Why? First, if we take the science seriously, we wouldn't be making plans to add new fossil fuel infrastructure, instead we would be negotiating a fossil fuel non-proliferation treaty to phase out existing infrastructure within a coherent and comprehensive just transition framework.

Second, if we take the economics seriously, we wouldn't be investing in a sector that is guaranteed to generate stranded assets (both financial and physical) before those investments generate the expected rate of return.

Therefore, whether what the fossil fuel industry is conspiring to do is signing a collective suicide pact for humanity or committing financial fraud by duping investors with stranded assets, it is criminal and it should be treated accordingly.

I truly believe that if we don’t address this issue head-on in Dubai during COP28, we might as well have the fossil fuel companies host the next COP at their headquarters and be very clear about who is actually running the show.

The Loss and Damage Fund

One the opening day of COP28, US Presidential Envoy, John Kerry tweeted “This is it, folks: #COP28 kicks off today in Dubai. Over the next two weeks, we must deliver strong decisions and ambitious action to achieve the Paris Agreement's goals - and to prevent the worst effects of the climate crisis.”

Yes, indeed! "Strong decisions & ambitious action," which is why the US pledged a whopping $17.5 million to the Loss & Damage Fund. If pledges go to Africa alone (1.4 billion people) the US pledge would be about $0.01 per African. Germany pledged $100m, UK $50m, Japan $10m, and France $109m (with conditionalities!).

Just to put things in context, after WWII, with the Marshall plan, the US gifted (mostly grants) 5% of its GDP to Western Europe. In today’s dollars, that would be nearly $1.2 trillion. And that was on top of a very expensive world war, which came after the economic misery of the Great Depression. So the $17.5 million pledged by the US for the Loss and Damage Fund shows how serious the Global North is about climate change.

Finally, the major push by the US to have the World Bank host the Loss & Damage Fund is a slap in the face for the Global South. The World Bank has dominated the development policy space in the Global South for decades, and here we are dealing with perpetual debt traps. Therefore, I can only conclude that the World Bank is either incompetent or is intentionally creating these debt traps. So can the Global South agree to host the most important and possibly the largest climate fund at an institution that has caused so much destruction in our countries.

Furthermore, the hosting fee that the World Bank collects is 24%. In other words, if we manage to put one trillion dollars in the Loss and Damage fund, the World Bank will gobble $240 billion in annual fees. That is pure theft. And finally, the undemocratic governance structure of the World Bank with an exclusive veto power in the hands of one country should disqualify it from ever hosting any global fund in the future.

The Loss and Damage fund should be hosted by an independent and democratic institution. We already have the Green Climate Fund that was established on democratic principles (one country, one vote). Alternatively, the Loss and Damage fund can have its own independent and democratic bylaws to ensure its integrity and sustainability.

Targeting, not just scaling up, Climate Finance

Climate finance (no matter what the scale is) must go towards economic transformation and resilience rather than "consumption" of green tech/products made in the Global North For example, clean cooking products must be manufactured (not just assembled) in Africa, which means a Pan-African industrial policy with grants and transfer of technology from the Global North.

Renewables must be manufactured 100% in the Global South, with transfer of tech from the North. And renewables must be deployed for energy access in the Global South first, with exports taking place only when there is surplus energy.

Climate finance must target investments in food sovereignty and agroecology to reduce reliance on debt-financed food imports, reduce carbon footprint of shipping grains from Russia to Kenya etc...  and better health outcomes etc.

Climate finance must also target clean transportation manufactured here with tech transfer -- Pan-African railway and urban metro systems, not assembled, but fully produced locally from minerals processing to final products ready to roll.

These economic transformation demands happen to be also climate resilience and adaptation demands. However, climate finance at scale in the way I describe above goes completely against the existing economic development model pushed by the WB, IMF, and WTO... so we can't just ask for climate finance without also asking for transformation of the trade, investment and finance architecture.

---

Fadhel Kaboub is an associate professor of economics at Denison University (on leave), and the president of the Global Institute for Sustainable Prosperity. He is also a member of the Independent Expert Group on Just Transition and Development, and serves as senior advisor with Power Shift Africa. He has recently served as Under-Secretary-General for Financing for Development at the Organisation of Southern Cooperation in Addis Ababa, Ethiopia. Dr. Kaboub is an expert on designing public policies to enhance monetary and economic sovereignty in the Global South, build resilience, and promote equitable and sustainable prosperity. His recent work focuses on Just Transition, Climate Finance, and transforming the global trade, finance, and investment architecture. His most recent co-authored publication is Just Transition: A Climate, Energy, and Development Vision for Africa (May 2023, published by the Independent Expert Group on Just Transition and Development). He has held a number of research affiliations with the Levy Economics Institute (NY), the John F. Kennedy School of Government at Harvard University (MA), the Economic Research Forum (Cairo), Power Shift Africa (Nairobi), and the Center for Strategic Studies on the Maghreb (Tunis). He is currently based in Nairobi, Kenya and is working on climate finance and development policies in Africa. You can follow him on Twitter @FadhelKaboub and you can read his Global South Perspectives on substack where he blogs regularly.