We need a dedicated institution for tackling climate change - by Urjit Patel and Rahool Pai Panandiker

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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We need a dedicated institution for tackling climate change - by Urjit Patel and Rahool Pai Panandiker

In the World Economic Forum’s ‘The Global Risk Report 2021’, weather, climate and human-related disasters emerged as the top three risks and concerns facing the global economy. Infectious disease was a distant fourth in a year that saw the most significant pandemic of modern human history.

A decade back, rich nations promised aid reaching $100bn annually by 2020 to support the developing world to mitigate and adapt to climate change.

Many analysts have pointed out that the real fiscal support provided between 2016-18 was around 33% of the promised total. This is woefully short of the amount needed and smacks of subterfuge on the part of developed nations. Siegfried Russwurm, president of the Federation of German Industries, was candid in his assessment: ‘This further gambles away trust in the common fight against climate change.’

Trying to solve the climate challenge for all countries, especially within unrealistic timelines, may engender more distortions and inefficiencies. Energy transition is necessarily a multi-speed, multi-timeline process. However, providing costly incentives to market players indulging in unproven green technologies may encourage a new set of rent-seekers (and suckers) and we may not be much better off.

There are precedents, however. The World Health Organization was created to promote the attainment of health for everyone with the recognition that universal good health is fundamental to a peaceful planet

The challenge is accentuated by key questions of global and local political economy: how to reallocate carbon space and ‘parking rights’ for emissions in the future, and how to fairly and equitably design a path to net zero. There is the added challenge of rallying the whole world around one scenario, thereby not leaving much margin for uncertainty.

The extant guardian of our climate conscience is the UN Framework Convention on Climate Change. It led the inter-governmental negotiations in the early days and is now the depository of nationally determined contributions, while continuing the work on negotiations, meetings and technical assistance. Beyond this, there is a cacophony of voices from non-governmental institutions, industry bodies, academia and the broader (polarised) civil society.

Trying to solve the climate challenge for all countries, especially within unrealistic timelines, may engender more distortions and inefficiencies.

There is no multilateral body or institution that is the owner of the planet’s climate health. The current model of a secretariat under the aegis of the UN is not free from political undertones. Nations follow different approaches, ranging from the wholly political to the purely technocratic, making a common platform for conversation almost impossible. And an investigation by the Washington Post found that many countries are ‘seriously underreporting GHG emissions’.

Moreover, there is the matter of representation in forums. For many these are dominated by wealthy governments and corporate interests. It is unclear if the current assortment of institutions will do what it takes to solve the global problem with consensus in a timely manner.

There are precedents, however. The World Health Organization was created to promote the attainment of health for everyone with the recognition that universal good health is fundamental to a peaceful planet.

The WCO’s primary focus will be an accelerated, fair and just attainment of climate health through transparent rules, governance and regulations

It is time to establish a new institution that centralises and coordinates our efforts towards climate health, namely: the World Climate Organisation.

The WCO will be the central body that goes beyond the current secretariat. It will act as the directing and coordinating authority on international climate work. By design, it should be a technocratic institution that will build credibility by reducing asymmetry of information between nations. It would become the repository of data and information, staffed with technically qualified individuals, and represent the wide-ranging interests of member nations (much like the International Monetary Fund for macroeconomic variables and analysis).

There are five functions that would be incumbent on a WCO to build confidence in its member nations while accelerating the cause of climate health.

First, it would ensure that assessments and commitments are realistic and in line with the needs and realities of each country. This requires clear definitions of standards, nomenclature and common vocabulary among stakeholders.

Second, it would transparently determine the criteria for allocating climate funding and imparting predictability, which is crucial for long-term objectives. It should provide authoritative clarity and define the norms of climate finance.

Third, the WCO would monitor the translation of commitment into reality, ensuring well-coordinated and compatible roll-out plans are in sync with global goals while allowing nations to develop at different speeds.

Fourth, it would provide technical and administrative support to governments to formulate their plans and provide oversight and support in building execution capacities.

Finally, it would ensure continued dialogue between governments and design efficient adjustment mechanisms. It would also promote co-operation between scientists, climate professionals and policy-makers to advance action on climate-related issues.

The WCO’s primary focus will be an accelerated, fair and just attainment of climate health through transparent rules, governance and regulations. The creation of such a dedicated climate organisation is urgently needed.

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Urjit Patel is former Governor of the Reserve Bank of India and, as of 1 February 2022, Vice President for Investment Operations in South Asia, Southeast Asia and the Pacific Islands, Asian Infrastructure Investment Bank

Rahool Pai Panandiker is Managing Director and Partner at Boston Consulting Group

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members
This article was first published on Official Monetary & Financial Institutions Forum (OMFIF) on 31st Jan 2022

 

 

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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