Climate Reparations a Lose-Lose-Lose Deal

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From Science Matters

At the recently concluded UN climate summit, wealthy nations agreed to pay climate reparations to poor countries. Unfortunately, this could ultimately be a bad deal even for the recipients, if the West expects developing nations to forego fossil fuels that would help them to develop and get more resilient towards natural disasters. Bjorn Lomborg also discussed the topic on The Journal Editorial Report with Wall Street Journal editor Paul Gigot.

The link to the video clip of the interview is in red above, and below a lightly edited transcript of the conversation.  PG refers to Paul Gigot and BL to Bjorn Lomborg.  Transcript is in italics with my bolds and added images.

PG: The COP27 conference in Egypt wrapped up last week with President Biden signing on to a climate reparations plan. Under the agreement wealthy countries would pay into a new fund to compensate poor countries for supposed damage caused by rich country use of fossil fuels. 

The move represents a major reversal in U.S. policy with the Biden administration’s climate envoy John Kerry dismissing the idea just weeks ago, saying that a compensation fund was “just not happening.”

Let’s bring in Bjorn Lomborg, President of the Copenhagen Consensus Center and a visiting fellow at the Hoover Institution. He’s also author of the book False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor and Fails to Fix the Planet.

Welcome back, Bjorn. So first of all, what do you make of climate reparations fund idea? Is it a good idea, or not?

BL: No it’s mostly a bad idea. 

Look, there’s a lot of different things you can think about it. But first and foremost, if you step back, we’ve been trying to solve climate, which is a real issue, for what, 30 years now.

It’s the 27th Conference. And now we’re basically moving from fixing climate–Which would obviously entail, How do we get technologies out so people actually cut their carbon emissions–to now saying, no, let’s just make it about money.

The second part is, of course, this is payback for the incredible amount of exaggeration that’s been going on for the last 30 years. If you tell everyone that this is terribly dangerous and it’ll endanger basically the survival of the human race.

Don’t be surprised when most people are gonna say, “Well then, you know, give me some money, for putting me in this dangerous situation.” That’s not the right way to look at this. The economic estimates show that global warming will be a problem; we’re talking about perhaps 4% of GDP by the end of the century, not a wipe out.

And then the really damaging thing is that much of this money, if it at all materializes, it will be spent on rich countries paying poor countries not to use fossil fuels. Which essentially means not developing. And of course that will leave them undeveloped. That will leave them in poverty. And why is it that these countries like Pakistan are vulnerable to flooding?

Remember most of Pakistani floods came from bad governance, lots of bad infrastructure and lots of people. It’s because they’re vulnerable, because they’re poor. So leaving them poor is the worst way to help fix the problem of climate change.

So this will leave the world worse off, and of course leave rich countries with a huge bill.

PG: I find your arguments compelling, Bjorn, but then why did the Europeans decide, in the first instance, to change their minds on this, to go ahead and endorse this reparations fund. And that isolated the U.S., which I gather felt then they couldn’t be isolated and had to go along. Why did the Europeans insist on this?

BL: It’s hard to tell. My gut feeling, and I wasn’t there, my gut feeling is they realized that nothing was coming out of the Sharm El-Sheikh meeting of the COP 27. So we need to have some sort of success.

So let’s say yes to this, which the developing world was very strongly pushing. Look if you go to all of these meeting, and virtually nothing comes out of it; if there’s the possibility of getting trillions out of it, I can understand why a lot of leaders would sign up for basically free money.

But the reality is, much of this could end up not happening, because remember the U.S. Congress has to appropriate: That does not seem plausible. The New York Times said, “We now have a fund but there is no money in it. So it seems likely this will not come true. 

Most countries are not feeling very flush right now. 

I can’t imagine most countries saying, “ Sure, let ‘s pay another couple of trillion dollars to the developing world.

First and foremost let’s remember that if this actually happened, it would likely prevent poor countries from using fossil fuels, which is one of the key ways to get out of poverty.

Remember China dramatically industrialized by using lots and lots of fossil fuels, and almost lifted a billion people out of poverty. That’s an amazing achievement. And most people in the developing world want to do the exact same thing. So in a sense, we are setting all of ourselves up for really bad outcomes in the future.

PG: There’s kind of a guilt tax quality to this, where the West is supposed to pay for the sin of having actually developed first, and for being prosperous in part by using fossil fuels. But China isn’t tapped to pay into this fund at all. And it’s building coal plants at a rapid pace, to the point where its projected new plants are going to dwarf all of the U.S. current coal production by 2025. How can China remain out of all of this?

BL: Well, first of all, because that would be really convenient for China. They are categorized as a developing country in the UNFCCC agreement that encompasses the COP negotiations. And of course, it you’re China, you wanna stay that way. I think it’s also fair to say that China has still only historically emitted only about half of what the U.S. or Europe has done. So there is some justification to this. But we have to very clearly separate the fact that you could make the argument that a little bit of reparations make philosophical sense.

But if you start in letting that genie out of the bottle, you’ll make the whole conversation about that, and forgetting to actually fix climate change.

Which is about making green energy much cheaper in the future through innovation. That’s what we should be focusing on if we actually want to fix this. And secondly, you’ll also have this situation where India, China and almost everyone else is not going to pay into this potentially enormous cost.


Climate reparations is a move in which rich nations lose, poor nations lose and energy innovation loses,  And as noted previously, the winners will be lawyers and accountants, as well as sovereign hydrocarbon producers.