by Antonia Stock[1]
LDCs are especially affected by climate inequalities between countries, while having contributed least to the total world CO2 emissions from fossil-fuel combustion and industrial processes (Birkmann et al., 2022; UNCTAD, 2022). However, climate change is driving social inequalities within countries at an increasing pace, with marginalized groups being particularly affected. Furthermore, most LDCs are highly vulnerable to the effects of climate change. Actions aimed at reducing inequality, addressing poverty, and promoting proactive adaptation to climate-related shocks would reduce the size of the exposed and vulnerable population, especially if co-benefits with climate mitigation policies are also in place (Byers et al., 2018).
However, climate change and poverty are intertwined, further raising the concern whether both global challenges can be addressed simultaneously, especially in LDCs. Moreover, the effects of climate change would negate the poverty eradication efforts of recent decades in the absence of mitigation, adaptation, and socio-economic measures. Countries in the Global South are poorer today than they would have been in the absence of climate change (Hallegatte et al., 2016). Across all geographical regions, it is evident that climate change is impeding poverty alleviation (Denton et al., 2014). The implementation of responses to climate change is constrained by a number of factors, including worsening living conditions and the threat of food insecurity due to undernutrition, malnutrition, and low opportunities for income generation. Furthermore, the access to basic ecosystem services, such as rainwater, is in danger, creating favorable conditions for the spread of diseases. Additionally, gender inequalities are enhanced by climate impacts (Patt et al., 2009).
With regard to the external dimensions of European policies in LDCs, we identify a number of challenges and gaps in the area of climate. One challenge is the exposure to the European green techno-economic paradigm and correlated technology transfers (UNCTAD, 2023). The necessity of investments in "sustainable" technologies to enable LDCs to catch up would, however, pose further inequalities and challenges on the poorest parts of the world's population.
The EU Carbon Border Adjustment Mechanism (CBAM) provides a clear illustration of these contradictory patterns in LDCs. The CBAM is a tool that assigns a price to the CO2-equivalent emitted during the production of carbon-intensive goods imported into the EU. This price encourages cleaner industrial production in non-EU countries. The CBAM introduces a price on the embedded carbon emissions generated in the production of given items imported into the EU. This price will be equivalent to the carbon price of domestic production, thereby guaranteeing that the EU's climate objectives are not undermined. Between 2018 and 2020, 80% of LDCs were classified as commodity dependent, including highly emitting commodities such as minerals, metals, and fuels, which are also inputs in carbon-intensive value chains. All of these are now covered by the European CBAM (UNCTAD, 2021). The mechanism would impose an additional burden on the competitiveness of goods traded from developing countries to the EU. Nevertheless, it is important to note that not all LDCs would be equally concerned by these costs. Although the provision is of particular consequence for the BRICS countries, some LDCs are also particularly affected. Countries that export aluminum, such as Mozambique, Cameroon, Guinea, and Sierra Leone, as well as steel exporting LDCs like Zimbabwe and Zambia, will be affected by these costs. Mozambique is also among the countries that will be most socio-economically influenced by the CBAM. It has been estimated that 2% of Mozambican jobs (more than 250,000 jobs) and 6% of wage bills are exposed to the impact, as the country has a weak system of social protection (with a coverage of less than 25% of the population) (Magacho et al., 2022).
In addition to the aforementioned use case, we also identify further enhancements in the external impacts of European policy-making related to climate. Firstly, it underscores the necessity for transparency in EU private sector finance mobilization in order to channel these private resources towards the achievement of targeted climate goals. Secondly, it highlights the importance of addressing the asymmetry in adaptation and mitigation finance (Lundsgaarde, 2023). Despite its status as a significant financier of climate-related initiatives in developing countries, the EU continues to confront a financing deficit for climate adaptation through multilateral channels. One partial solution would be the imperative to design climate finance schemes that are highly accessible for LDCs, with the objective of increasing their capacity to react to the effects of climate change they are exposed to. This could be achieved through the issuance of more grants and concessional loans, taking into account the high debt of LDCs, and through the concentration of efforts on sustainable offers in adaptation funding, such as the construction of climate-resilient infrastructure, the implementation of early warning systems, the promotion of sustainable agriculture, and the enhancement of the transparency and accessibility of international climate funds, among other measures. Finally, the analysis emphasizes the crucial importance of incorporating gender-specific considerations into the nexus of climate action and poverty eradication (Allwood, 2021; Franklyn et al., 2022).
The analysis concludes with a series of targeted policy options designed to address the identified gaps. Firstly, the EU should address the structural conditions of LDCs. This could be enhanced by strengthening the capacity for climate-informed decisions, investing in energy security and efficiency, and recycling the revenues from CBAM for the green transformation in LDCs. Secondly, the EU could address the existing deficiencies in the efficiency and additionality of climate finance. This could entail the establishment of loss and damage mechanisms for LDCs, the implementation of a more tailored approach to climate financing for LDCs, and the further clear and SDG-guided mobilization of the private sector. Finally, in order to comprehensively address existing inequalities and vulnerabilities in LDCs, it is of the utmost importance to ensure the coherent implementation of existing gender-sensitive mechanisms in mainstreaming and targeted climate action.
References
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Birkmann, J., E. Liwenga, R. Pandey, E. Boyd, R. Djalante, F. Gemenne, W. Leal Filho, P.F. Pinho, L. Stringer, and D. Wrathall, ‘Poverty, Livelihoods and Sustainable Development’, Climate Change 2022: Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, 2022. Further: IPCC WG II AR 6, Poverty, Livelihoods and Sustainable Development, 2022.
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Notes
[1] EPOG+ Program, University of Torino and Sorbonne University (Paris)
