OPEC Fund Quarterly - 2022 Q4

INTERVIEW

CLIMATE ACTION: “IN SHORT, THE POLLUTER PAYS” IIASA researcher Shonali Pachauri and her team have developed a tool for the transparent and verifiable calculation of burden sharing when it comes to financing climate mitigation measures By Howard Hudson and Axel Reiserer, OPEC Fund

OPEC Fund Quarterly : The International Institute for Applied Systems Analysis (IIASA) just published your paper on how to establish a fair burden sharing when it comes to financing climate mitigation. What are your main findings? Shonali Pachauri: Our starting point was the report by the Intergovernmental Panel on Climate Change (IPCC) published in March 2022, which provided the latest and most comprehensive scientific assessment of what the world needs to do and how to meet the long-term temperature goal of the Paris Agreement. The scenarios tell us how much to mitigate, where it’s cost effective to mitigate and by when we need to mitigate. But they do not tell us who should pay for that. And they also do not tell us how costs and benefits should be distributed. OFQ : How did you attempt to find an answer to this hotly contested question? SP: Our approach was simple. On the one hand, the principle of ‘common but differentiated responsibilities and respective capabilities, in the light of different national circumstances’ (CBDR- RC) is enshrined in the Paris Agreement signed by 194 out of 198 parties. On the other hand, we had the scenarios from Working Group III’s contribution to the IPCC sixth assessment report. So we said, let’s compare these regional

OFQ : On this basis you developed a webtool ( see link below right, opposite ) that allows users to systematically explore fair regional contributions. Who is this aimed at? SP: The question of financing and burden sharing is a continuing conversation and we hope to inform that debate A DEFINITION OF FAIRNESS ACCOUNTABILITY Burdens should be borne in proportion to those who have contributed to the problem. Those who have contributed to the problem should pay for it to be resolved. ABILITY TO PAY The greater the ability to pay, the greater the share of the cost should be. HISTORICAL BENEFIT Those who have benefited should pay in proportion to how much they have benefited from activities that have resulted in negative climate impact.

cost-effective mitigation investment ranges to what would be a fair share per region based on considerations of equity aligned with CBDR-RC. We developed indicators to operationalize these considerations, which we then applied to understand what would be fair contributions. This allowed us to determine what could be the ranges and directions of flows. Fairness and equity are of fundamental importance to the whole climate action agenda. It must not become an excuse for not taking action. OFQ : And your definition of fairness is based on the equity principles enshrined in the Paris Agreement? SP: Yes, there are basically three principles: Firstly, burdens should be borne in proportion to those who have contributed to the problem. So, those who have contributed to the problem should pay for it to be resolved. Secondly, the greater the ability to pay, the greater the share of the cost should be. Finally, those who have benefited should pay in proportion to how much they have benefited from activities that have resulted in negative climate impact. In short, the polluter pays. Each of these three principles can be operationalized using the considerations of responsibility, capability and needs and associated indicators.