Is The International Order Too Weak To Stop Climate Change? Ep188: James Cameron

Transcript

James Cameron

What I want to ask people who are angry. I mean, I saw Greta's piece in The Guardian, and there's a whole bunch of angry, angry, angry stuff. And I do want to know: Okay, so what is your alternative? How do you have a global gathering? How do the small island states get heard? How do you bring together business, finance, real world power, because it's all about power. How do you legitimize the actions that you want taken to deal with a global problem like this? I'm not for giving up on the rule of law. I'm not for giving up on international institutions. I totally get that it's a hard case to make right now in the face of nationalism and populism, and it's a really difficult line to tread.

Michael Liebreich

Hello, I'm Michael Liebreich, and this is Cleaning Up. This weekend saw the end of yet another COP, that's COP29 in Azerbaijan. My guest this week is an expert on COPs. In fact, he's such an expert that he was working on COPs before they were even called that. And he's been to every single one since. Until this year. James Cameron has actually been on this show before, talking about trade, that was episode 23, and he is actually the chair of our new editorial council, keeping us honest here on Cleaning Up. So please welcome James Cameron to Cleaning Up.

So I hope you can live up to that big build up. You've been to — is it true? — every single COP since the very beginning?

I fear I may have missed one with the birth of a child, but I have been there from the very, very beginning, if you like, before the beginning, because I wrote the first law review article on state responsibility for climate change, and I built a coalition with my colleagues that became the Alliance of Small Island States, and we advocated for an international agreement on climate change. And then we got one really negotiated quite fast between the end of 1990 and June 92 in Rio with the Earth Summit. And then, yes, the first COP, I think it was 1995 in Berlin. That was, that was COP one. And I have been to an awful lot of them, but not this one.

I'm actually shocked that you missed one because of just some, you know, the birth of a child. I mean, what is that, compared to saving the planet and so on? But you've also been a negotiator, and you worked for a number of years with the small island states who played quite a sort of dramatic role this year, as we're going to hear.

Always, in fact, they've been the conscience of the process from the very beginning, and their value was not just to be complainers or victims, but to contribute real solutions in the negotiations. And certainly, when we began working with them, my colleagues and I, we were effectively helping them make good arguments in law, not just rhetorical arguments or not just 'look at me, I'm in trouble' type arguments, but actually contribute to the forming of the agreement. Indeed, on day one of the negotiations, we tabled a draft agreement which was rather more sophisticated and involved than any other country, and we did that through the delegation of Vanuatu, which, let's face it, was an unusual contribution at that stage. So I'm quite proud of what the small island states have contributed. But equally, I have had many years of working in other ways in the process, as an observer, but also working with presidencies, several: Peru, Morocco, the UK, of course, and Fiji. I've been a senior advisor to the presidents of these processes, and I know how hard that is.

So we've established your credibility as somebody who's allowed to speak about these processes. Actually, on those small island states, they have appeared in a previous episode. I've just remembered that they were discussed by Catherine McKenna, because in Paris, they and Catherine of Canada made this very dramatic intervention. And the thing about the small island states is they are, without question, existentially challenged. If the sea level rises, they don't exist anymore. And so they have a moral authority beyond all of the toing and froing and much more sort of equivocal outcomes for many of the other countries,

They really do, but also they explain why a process like this exists. What on earth can you do if you're Vanuatu or Tuvalu, what are you but a dot in the ocean? You might be a big ocean state, but you're a dot in the ocean. You're not a contributor to the problem. You can't solve it on your own. Mind you, nobody else can either, but you really can't, obviously, if you're a Pacific Island nation, or whatever. You have to find someone else to solve the problem for you. How do you do that? With what process? With what legitimate process could you possibly control the behavior of another state, other than through negotiation at the global level. If you want to obligate someone to do something, how do you do that legitimately, other than through international law?

In a sense, fast forward through years of these and there's been some high points, there's been some low points of all sorts. And then there was Paris, which I think we would regard as a high point. And I certainly see myself as a kind of Paris fundamentalist. In other words, you know, we have to keep below two degrees as far as possible. We try for one and a half. I personally have accepted that's not going to happen some years ago, but I'm a fundamentalist on Paris. And then we've had a number of these COPs since. But this is the first one, other than through the birth of a child, that you have missed. Why did you miss it? Did you have this presentiment that Trump is going to win, and therefore it was pointless? Why did you not go this time? Or was it because this is the third petrostate in a row and you've just given up on it? Where are you?

It's a good question, because I didn't go partly to follow my own advice to others. So I tell people, don't go to a COP unless you're very clear why you're there and what you're doing when you get there. Don't go unless you're on a government delegation and you've got diplomatic work to do, which is hard. It's a hard graft. Don't go unless you've got something specific to offer or to get by negotiation from somebody else who's also going to be there. And don't go just to be there for a period of time, right? I've got lots of stuff to do in my working life. I don't need to go there in order to carry on working on this subject. On this occasion, I wasn't on a government delegation. I didn't need to go there for a particular transaction. A lot of the companies I work with had decided they were not going to go. Many of them had done the work they wanted to do on this topic in New York during climate week, and were not going to go to Baku. And yes, there was some discomfort about this particular presidency, not for my mind, because it's a petrostate. I'm perhaps in the camp that says, Why shy away from the brute reality of where fossil fuels are and who is producing them? Isn't it better to go into the place that produces fossil fuels and have an honest conversation about the need to phase them out? I think it's better that way around than to look away. And by the way, diplomacy is always about dealing with people who you disagree with, who you might actually be at war with tomorrow, unless you go and have a diplomatic process, right? So I don't think there's any value in shying away from events in those countries that produce fossil fuels. But adding it all together, I decided on this occasion, I had things to do that would not require me to be in Baku.

Okay, now you've followed the blow by blow, and we're going to go through some of the outcomes and so on, but it's very interesting. You say you tell people not to go unless they've got a specific thing. I actually tell people almost the exact opposite. I've never been on a delegation, so I tell people that the reason you go is because everybody else goes. And so it's just a very efficient way of meeting up with people and just networking, catching up and also meeting new people. But you talked about it being a good place for an honest discussion. And I couldn't agree more, you've got to have an honest discussion with people who are currently in the business of burning stuff. And it's the stuff that causes the CO2 emissions and the climate change. But here in this situation, you've got the president of Azerbaijan, Ilham Aliyev, who opens the proceedings by saying that 'oil and gas is a gift from God.' And the CEO of the proceedings has been caught on camera offering to make introductions to Azerbaijani oil and gas companies. So, I mean, is that what an honest conversation looks like in your book?

No, but look. I sort of agree with your first point, too, that there's value in attending a gathering of this size to be with all the other people who are there, right? I'm never impressed by the oh, why are 80,000... actually, there are about 65,000 apparently, in Baku, there were over 100,000 in the Emirates, in Dubai. And I go to Wembley and there are 85,000 there most times. And I go to a lot of sports fixtures with those sorts of numbers. I'm really unimpressed by 'why are all those people going?' It's a big issue that humanity has to face, it's good if human beings do it face to face, much better than online. And yeah, why not go and meet a lot of other people who are working on similar issues? Careers are built, money is moved. I'm all in favor of it. My point is slightly different, that for this particular event, it was even more important to know why you really had to be there. But honesty, yeah. It's quite funny how ridiculous that situation is, but it's also revealing. It tells you something about the real world. You could say, 'well, of course, Azerbaijan is going to have meetings about oil and gas and negotiating gas contracts. That's what they've got to sell.' What would be interesting in the aftermath is whether or not there is any notion that has really stuck in the minds of those who run that country, that they are involved in the greatest natural economic hedge that we've ever really faced, from high to low carbon. I would argue that in the Gulf that did register, that there is an understanding that they are involved in a high to low carbon hedge now. They think that happens over a long period of time, and they're not right about that. And neither of them know when that cliff of declining demand is going to come. But I would be satisfied for that particular country that those phrases, which, let's face it, are going to be remembered by those who deal with them, actually start a process of thinking that they are also involved in that transition. They have got to be, and they're also at risk, like everybody else, from the consequences of climate change.

Okay, so I just happen to have in front of me, just by pure chance, a glass of water, those people who are listening to the podcast. I'm just topping it up to make sure that it is almost exactly, as close as I can, glass half full. Glass half empty. Got it? I'm going to do glass half empty because you've obviously decided you're so committed to this process to do glass half full. I would look at, for instance, that terminology in COP28 that came out of it, 'we're going to transition away from fossil fuels.' Now you're saying it's a good thing, because these petrostates have realized that they are transitioning away, and maybe they'll think about what that means and risk and how to hedge and how to protect themselves. What I look at COP29 in Azerbaijan, is the Saudi delegation behind the scenes doing everything in its power not to have those words repeated. So what they've actually done is looked over the precipice, decided that they don't like it and that they would rather continue with their fossil business model and with the world burning, but that outcome is better. That's what they've decided. That's how they are behaving. They are not behaving, as you suggest, suddenly, having decided that they have to be a driving part of the solution. Have they?

I think there is greater awareness in Saudi Arabia, at the top and in business that this transition is underway, and they can finance it out of the profits from fossil fuels. I would accept that the general view at the top, and after all, that's how delegations get their powers to represent the nation, is that this process takes a long time, and they've still got plenty of demand for their product, and they need to hang on to that. They don't want to give anything up by way of international negotiation. I would also accept that very often there is a difference between a negotiated position and the real position behind it. And that can go in both directions. So if you take another country, a very important one for this particular process — well, all of them — but they stood out at the end of what happened in Baku: India. So India was very, very unhappy at the way the decision was gaveled down. And by the way, it sounds a small point, but it isn't. These negotiations work by consensus, but consensus is not unanimity, and we often only get a deal at all because of that rule. So there can be one or two countries that are still putting their flags up saying 'we don't agree, we don't agree,' and the President of the process can still whack the gavel and say, 'We're done.' And India, on this occasion, was on the wrong side of that, and they were really mightily unhappy about it. But here's the thing, there's a huge difference between how India represents itself in those negotiations and how India represents itself in all other facets of its corporate investment and indeed governmental life, where they're very ambitious, they're very confident, they see themselves as part of the future, as natural rivals to China and the region and in the world, and not a 'poor, me, developing country' that needs to be told what to do by the rest of the world or given money to do it. So very often, you have quite different positions adopted, even at the COP. If you went to a COP and went to the Indian pavilion and had a look at how they present themselves to the world, it's full of confidence, full of can do, full of we've got the money, we've got the technology, we're the best, and then their head of delegation is saying, 'we can't do anything unless we transfer money from the wicked north and west.' I'm afraid that is one of the realities of this process, full of weird paradoxes and contradictions that, if you know, you know. But if you only look at the surface, it looks ridiculous.

Okay, so let's look at what actually came out of Baku. There were a number of things that did emerge, the sort of agreements that were made, some quite early in the process, and then some that were controversial, but gavelled through. And then there were some things that were parked. So let's go through the sort of roll call: agreed early. What was that we had an agreement early on, something called Article Six, which is so boring, I've forgotten what it is.

Does your audience really, really want to know about Article Six?

Article Six is all about carbon trading, and it could be very important. Just tell us what it is. Just give us a short version.

Okay, it's a bit more than about carbon trading. Properly understood, it's about how countries cooperate to create markets driven by incentives to reduce emissions and, by the way, to do other things that draw down carbon from the atmosphere, maybe in natural systems. So it's not just about any particular form of carbon trading. In fact, a lot of fuss has been made over many years about the range of options for countries to regulate or tax or do whatever they want to do within their own political economy, to value carbon one way or another. Okay, so let's just clear that out, to start with.

Careful, I can feel my eyelids going. What's going to change because of Article Six, in terms of the people listening to this? They're investors, they're corporates. What will be different because Article Six has now finally been put to bed.

Yeah, okay. Well, the first thing is the agreement has taken a very long time, and we have agreement on the whole of Article Six. So we have agreement on what countries can do to purchase carbon from other countries — Article Six two, which tells them how you do this, what the rules are, how you account for it, how you avoid double counting to enable countries to use public money, government to government to say, you do this, and we'll pay for it, and we'll have a transfer, right?

Let me try and give an example and ask whether this works. So the UK has said we're going to be net zero by 2050, but maybe we could be not quite net zero, but have, I don't know, Indonesia or Brazil or Angola or somebody else, do something instead? We now have a framework.

It could be simply also to finance something that takes place somewhere else, and then make sure that the two accounts are matched, i.e. reductions have taken place. So, for example, Singapore just did a deal with Zambia — for real — to show how it should be done, could be done. Now, after Article Six has been agreed, more of those will happen. It's not 100% clear where demand will come from that is substantial, because the EU has said they're not going to do that for the time being. Anyway, they might change their mind. The US government is not going to do that. It's possible that you might have some sort of deal with states, sub-federal states. That's possible. But largely it's going to be Japan, the Gulf, Singapore, there will be buyers Switzerland, Norway.

And we used to see Japan do quite a lot of these deals in the early days. And these will be industrialized countries, maybe land-locked countries, countries that find it very difficult to do their own carbon reduction.

That's one version, right?

And we need to keep moving. So what does it mean for a corporate? Does it give a framework now for British Airways to go and do something and for everybody not to just mock them?

Um, yeah, it's a macro framework with rules and principles attached to it. It will clearly influence the voluntary market, which is the one you're thinking about. It doesn't predetermine what any of these voluntary agreements look like, but the probability is it will be a kind of macro framework with which a company can judge, is this the kind of project that is consistent with an internationally agreed set of rules? That's about it. Michael, I don't want to go further than that, but it will bring another level of certainty and conviction, if you like, in the rules that govern transactions that private enterprises will do, not governments, and that's within Article Six. And it will definitely make a difference.

We have a whole bunch of you know, diplomats are excited, because they can go off and negotiate state to state. You have some corporates that have got a bit more certainty, and maybe some investors, maybe even some hedge funds might come into that space. Okay, fine. They're all excited. But the average person, perhaps, who's not involved in those groups, is probably thinking, 'well, 29 times we've flown up to 100,000 people around the world, and that's it?' So then there was this big discussion about the money flows. And there's this wonderful term called the NCQG. James, what's an NCQG, and how much is it going to cost us?

It's another acronym. You don't need to know what all the individual things are, but it's a quantifiable amount. So for years and years and years, by the way, all COPs are finance COPs. This was called the finance COP. All COPs are finance COPS, and they are stuck with a language which is very artificial about what climate finance is, and the origins lie in the notion of responsibility for who caused the problem, right? And then they became out of date when other people caused the problem, going back to your original critique of the process, and we got lumped with numbers that were wholly artificial. The original one was $100 billion, which most people attribute, actually to us, to Gordon Brown, finding a number to focus on, on the idea that we must do something more than talk vaguely about climate finance. And we came up with $100 billion a year.

I thought that was Hilary Clinton in Copenhagen?

It was before that. But, you know, these things have stuck around, and that number was both too little and too much. Ridiculously small in the light of what is required to make this transition, that's why there's a mantra now about trillions, not billions. But from a point of view of extracting money out of a treasury, especially one that is hard pressed, and where we're already experiencing prized corporate assets being acquired by Tata or someone like that from India. Back to your critique, you know that that number was also too big.

Let's be clear, when you say the number and the number and the number, right? This is a transfer of money from the developed world to the developing world. And really, the COP process has, for all its good intentions and for all that it focuses on small island states' existential struggle, fundamentally, it's devolved into becoming a kind of heist, where the global South, the developing world, whatever's the correct term to call it, basically tries to extract money out of the developed world, using guilt as the crowbar, saying, 'you did this.' And by the way, there's a subtext of many of these countries, and you know, there is legitimate outrage in our history as colonial powers, right, which has got however, relatively little to do with climate change, particularly in a world where China is now by far the biggest emitter, and India wants to be the next biggest emitter, and is on track to do so. And you know that. But the whole thing has just become, I don't know, heist may be a little bit too rich a word, but it's a shakedown, isn't it?

No, I don't like either of those words. I don't think they're right, but there's a lot in what you say that is absolutely right. It just uses different language. So the original principle was, and it took a lot — and I did a lot of these negotiations, way, way back. It settled on this phrase of common but differentiated responsibility, right? Very UN jargony, I understand that, but it does actually make sense if you analyze it carefully. The problem was caused by the industrial nations. They didn't willingly cause harm. You know, we shouldn't really be spending much of our time visiting the guilt of our fathers, but there was a responsibility that could be attributed to those who burn greenhouse gasses for a very long period of time. And the burden has fallen unfairly and unequally on the poorest and those who least contributed. I had, if you like, the luxury of representing a group of countries deliberately put together for the purpose that really had no contribution to the problem and did face an existential threat. We were very much in favor of that kind of separation between past and present. But the whole point of having an evolving negotiating process is it has to adapt and change for how the real world is, and it has done that, but it has never lost the idea that there is still disproportionate responsibility for the problem faced today, and the scientific justification for that Michael is the long lived gasses in the atmosphere, which have not been dealt with.

Yes and no, James, yes and no, because the new, new collective quantified goal, which is what NCQG stands for...

It doesn't matter.

That is where the developing world or the emerging market, whatever the global south were after this figure of $1.3 trillion. And that is not about adapting to the historic emissions. That is about shaking us down in the developed world for all the money that it would require to build out and complete a clean energy system for the future to compete with us. So I don't accept that goal, the $1.3 trillion that these countries were after... they got $300 billion, which is a huge amount, I don't see it as in any way proportional to the historic emissions. We may have also caused emissions, but we also caused very cheap solar power, and we caused very cheap batteries, and we caused all sorts of solutions as well, which they're very happily using and still asking us for these vast amounts of money.

Well, ironically, a lot of those very cheap things you talked about were actually made in China.

China industrialized them. But where did all those technologies come from? You know, all of those technologies originated in the West. If we were unable to manufacture them, that is a very interesting and good episode, but it's not this one.

Well, you're also not quite right. A lot of that money that you're talking about the $1.3 trillion, or even the $300 billion, is also for adaptation. It is for responding to the physical consequences of climate change. In fact, one of the unresolved issues is how much. The phrase, which is quite interesting about we're trying to make this money fall into a different type of distribution. So 'all actors' is the phrase, 'all actors,' not the original design back in 1992 where the world was split between the Annex One countries like us, and China, who did not have obligations then. That system was changed, and it happened through failure. It happened through the Copenhagen failure. It happened through various ways after that in Cancun, for example, remaking the structure.

Kyoto Protocol failure.

Well, the Kyoto Protocol failure. Interesting enough. I am a bit precious about the Kyoto Protocol. I do think it was a better approach, but it failed because the US didn't ratify.

But hang on, James. The US didn't ratify it because it didn't, in any way, bind China to do anything. And so I would argue that it was completely appropriate for it to fall away because it didn't do the job. It was never going to do the job.

Okay. So the counter argument, which I feel quite strongly. The counter argument is that the structure of having quantified emission reductions, which did allow trading and did allow investment in emerging markets, provided a metric for including those countries who increased their emissions over time, being brought into that scheme. Of course, we don't know. We never got there, right, we never got there. The system was not ratified. The allocation of quotas did not extend. And in the end, people gave up on that obligation, that structure of obligation, and turned it upside down, and said, 'right, we'll have a universal agreement that everybody is a part of, but everybody has a chance to bring to those negotiations what they're going to do in their own nation state, in their own way, in their own political economy.' And then we have a whole series of things that are known but somehow or other discounted. Like China has done far more than they're obliged to do already. The US did not ratify Kyoto, but effectively implemented the obligations they would have got had they ratified Kyoto. And they just moved there by different means. And all the complaints about Kyoto ruining the US economy, they're all nonsense. They're all upside down. All the things that were done were done for perfectly sound economic and political reasons, mostly in the states. And the US economy did not collapse. Just like we managed to grow our economy and meet our obligations without our economy in any way being affected by our obligations to reduce. And we innovated along the way, just like China is doing.

You're making a strong argument at the moment for the whole thing being irrelevant, because the people who weren't bound did it anyway, and the people who were etc, but, but let me come back to...

Absolutely not, Michael. What I'm saying is that the reasons not to were false, and that we could have done more had we gone through the tougher obligation that Kyoto provided, that's my view.

I'm teasing you slightly, as you can tell.

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Let's just come back to the outcomes, because the $300 billion. The south wanted $1.3 trillion and was outraged that the number was only $300 billion, which sounds like a big number to me. But within that you also touched on that some of that is for adaptation, but there's also this thing called loss and damage. Now loss and damage is different from adaptation. What did we get out of Baku, or what did the world get out of Baku on loss and damage?

Well, not much more than was already there, because we have a loss of damage fund. And this is going to sound hard. There's another conversation which goes on all the way through these negotiations that negotiators understand can never be fully resolved, because nobody who is in any way part of the cause is going to accept liability for the cost. Not ever. I used to argue for it on behalf of the small island states. Never going to get it, all right. So we have a parallel conversation, which is now called loss and damage, and it's compensation by other means, it's never going to arrive at a large enough number. It's never going to correspond in any accurate way to the amount of emissions that have been put up in the atmosphere over 150 years or so. That calculus is ridiculous. It's not going to happen. So yes, there is a certain conscience in this, and there is a certain feeling of debt owed to these countries, but it's approximate. It's now moving more and more towards insurance, which I think is quite sensible, because we have a large insurance pool in the capital markets, very large indeed, and it could take away some of the burden. And if you really had to join some dots of interest, we have an interest in people staying in the countries that they belong to and not moving. We have an interest in people participating in the real economy and not being a burden on somebody else's economy. To put it more idealistically, we're all connected human beings, and it matters. If countries are lost, their cultures are lost, those things matter, and so loss and damage is a space we have for talking about compensation before we ever get to liability.

Just intellectually, I've always thought, okay, let's divide things into three categories. You've got damage, which is clearly proportional in some way to historic emissions. By the way, historic emissions, the ones that everybody worried about when you started this, are now, frankly, becoming pretty small compared to the ones that have happened since, and that are happening every year. The global economy has grown, largely coal powered largely by China.

China is the example. China's historic emissions are now above the UK. They weren't when I started.

So it strikes me intellectually, there's loss and damage which ought to be paid for, somehow, proportional to all historic emi,s up to the kind of current day, not just to the old in a sense, Colonial Era, industrial revolution, ones. Then you've got adaptation, where small island states have got every claim on us to protect them against future damage, and if it can be done through insurance, fine, whatever. But that is so different from the third category, which is, 'I'd like an energy system. I'd like some wind farms. I'd like some solar farms. I'd like a grid. I'd like electric cars. I'd like electric chargers.' We'd all like that stuff.

I agree with you Michael, no defense. I agree with you. If you go back to my beginnings with the small island states, I'm quite confident the first two points were precisely how we argued. By the way, if you go all the way back, I could tell you exactly in November 1991 the small island states tabled a fully worked out insurance scheme that would have done exactly what you suggest. It would have responded to the real world economic output over that period of time, and it would have taken payments into a pooled fund, and payments out would come on certain metrics being met, whether it's sea level rise or hurricane activity or various things that were physical consequences of climate change. That was a really nicely designed scheme all the way back in 1991 and it failed, absolutely, to get into the text.

I'm laughing because that's what you were doing in November 1991. Let me just tell you what I was doing. I wanted to qualify for the Olympics, right? Which was in 1992. No, I had already qualified, but I was busy trying to score some free kit from whoever would give me skis and ski boots. And I was down the gym every day, and that was what I was worrying about in November 1991. And, of course, February 1992 then was Albertville, where I competed. But anyway, you're far more qualified than me to talk about these things. I want to come back to where we are, and Baku came up with this $300 billion figure.

As a floor

As a floor, and with lots of toing and froing about, what's included in it? Is it private money? Is it public money, right? And so the Global South wants it all to be essentially state to state. They want it to be just a check. Your government writes my government a check, and we do with it what we want. I'm paraphrasing.

Not everybody, but that has been part of the problem over many years, certainly when

Certainly when it was the Copenhagen commitment, the $100 billion that was ultimately enshrined at Copenhagen. There were these discussions, and there were these sort of code words, like 'predictable,' which meant the government writes a check, rather than some investors maybe coming up with the money, and maybe not. But here's my thing with this. I look at it and I say $300 billion, and it's $300 billion per year. And, you know, here you have President Trump's clearly going to do nothing to actuate it, that's not going to happen. So we're really talking about a small number of countries in Europe, in the front line. And I'm just wondering, Where is this supposed to come from? Europe has no clue how it's going to become competitive. Frankly, Europe has no clue how it's going to continue and deliver its own decarbonization pledges, which are going to cost hundreds of billions, and they're all fantasizing about hydrogen and all sorts of nonsense, and they don't really know how they're going to do it. And yet, the same leaders go off to Baku and sign away a big chunk of $300 billion per year. I mean, how dare they? How dare they?

First response is that, you know, as I do, that $300 billion is not a lot of money when it comes to money invested right? And it's nowhere near enough to deal with the climate change problem in all of its forms, whether it's reducing emissions or adapting to climate change or building the infrastructure of the future so that it's resilient. $300 billion a year is a small number, not a big number, and the $1.3 trillion is closer to what's needed. But even that is probably less than required. And compared to other types of investment, it's not a big number. It really is not a big number. You know that, right? It's not a big number. Where it is problematic is if it's just a transfer from Treasury to Treasury in circumstances where here in Europe, as you rightly say, we have low growth, we have real anxiety. And as you know, because we've talked about it, I am particularly concerned that we are not investing enough in our defense, and we are very much at risk because we have a war right on the edge, and when we have Poland now putting 5% of its GDP into defense, and the Baltic states and Nordic states are ramping up. Believe me, every European state, including ours, here in the UK, we are going to have to put more money into defense in the short and probably medium term. So that's going to be a call on our money and a high priority, I would hope, for every government in Europe. Okay, that's not making things easy for a transfer.

Let me come in there, because I think there's a key point, the differentiation between the transfer just spending, like the aid budget, and investments. And $300 billion investment within the capital markets that are umpteen trillion and we have individual asset managers that look after $10 trillion and more of assets, but you've got two issues there. Number one, governments don't control investments, so governments signing up to say we will invest, but they don't have the money to invest. So that's one problem. But the other problem then is, how does that play in the Global South, when they're saying, Oh, we've got all this problem. We didn't cause this. This is what is being imposed on us. And even what you do provide, we're supposed to pay interest on and then reap and then return the capital in due course.

Which is why there's the endless debates about what type of money is involved in these numbers, and they're not resolved. They're left open deliberately, right? So I would say that if you took a poll of all the governments that negotiated that text, you would not get a consistent percentage of how much of that is private right. And I would say most of the people who are going to be called upon to pay are thinking, maybe 50% will be private. And then the numbers look different. So if it's a question of facilitating flow, if it's a matter of using public money to facilitate flow, if it's a matter of using money that's already in the multilateral development banks, which it is, by the way, then those numbers start to reduce. The EIB is a triple-A rated bank and has a very strong commitment to making investments in infrastructure that deals with the climate change issue. There's a lot of money in the EIB already. It doesn't need to be put there. It's already there. So if you start working through where is the money coming from? What do you call the money? Believe me, if there's more flow into emerging economies to assist the transition to a cleaner economy, or more difficult to pay for adaptation, harder to value in investment returns, then whether it's public or private will become less of an issue. The reality is, it's all our money. It's all our money, whether it's in taxes or savings or pension funds, is all our money, and how it's used makes a big difference to us, wherever we are in the world.

Those institutions that you mentioned — EIB, World Bank, EBRD, Asia Development Bank, and so on. I mean, that's great, but they don't have $300 billion per year. They certainly don't have $1.3 trillion per year. I mean, they've got a few tens of billions per year of financing. And I'm just reminded of the episode that I did with Carine Smith Ihenacho of the Norwegian Oil Fund. And that's surely the sort of private capital that could kind of slipstream behind those multilaterals. And yet essentially what we discovered during that episode — I found it a very fascinating process, perhaps a little painful for Carine — because what became very clear was that they were not going to slipstream back behind any multilaterals and put a large asset allocation into the global south. That was just not what they were going to do. So I guess where I'm going is, I think this sets us up for more years of the same, frankly nonsense, that we had about $100 billion. Complaint after complaint because we only, and I'm doing air quotes for those listening on the podcast, we only got to $84 billion of money flowing by 2020 despite COVID and so on. I think that was a heroic amount of money that was produced. And yet all that happened was we got beaten up. All that happens, we got beaten up by everybody, every activist, every global south country. It was painful.

Now here's where I'm with you 100% and have been for a long time. It's exasperating, by the way. Norges is just one example of many big funds, really big funds who are absolutely not grasping the reality of climate change and the effect upon their own beneficiaries. So just to take that and many similar examples, the vast majority of our money is in liquid markets. There is a kind of obsession with liquidity. They're in tradable instruments, mostly stocks and shares and other Treasury type instruments. A lot of them, the vast majority, which now is driven by algorithms. They're electronically traded at tremendous speed by algorithms that have no connection with this conversation at all, none. They're parallel universes. If you look at the asset allocation strategies of almost all of them, they have tiny fractional amounts allocated to real assets, the ones we need. They have almost nothing allocated to innovation, which we need. And they don't put money in emerging markets where we have to make it go right? It's outrageous, and all the excuses are weak. Oh, we can't do this because we have no expertise. They pay out 2% to a massive hedge fund in New York, and they can't they can't find people to advise them on risk going into emerging markets. Are you kidding me? There are no interesting ideas about how to pull structures to manage that risk. It's appalling, and it's been going on for decades. You know, I started Climate Change Capital in 2002. We've been doing this for so long, so that's much more of a problem, frankly, than negotiating around whether it's $300 billion or $1.3 trillion, right?

I agree completely, and that's a fantastic segue into, I think, what we need to cover in the final section, which is that this process just doesn't seem to be focused on the important stuff. So I agree entirely that, you know, just to complete the conversation with the Norwegian Oil Fund, exactly as you said, the things we need to do for climate change is essentially innovation, infrastructure and the global south. That's where the money needs to go. The mandate from the finance ministry of Norway is essentially not to do those things. Now, a lot of people would say that they need to do them to protect the value of the other things, of the rest of their investments. I disagree with that, because it's not their role to. They are only one and a half percent. But what struck me is the opportunities that they're missing. Sure, the argument for the $300 billion is, well, if you do it, the chances are you're going to make good returns. You're going to make good returns, because that's where the opportunities are. But if I can come back to the point about what is not happening in the negotiation, right, right? So we're having this tug of war, which is essentially, I've called it a heist and a shakedown, and now I've reversed course a little bit and said, 'well, actually, it's an opportunity as well.' You should allow yourself to be at least somewhat shaken down. But the ritual discussion which dominates the COPs, doesn't talk about how the developed world, which is still the bulk of the emissions and the bulk of the technologies that are going to be developed. It doesn't address in any way how Europe, the UK, the US, Japan, South Korea, is supposed to decarbonize. It is amazing we have a climate process that absorbs vast resources. And actually, you never talk about how the developed world is supposed to decarbonize?

No, that's nonsense. That happens. These events are full of those conversations, full of them. And also you've got to bear in mind, there are loads of agreements to happen in the process and around the process. You know, smaller groups of countries that get together to do one thing or another. I'll just give you a couple of examples. So of the countries that put forward national targets, 11 were higher than last year, right? That includes the UK, Brazil, UAE, Canada, EU.

James, can I interrupt? How many finance ministers of major economies were there, how many finance ministers were there? They all sent their environment ministers, and they all do this and that and their national determined contributions...

I know where you're going with this, but it's not useful, because they are organized through the course of the year. There are meetings with finance ministers on climate, right. There are also heads of state that go to this negotiation. Perhaps Baku is not a good example, because they didn't get full attendance of heads of state. But when heads of state go, yes, there's a ritual associated with it, and they make a speech, it's all quite boring, speech after speech after speech. It's really boring if you're actually in the room. But the point of that is, they represent the whole of the government, including the finance ministry. So I think your point is overdone. For years now we've been trying to get a better alignment with treasuries and a better conversation with finance ministers. And that is taking place. It takes place in other fora, not always at the COPs, and that's fine by me. If the finance minister meeting is somewhere else, is a G7 meeting or G20 meeting where they meet, that's fine by me too. It's all part of the process, and it's all understood by anyone who runs a good presidential process. This perhaps was not an example of best practice, but let's not pretend that we're having a conversation only about a transfer from north to south. That's not what's going on. And actually, at the event, there are loads of opportunities for smaller groups to form that are exclusively about what happens in their territories.

And I come back to why have I gone in the past, I didn't go to this one, but why have I gone? And I say that's just to meet all these people. Yeah, it's about joining in. It's really about those side meetings around those issues. But you know, if you look at what is another of the big determinants of whether we are on track or not on track, to do with climate change would be trade. I mean, what you've got is this incredible supply chain, developed by China for whatever reasons and however it happened, that can produce two terawatts of solar per year. And if we export that everywhere and install it, 10% of the world's electricity can go clean every single year. And we're going to have a trade war. And that wasn't even discussed at the COP. What on earth, how are we supposed to be progressing on climate change when we don't talk about the big issues?

So Michael, it's true that this has been really hard to get the trade regime and the climate regime to talk in the same language, in the same place, in a coherent way, right? And, you know, I've tried over a long period of time, and it's been various initiatives. My old mate, Esty at Yale, has tried. And we had this thing called the Villars agreement, which was a kind of back door agreement between the two regimes. And Ngozi, the current leader of the WTO, is very much switched on. We've tried. We should get her on your show, you know. She's very switched on to the issue. But here's the problem right now, the WTO is relatively weak. There is a backlash against multilateralism of all kinds. It's extremely difficult to get a serious trade conversation going inside the climate regime and vice versa, and it's very frustrating because, as you correctly say, we are going to have a nightmare in the next few years taking advantage of the innovation that's taking place, particularly in China, to move the solutions around the rest of the world, relatively free of tariffs. We're now going to have conversations about tariff wars. We're going to have problems associated with importing the solutions you and I worked on some time ago, on trying to get a free trade agreement for renewables and the technologies associated with renewables. We should try again, maybe with a small group. I was doing an event yesterday at Australia House with India, Australia, Singapore, looking at an Indo-Pacific strategy. That would be a region where you could try, but you'd need to scale up manufacturing in India to be a supply chain alternative to China, and you'd need minerals to come from Australia. But you could see that happening. I'm happy to put time into something like that. But each and every trading nation that's either got capital or resources or a market has got to start figuring out how to use a liberalized trade system to move the solutions around the world.

And because I sit here and I'm listening, and in a way, addressing climate change is incredibly simple, right? We've been cleaning up the grids. We need to do more of that, more renewables. And, frankly, another topic which is not really discussed with the climate negotiations is nuclear, right? So we clean up electricity, and then we electrify transport, we electrify heating, we electrify industry, and we do some other stuff around the fringes that won't do everything. There's still aviation and whatever. These are relatively minor problems, and we do a lot of trade, because the way you do that cheaply and affordably is through trade. It's not kumbaya and everybody loving everybody. There's a system for getting the costs down between countries that don't see eye to eye on everything, and it's called trade, and it's so simple and straightforward, and yet they go there and they try and shake down the supposedly rich. And by the way, the big worry is that these supposedly rich countries contain large numbers of people who are not rich and who are financially stressed, and they are turning to populists. I've done a European tour. I've been in Brussels, I've been in Skopje, I've been in Amsterdam. I'm now in Prague as we record this, and it's like the EU panjandrums don't realize that signing away these billions has political, domestic consequences. I'm very scared about this.

I agree with the concern. In fact, at an event yesterday, someone who probably shouldn't be named, but a very significant figure, said that we've entered an era where no one cares about the rule of law, right? Scary place for me. By the way, you can't have a trading regime that works without the rule of law, and things just fall apart if you give up on those things. But I understand where he's coming from. What he was saying is we have got a populist backlash. In many countries, people have lost the ability to care or have concern for organizations that feel remote to them. They're turning inward. They're angry and disappointed. They feel like the next generation is not going to prosper, and they want to take it out on somebody that's a really, really difficult environment to do anything that looks like international cooperation.

In 2011, after the failure of Copenhagen, and then there was, I think there was Cancun and a few other things and Doha and on. And then there was a COP which I didn't go to, in Durban. And I wrote a thing called Ya Basta. Ya Basta, which is Italian for 'Enough.' And I wrote what is needed in Durban is a modern day Oliver Cromwell who will stand up and say to the assembled negotiators and politicians, 'You have sat too long for any good you have been doing lately. Depart, I say, and let us have done with you in the name of the planet. Go now.' That was me in 2011. Of course, I was completely wrong, because we got the Paris Agreement a mere four years later. Christiana Figueres, the former head of the UNFCCC, wrote a letter before or during Baku saying something somewhat similar, maybe not Ya Basta, but saying we need to rethink this process. We cannot have petrostates. We cannot have these numbers thrown around with no definitions for finance. And we also need, essentially, to put the developing countries, the Global South, in the driving seat, which is something that I think is extremely troubling. But where are you on what has to happen next? If we're going to go from Baku, which I'm sorry I don't see as a huge success, to within four years, maybe after a President Trump, who knows? But if we're going to go to another one of the highlights, you know, COPs have been good, COPs have been bad. If we're going to get to a highlight in four or five years, what has to happen with this process? Because right now, I think it is pretty clearly off track.

Yeah, well, it's easy for me to agree on a reform agenda. It's easy for me to agree that there's a whole long list of things that are wrong. By the way, it didn't go so well after Cromwell. And in truth, what I want to ask the people who are angry? I mean, I saw Greta's piece in The Guardian, and there's a whole bunch of angry, angry, angry stuff, and I do want to know. Okay, so what is your alternative? How do you have a global gathering? How do the smaller states get heard? How do you bring together business, finance, real world power, because it's all about power. How do you legitimize the actions that you want taken to deal with a global problem like this? I'm not for giving up on the rule of law. I'm not for giving up on international institutions. I totally get that. It's a hard case to make right now in the face of nationalism and populism, and it's a really difficult line to tread, because I don't want to concede that territory, even though I can see the risk of the backlash. But reform is necessary. I would suggest a couple of things. I also wrote a piece some time ago, actually, with our mutual friends, Morgan Brazilian and Brindusa Burrows. I wrote a piece with them a long time ago about how we needed to break parts off that could be negotiated by smaller groups of countries and made implementable in law. Only choose those things that you could work on, that you could deliver by legally binding agreement that would make a difference to a board making investment decisions. And you could do that within some sectors. I think you could probably do it with a smaller group of countries on trade, picking a cluster of technologies where you could match IP development with capital, manufacturing capability with market size. I'm absolutely in favor of that. I'm in favor of finding things that can be negotiated with smaller groups with more specific objectives, that can be made binding in law and affect capital flow. I'm very much in favor of that, and I would love to work with people to find what the short list is that you could do something with. I still think you need a global process. I don't think that the UN General Assembly is good enough. And I do think it makes a difference to have the trade fair as well.I'm also not in favor of let's just have it for the negotiators. Not interested in that. I want the global gathering. I like lots of people turning up. I like a presidency to care very much how to communicate this big show at the global level with their domestic constituency. I would argue that Mexico did that very well with Cancun. Morocco did that very well. Made sure that it was a real benefit to Morocco, largest solar installation in history at that point in Morocco, and a big campaign to communicate the importance of climate change to the citizens of Morocco. That's a good model.

Final question: COP30 Belem, in Brazil, will you be going? Will you be giving it a miss?

I will definitely, definitely go to Brazil. And you never know, it's possible that the next one after that will be Australia, and given that I have an Australian passport, I would be ashamed to miss that one. So not definite, but I will commit to go to Brazil.

James, it's been a huge pleasure, and just for those who are watching the podcast, I'm holding up my glass of water, which is now not half full anymore, but I definitely have a little tiny bit of liquid in it. So we're not completely out of hope yet. And who knows. If I mix my metaphors, even if the cup was now completely empty, it is always darkest before the dawn. And we have seen these turnarounds in these international from Copenhagen to Paris and then on to Glasgow. You know, huge high points. So who knows, maybe in five years, we'll be sitting here going, do you remember how depressed we were, and we will have some much better outcome and better news to discuss. Thank you so much for your time.

Very good Michael, thank you.

Thanks very much. So that was James Cameron, barrister, independent advisor, social entrepreneur, and self described in Episode 23 of Cleaning Up as a 'radical in a suit.' An expert on all things COP, having been there all the way from the beginning, and of course, also the chair of our Editorial Council here at Cleaning Up. As always, we'll put links in the show notes to other episodes mentioned during our conversation. So that's the link to Episode 23 when James first came on the show. But also links to episodes with key players in the run up to the Paris Agreement at COP21. So that would be people like Christiana Figueres, Catherine McKenna, there's Amber Rudd, Laurence Tubiana, and a number of others. And finally, we'll put a link to the piece that I wrote for BloombergNEF about the Durban cop, which I called Ya Basta. And with that, let me thank the production team behind the show and urge you to join us at this time next week for another episode of Cleaning Up.

Is The International Order Too Weak To Stop Climate Change? Ep188: James Cameron

James Cameron

Michael Liebreich

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