Amid geopolitical conflicts in Ukraine and the Middle East, and with the entire world focused on the transition to Donald Trump’s coming administration, most of us barely noticed when rich nations signed up to transfer $300 billion a year in “climate aid” to poor countries last month.
The promise was the big outcome of this year’s annual climate summit. Politicians have made extravagant promises at these talkfests for nearly three decades, and the world has very little to show for it: There have been endless promises to cut carbon emissions and solemn commitments to phase down coal. Carbon emissions have increased yearly, with 2024 reaching a new high. Global coal consumption has gone up.
For decades, rich nations have tried to bribe the poor to agree to emission cuts, mainly by rebranding existing development aid. The election of Trump means taxpayers in the United States won’t be on the hook for these payments. And that, in turn, means that these over-the-top pay-offs are unlikely.
We should hope that this latest grand promise marks the high-tide mark for empty climate pageantry and that governments turn away from sanctimonious summits to embrace a more serious, grounded response to climate change.
The “net zero” green agenda, based on massive subsidies and expensive legislation, will likely cost $27 trillion annually across the century, making it utterly unattractive to most nations. For most of the world, the eradication of poverty is a priority. That requires economic growth, which requires fossil fuels.
Wealthy countries have mostly focused on cutting their emissions. While they can possibly afford the cutbacks and pain of higher energy costs, it’s far from clear that it’s worth it.
Take virtue-signaling Germany. It has hiked energy prices, sacrificed industry and given up on economic growth for green energy. And for what? Despite economic hardships like its first two-year recession, according to current trends, it will take Germany half a millennium to stop using fossil fuels.
Green campaigners insist that the global transition away from fossil fuels is underway and unstoppable. Yet, over the past decade and even last year, fossil fuel energy has increased twice as much as green energy. Even the Energy Information Administration expects fossil fuels to increase to 2050.
Humans aren’t burning fossil fuels to annoy climate campaigners. Although campaigners say solar and wind are cheaper than fossil fuels, this is only true when the sun is shining and the wind is blowing. In reality, these renewables need massive subsidies and redistributive taxes, which have driven up electricity costs in the European Union by 50 percent since 2000, now costing each person an additional $300 annually.
Recent years have seen politicians promising feverishly to cut more carbon, but there are signs the bubble is bursting. Despite an exuberant stock market in recent years, clean energy shares have lost half their value. After the U.S. election, they immediately tumbled further based on the expectation that subsidy spigots would be turned off.
While it’s clear the Trump administration will change course, it’s also clear that without huge wealth transfers, China, India and many other growing, developing countries will quietly disavow carbon-cutting policies in practice. This leaves a rag-tag group, mainly from the EU, which can scarcely afford their policies but has no ability to pay off everyone else. The result is that the $300 billion promise this year will likely to be nothing but hot air.
The truth is that the money could be far better spent. The rich world faces many challenges: rapid aging, an urgent need for pension reform, growing healthcare costs, flatlining education results and military threats. For the world’s poorer half, problems of poverty, hunger, easily curable infectious diseases and corruption need more attention. These challenges have incredibly cheap and effective solutions. Instead of the immense, and mostly poorly spent, climate bribes, this money could boost development across the global south.
Fortunately, a much more effective and cheaper way to tackle climate change exists. Climate economists have long shown that investment in green energy R&D is the most efficient approach. For just a tiny fraction of current, inefficient green spending, we could quintuple global green innovation to drive down the price of new technologies like better batteries and fourth-generation nuclear.
Innovating the price of green energy below fossil fuels is the only way to get everyone to switch. This approach can help convince policymakers who are skeptical about climate change because they see the vast potential in cheaper energy.
The promise of $300 billion in annual climate aid is just another example of hubris and folly from politicians who need to remember all the other challenges facing the planet — and embrace far more sensible responses to climate change.
