By Mathew Carr

Two speakers stood out for me at the New York Times “Climate Forward” conference held earlier this week.

The first one was

Philip Edward Davis

Prime Minister and (crucially) Minister of Finance, The Bahamas

With hurricane Fiona bearing down on his country at the time of his speech (it will likely turn away as of today), Davis calmly spoke about how repeated, destructive hurricanes have effectively contributed to 40% of his country’s debt level.

“I had to evacuate 30 persons” from one of the islands of the Bahamas on Tuesday, he said that day on stage in New York. “And so, when we talk about climate change, it’s no longer a threat, as people still seem to think, it is a crisis [that] has to be addressed and addressed now and tomorrow.”

That climate damage is costly to the Bahamas is perhaps not so surprising.

What’s surprising is Davis’s solution — or rather SOME of his solutions in the array of urgent solutions that need to be deployed.

Proper payment for ‘environmental services‘

“I think governments can’t do it alone. We need a private sector.

“In my country, I’ve started a program. I’ve set up legislation to engage Article Six of the Paris [climate] accord to have the private sector engage in the voluntary carbon market [in the Bahamas].

“We are now in the process of having our carbon asset verified. And so hopefully by … next year, we’ll be … on the market selling our carbon credits.

Credible carbon markets mean people can make money saving the climate. Such market stuctures will boost the chance the climate will be saved.

“Bahamas [is a country that does not] contribute to the [world’s carbon] footprint. But we bear the burden and the risk.”

[The country] has been scientifically verified as one of the most significant carbon sinks in the world, he said. [Im checking this claim]

[CarrZee: this means the country absorbs more greenhouse gas out of the atmosphere than it vents into the atmosphere. I have some doubts about this claim because of the jets flying to and from the country]

“And so should we not be paid, even if you want to call us the garbage collectors because we [we are collecting the garbage in the atmosphere that has been put there by rich nations — CarrZee: OK, I’m reading his mind a bit here with my square backets].

Paying the Bahamas to keep processing rich-country emissions probably seems like a funky idea to a lot of people. But the science, and even the finance and the policy, bear up. The Paris climate deal was designed that way, as Davis said.

Yes, the Bahamas has been providing this service for free for a long time, while rich countries like the United States continue to let oil companies damage the climate without paying a brass razoo. And even worse, most countries continue to subsidize the fossil fuels – that is, they incentivize the climate crisis.

Not everyone is on board with Davis’s plan, as this Climate Home story states [I’m not endorsing the story, but I want to provide various views].

One possible, even probable, scenario would be for the Bahamas to at least get some debt relief for its environmental services. That is, it’s providing a service when it takes more heat-trapping gas out of the atmosphere than it puts into it (in some regions of the country, at least).

Enter …

Kristalina Georgieva

Managing Director, International Monetary Fund

“The answer is, of course, we need countries that have caused the problem to meet their obligations,” Georgieva, speaking on the same panel as Davis, told the audience.

“What do we do in a world where a crisis upon a crisis, upon a crisis has lifted debt burdens on developing countries, and at the same time, they’re being hit by climate shocks?

“I do believe that it is very important to think about finding a solution that marries these two problems, debt on one side [and] on the other side, climate.”

Debt for Climate

$ – EXCLUSIVE: Debt Relief’s Club de Paris Hinders Paris Climate Deal? Forests, Elephants, Blue Whales At Stake (2)

Georgieva: “We have been advocating for creating an objective platform in which … public institutions, philanthropy and private sector can step in.

“And let’s let’s take your example, [Bahamas].

“You suck in carbon. Why not provide to your creditors, not money, but carbon credits that have a monetary equivalent.

“Is that possible? Yes, it is possible. It is hard, but it is possible and the bank [CarrZee: the World Bank Group, I assume] and the fund — we have been thinking how to create key-performance indicators that would allow a country to swap its debt [for] investments in climate resilience, or in a mitigation program.”

Note this story from CNN, which gives the IMF boss’s comments to the New York Times event added urgency:

Another aspect of Georgieva’s speech might surprise. It’s related to the Bahamas’ creation of carbon credits, because higher carbon prices generally around the world will change market incentives to favor climate solutions and “punish” (financially speaking) the burning of fossil fuels.

CarrZee: High carbon prices will incentivise companies and countries to find emission reductions at lower price/cost levels.

People will be able to make money from saving the climate.

Here is a plan for installing carbon prices in a politically credible way:

The thing that ‘cannot be missed‘

Georgieva: “I want to say something that we may miss in this conversation that cannot be missed.

“We also have to create real incentive for businesses and households to reduce emissions by introducing [a carbon price where it doesn’t exist and where it does, increasing that price] — not today because energy prices are high. To go and say, ‘Oh, now you’re going to have a high carbon price’ [as well]– It’s not going to work [right now].

She continued: “But we know that energy prices are going to go down eventually. And when they go down carbon price must step in and go up.

“Here is the data — positive, good news. The carbon price globally doubled in the last year. So it was $3 a ton, now it is $6 a ton.

“Bad news? Where do we have to be to actually reach the Paris Agreement [targets]? We have to be at $75 a ton by 2030.”

(Adds Malpass in premium section.)

The panel was hosted by:

David Gelles

Climate Reporter, The New York Times

(The New York Times event was sponsored by Morgan Stanley. I could not see where the NYT wrote up the panel, if it did. Please send it to mathew@carrzee.net if you saw it. Thanks!)

note

The backwardation in the Dutch natgas market is not steep, indicating the market does not expect the Russia-Ukraine war will end anytime soon: