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Sustainability

28 November 2024

6 min read

Does COP make any difference?

When climate deal makers and justice seekers meet.

Julia Kendal

Juila is a writer and social justice advocate.

A speaker holds two fingers up while sitting in front of a backdrop reading 'United Nations Climate Change.

Brazilian politician Geraldo Alckmin addresses COP29.

Vice-Presidência da República, CC BY 2.0, via Wikimedia Commons.

This year’s UN climate talks have come to an end with a headline-grabbing figure, reports of deep divisions and cries of failure. How do we understand the legacy of these negotiations for us now and for the generations to come?

COPs bring together negotiators from almost 200 nations, along with tens of thousands of people from across business, civil society and local communities. They gather to make decisions about this crisis that touches every community and part of our lives and our world, though not equally (which is part of the issue). The annual negotiations are the culmination of months of action and diplomacy. The negotiators pore over draft texts to understand the implications of a new set of brackets, they search for sources of free coffee to power them through the increasingly sleepless fortnight, and scrabble at the end to land on a consensus.

At COP29 this year, the key things at stake were a new finance deal that was three years in the making and a wave of 2035 national climate targets. Lurking amongst discussions were the implications of the US election results. The pressure was on to land strong decisions before Donald Trump – who withdrew the USA from the landmark Paris Agreement on climate last time he was in office and has stated his intention to do so again – returns to the White House.

What did we get at the end of all of this?

Finance in the spotlight

The new finance goal of at least $300 billion per year by 2035 for lower-income countries seems like a big number, but is around a quarter of what is needed, $1.3 trillion. For what was dubbed 'the finance COP', wealthier nations came with a distinct lack of actual money, despite their obligations towards those countries least responsible and hardest hit by climate change. The $300 billion could be spun as a tripling of the previous commitment of $100 billion a year – but taking into account inflation, it’s nowhere near that in real terms. And it’s not just about the quantity; much of that money is likely to be loans, driving already strapped countries even further into debt.

When lower-income countries argued for that $1.3 trillion, this wasn’t them trading Pokemon cards in the playground. It was about the very existence of people and whole communities. Climate Action Network, a global network of over 1,900 civil society organisations, labelled the outcome a betrayal, while India's delegate Chandni Raina called the final text “little more than an optical illusion”.

To build meaningfully from this, the last-minute addition about using the next 12 months to develop a roadmap towards that $1.3 trillion needs to be a priority. This finance could come from sources such as taxes on shipping, aviation and the wealthiest in society. This money would be an investment in the world we need – more secure and stable in the face of growing climate chaos and more frequent flooding and storms.

Emissions reductions left in the dark

The other key test of this COP was meant to be the countries’ national climate commitments which are due to be updated and strengthened by February next year at the latest. Despite this, the UK was one of just a few countries to come with a new target. In Baku, nations had the opportunity to collectively agree how they will implement the commitments from last year to transition away from fossil fuels – but kicked those decisions to next year. This is in the context of plateauing action to curb warming; since 2021 we have been on a path toward 2.7°C by the end of this century. (This analysis suggests the recent election of Donald Trump could add 0.04 °C of warming due to rolling back US climate policies; not good, but not the derailing some feared. The potential impact on collective action is as yet unquantified.)

A mirror to the world

Questions are inevitably being asked about these COP events: are they “no longer fit for purpose”? Is it time for something else to deliver the scale and urgency of action required?

I was struck by the words of Alden Meyer, with his 40 plus years of experience in climate policy:

“COPs are where the world holds a mirror up to itself to see how well it is doing in the fight against climate change; when the image in the mirror is ugly, it does little good to blame the mirror.”

We do not like what we are seeing. Two weeks of tough negotiations culminating in imperfect outcomes expose our frustration with the rate of our change. They magnify our longing for COP to solve this crisis that frightens and overwhelms us.

But COPs are only as good as the governments, businesses and people that will turn the agreements into lived reality. That’s why those national climate plans due next year matter so much. This mirror indicates that climate seems to have slipped a little down the priority list, despite the growing urgency.

The mirror analogy is a good one – but we also need to recognise where there are vested interests who would obfuscate what we see and what is decided. Among the thousands who descended on Baku were 1,773 fossil fuel lobbyists — more than all delegates from the ten most climate-vulnerable countries. This is part of a recent trend of outsized influence by those who would invest against our collective future for the profit of burning more fossil fuels.

Weeks like last one remind us of the flaws in the COP process – but the answer is not to ditch the whole thing. COPs are the only forum where every country is heard on this global issue. Existing power imbalances are reflected and needed to be addressed; a concrete finance figure only appeared on the last scheduled day of negotiations, putting lower-income nations were under pressure to accept it as clock ran down. In the final hours, several delegations walked out of a meeting to express their frustration with what was on offer.

COPs provide a space for civil society, youth activists, faith and community leaders to speak into global decisions and shape the world and our future. Getting the agreement we got is in part testament to the advocates who kept finance solutions on the agenda.

The COP processes need to be made fairer and more accountable, to steer a clearer way forward for climate action of the scale and speed we need. But if we scrapped them, we’d only need to create a different space for international diplomacy in their place – and we certainly don’t have time for that.

We see only in part

Ultimately, our disappointment with COP shines a light on our longing for a more hopeful future. It would be easy to let weeks like the last one harden or discourage us. But legacies are hard to see in the moment. Prior to the 2015 Paris Agreement, we were headed for at least 3.5℃ of warming by the end of this century; a catastrophic change to our world and inheritance for future generations. COPs have played a key role in shaving almost a degree from that trajectory. It still isn’t enough, but it isn’t nothing.

COPs show us something of the world as it is – messy, broken and yet suffused with people devoting themselves to justice again and again. For many, there’ll be some much needed rest to catch up on, because this is a race for the long haul. We live and act and speak for justice knowing that legacies don't fit nearly into a headline or media quote. They are slower to be realised and understood. The challenge to us all is to keep sowing faithfully, knowing we may not be the ones to reap in our lifetime. To keep acting in love and hope – even when the end is not in sight.

One of the early church leaders, Paul, wrote in a reflection on love: “For now we see only a reflection as in a mirror; then we shall see face to face.”

Explainer

Comment

Economics

29 October 2024

6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?

Laurence Fletcher

Laurence is a journalist at the Financial Times.

Sarah Agnew on Unsplash.

Few doubt that Chancellor Rachel Reeves will be putting up taxes when she presents her first Budget on October 30th.

The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled.

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much.

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue.

But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society?

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play.

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver.

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive.

A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts Dan Neidle.

Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here?

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Paul Williams

So, what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a Biblical perspective that he believes offers some solutions.

He takes as his starting point a story from the gospel of Matthew, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans.

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God.

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system.

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one.

Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society.

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets.

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.”

Williams highlights parts of Devon and Cornwall that have been, he says, “completely ruined” by wealthy people from elsewhere buying second homes, leaving property “out of reach of anyone who lives and works there”.

Nevertheless, he believes taxation can be used in this area to help level the playing field.

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive).

“You want to disincentivise the way the housing market is used for speculation,” he said.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds.

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets.

So, would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives?

Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy.

But he adds an important caveat: “the playing field is not level.

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.”

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start.