debt
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Growing debt payments hinder climate action in vulnerable countries
Debt payments by the 50 countries most vulnerable to the climate crisis have doubled since the pandemic, hindering their ability to address global heating.
In short:
- Vulnerable countries now spend 15.5% of government revenues on debt payments, up from 8% before COVID-19.
- The debt burden increase is attributed to the end of a debt suspension scheme, rising global interest rates, and a strong US dollar.
- A conference in Bonn will address climate finance and unsustainable debt levels, highlighting the urgent need for debt relief.
Key quote:
“Record levels of debt are crushing the ability of the most vulnerable countries to tackle the climate emergency.”
— Heidi Chow, executive director of Debt Justice
Why this matters:
High debt payments limit the capacity of vulnerable countries to invest in climate mitigation and adaptation, worsening the impacts of climate change and deepening economic instability. These countries, often located in regions already suffering the most severe impacts of climate change, are now forced to divert critical resources to servicing debt rather than investing in sustainable infrastructure, disaster preparedness, and environmental protection. The rising debt payments are squeezing budgets, leaving less room for essential climate adaptation and mitigation strategies.
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What if debt was written off to protect climate and nature?
From Barbados to Belize, nations are beginning to swap debt for action on climate and conservation. But how far can this help without deeper reform of the global financial system?
Dear TMX oilsands pipeline owner (that’s you)
Greetings, thanks for investing, and please brace yourself for some very bad news.
Dear TMX oilsands pipeline owner (that’s you)
Greetings, thanks for investing, and please brace yourself for some very bad news.
Rich countries ‘trap’ poor nations into relying on fossil fuels
Kaamil Ahmed reports for The Guardian that campaigners are criticizing a ‘new form of colonialism’, where countries in the global south are forced to invest in fossil fuel projects to repay debts.
In a nutshell:
Wealthier nations and private lenders are ensnaring heavily indebted countries in a cycle of fossil fuel dependence, asserts a recent study. The report reveals that mounting debt pressures are compelling impoverished nations to persist in fossil fuel projects to meet repayment obligations stemming from loans extended by more affluent countries and financial institutions. Debt Justice and their partners in affected nations are urging creditors to absolve indebted countries, particularly those associated with fossil fuel ventures. The study discloses that debt owed by developing nations has surged by 150% since 2011, with 54 countries now grappling with debt crises that divert resources away from climate crisis mitigation.
Key quote:
“High debt levels are a major barrier to phasing out fossil fuels for many global south countries,” said Tess Woolfenden, a senior policy officer at Debt Justice. “Many countries are trapped exploiting fossil fuels to generate revenue to repay debt while, at the same time, fossil fuel projects often do not generate the revenues expected and can leave countries further indebted than when they started. This toxic trap must end.”
The big picture:
Heavy reliance on fossil fuels often takes a toll on public health. The burning of these fuels releases noxious pollutants and greenhouse gases that diminish air quality, contributing to a surge in respiratory illnesses, cardiovascular diseases and premature deaths. Often lacking the resources for proper pollution control and healthcare, poor countries bear the brunt of the health impacts as the toxic cocktails of pollutants impact vulnerable populations and create entrenched health disparities.
Read the article in The Guardian.
Go deeper: Last year, Agents of Change fellow Daniel Carrión argued that combating energy poverty and energy insecurity are critical elements to achieving environmental health equity for billions worldwide.
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Are debt-for-nature swaps the way forward for conservation?
Agreements to reduce developing countries’ debt burden in exchange for spending on nature will be on the agenda at a finance summit in Paris this week.
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Photo by Louis Velazquez on Unsplash
House GOP’s debt-limit plan seeks to repeal major parts of Democrats’ climate law
House Republicans’ proposal for averting a breach of the federal debt limit seeks to relitigate one of the most consequential congressional debates of last year — by taking an ax to President Joe Biden’s signature climate law.
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