Intergenerational Global Loans System

Climate change adaptation and mitigation have finally become a priority in many political agendas. However, measures are needed at a global scale to make an effective and tangible difference; otherwise, the outcome would be both unsatisfactory and insufficient. Therefore, no country can be left out in climate transition. Nonetheless, it is well-known that countries have contributed to climate change through Greenhouse Gasses (GHGs) unevenly: as of 2017, the United States’ cumulative emissions account for around 25% of the global cumulative emissions, whereas India’s only represent 3% of the total. Therefore, when discussing how to implement measures for reducing GHGs emissions, some countries refer to the historical contributions as an argument to point out the economic unfairness of the proposed methods due to missed development opportunities.

We are very aware of this unfair deal; however, it is now or never and, in order to tackle this issue, we have concluded that only through inter-generational and international historical solidarity both sides will be able to reduce their opportunity costs at the same time of actively engaging in climate transition. Hence, our first proposal is based on an inter-generational and inter-territorial solidarity system that manages to jointly redistribute the costs of the transition processes. This system, developed through international institutions such as the World Bank, the IMF, or the UNDP, as well as state-based, will allow the development of loans with differentiated levels of interest according to criteria of historical justice and intergenerational commitment. The redistribution system will include specific considerations for each country based on its levels of development and its history of contamination. FIGURE 2 shows a preliminary and conceptual representation of how this Intergenerational Global Loan System can be designed and carried out over time.

International concessional loan scheme for climate and development issues remunerated over a longer-than-typical time frame with the higher interest rate for high-income countries and lower interest for low-income countries. Moreover, what makes this concessional loan scheme different is its intergenerational character. Climate change is a threat that can and will affect more than one generation, thus transiting from the current to a free-GHGs system is a necessary process not only for today’s society but also for the people of tomorrow. Having said this, due to the immense cost this transition implies, the aforementioned loan scheme will rely on future generations to help pay back the fees embodied in the climate transition. So, future citizens from already-developed and historically more polluting countries will cover the transition costs of today’s citizens from low-income and historically less-polluting states, thus reducing global inequities and enhancing climate change transition.