The Zeroist
New Climate Capitalism
🎧 #26 "Unlocking the trillions" will not suffice: a new Grand Bargain is needed between North and South

🎧 #26 "Unlocking the trillions" will not suffice: a new Grand Bargain is needed between North and South

Today we are excited to welcome back Sony Kapoor to the podcast, and we’re talking about the Bridgetown Initiative, a new plan - an exciting new plan - to overhaul the international financial system to unlock huge flows of finance to the global South for the energy transition.

Now disagreement between the North and the South on how to finance the latter’s exit from fossil fuels provides a useful lens on a wider problem about the geo-economics of today’s world of multiple, intersecting crises.

Sony outlines the nuts and bolts of this new plan - championed by the Prime Minister of Barbados, Mia Mottley, to “unlock the trillions” for the global South. But, more importantly, he explains why this approach is far from sufficient.

He questions whether headline-grabbing news that focuses on big numbers instead of the quality of the finance, is the answer.

And raises the issue of which economic model the new engines of global growth - India and Indonesia - can follow in a world where we no longer have the carbon

budget to replicate China’s carbon-intensive trajectory.

Now Sony has a plan for a new “grand bargain” between the North and the South for a new development model led by services and virtual delivery of services that respects global environmental boundaries. This is arguably one of the most important policy conversation of our times, so stay tuned.

What we talked about:

0:57 Stocktake after COP27

3:47 The loss and damage fund is for now an empty shell

5:31 Why the Bretton Woods system is well overdue for reform

8:01 Note that World Bank/IMF played big role in opening up of China in 1980s and liberalization of India’s economy in 1990s

10:03 But today these bodies are not tackling the urgent debate about which economic model the new engines of global growth such as India should follow, as replicating China’s carbon-intensive model is not an option

11:00 Climate change still doesn’t feature in the IMF core function of macroeconomic surveillance. World Bank calls itself the world’s bigggest climate finance lender, but this is only because it is the world’s biggest lender.

12.19 Enter the Bridgetown Initiative: what’s good about it

14.15 Why the ambition of Bridgetown falls short

16:43 Bridgetown - short term aspect seeks to reduce the outflow of money by extending the suspension of debt repayments agreed during peak of COVID crisis.

22.55 Medium-term - how Bridgetown proposes to allow lending up up to a trillion dollars of cheap money to developing countries

29.37 If climate risk is properly assessed and taken into account by markets and credit rating agencies, the poorest countries will see their already sub-par credit ratings go down several notches because they face many physical risks from extreme weather.

31.04 Why the quality of finance matters more than the quantity. Too many discussions about climate finance focus coming up with the largest headline number.

32.55 Sony’s Grand Bargain, explained.

The Zeroist
New Climate Capitalism
New Climate Capitalism is a podcast about change-makers working at the intersection of activism, finance and investment.