The geopolitics of climate change

Yesterday we talked about COP28 and the move from the fossil fuel industry to stall any phase out of oil, gas and other fossil fuels. Make no mistake, the geopolitical consequences of climate change, and in particular moving towards a world which no longer uses fossil fuels, are huge. We’ll cover this in more depth in future, but this topic is timely because of the appointment of the new head of the World Bank.

Considered from the perspective of self-interest, it makes perfect sense for oil producing countries to be arguing for policies that continue to allow fossil fuels to be extracted and used. Selling oil and gas to other states makes up a huge part of their economies, and if that income was no longer available it could have huge consequences. It’s likely oil producing countries would seek compensation in exchange for leaving their fossil fuel assets in the ground. But who would pay this compensation?

Enter the World Bank. The mission of the World Bank is to “end extreme poverty and promote shared prosperity in a sustainable way”. So arguably climate change forms a huge part of the bank’s remit. Obviously paying off petrostates and leaving it at that won’t be acceptable, a huge amount of money is also going to be required to help developing countries adapt to climate change and aid their transition to renewable energy.

The opportunity for Ajay Banga is enormous.