The Failure of Climate-Finance Governance and Federalist Action

By Guido Montani

In Paris, on June 22-3th, representatives of the “New Global Financial Pact” met to discuss the financing for the ecological transition promised, as of 2021, from the richest to the poorest countries and those with financial difficulties. In introducing the meeting, President Macron said: “No country must be left to choose between poverty reduction and fight against climate change.”

However, the conference ended without agreement on the most important issues. In the end, it seems that the promise of a financial commitment of 100 million dollars promised in 2021 for the damage suffered by emerging economies can be kept, but this is a far cry from the estimate made by experts on the amount of resources needed for financing that avoids the costs of excessive CO2 emissions on poor countries;a responsibility that already industrialized countries should support: $4 billion a year for at least ten years. This is a far cry from the commitments that the industrialized countries intend to accept for the time being.

This dispute is not only about an issue of international justice, which of course is crucial, but also about a serious policy against climate change. As Geneviève Pons (Delors Institute) pointed out, a general agreement is crucial to set the price per tonne of CO2 at $100. A global CO2 price is crucial if global investment is to be directed towards renewable energies, the cost of which is still excessive. There are not many years (not decades) left to prevent global warming from exceeding the threshold set by the Paris Agreement, 1.5-2 ° C. The divergences between world governments are condemning future generations to suffer the consequences of a dramatic collapse of the biosphere, when material conditions will threaten the survival of all animal species (including humanity).

As a reaction to this bleak prospect, the President of Brazil, Lula, intervened and proposed a courageous qualitative leap. Lula reacted to a further call to halt deforestation in the Amazon, as if it were his own responsibility. Lula invited everyone to the COP30 that he intends to organize in the Amazon in 2025, but in the meantimehe points out that if the Amazon is to be saved, because it is rightly considered a global public good, there must be a sufficient international financial contribution. In this regard, Lula proposed a crucial reform: renewing the IMF, using the Special Drawing Rights (SDRs) as the world currency. If there is no serious reform of the Bretton Woods institutions, other associations of states, such as the BRICS, will be formed to use their own currency.

I conclude this brief chronicle of the Paris Conference by recalling that a small group of federalists has already set out to address these problems and has made proposals (see “The Global Ventotene” on “How to Finance the Global Green Deal”) that offer an answer to the problems raised in Paris. The federalists have indicated, as was said in Paris, that the global amount of aid, for a series of effective sustainable policies, must amount to 4 billion dollars a year. In addition, they also indicated in the reform of the IMF the indispensable lever for adequate financing of environmental policies, for sustainable development between rich and poor countries, coverage for environmental damage (loss and damage) and to facilitate the formation of a world price of CO2, an objective that can be easily achieved if all the countries of the world can resort to a single monetary unit:  the SDRs.

In conclusion, this set of reforms can be achieved if a minimum number of countries agree on a Global Green Deal. This is not a visionary proposal. According to a study by the IMF (2021), an agreement between four countries – China, USA, India and the EU – which together produce 63% of total CO2 emissions, would be enough to create a snowball effect of the remaining member countries of the United Nations, which would join the leading platoon. An agreement for a Global Green Deal would not only put the whole world on an ecologically sustainable path but would also allow a serious reform of the United Nations, which today is completely incapable of influencing the course of international politics, just think of Russia’s invasion of Ukraine. A reform of the Bretton Woods institutions would allow the United Nations to relaunch a process of peaceful economic cooperation on a global scale, restore some crucial rules of multilateralism, and show the citizens of the world that international peaceful cooperation is not a chimera.

These proposals are the result of a debate between a few federalists. It is desirable that UEF and WFM take them into account.


  • Euractiv, New Global Financial Pact takes small steps towards climate justice, 26th June 2023
  • LesEchos, Le charge de Lula contre la Banque mondiale, le FMI et l’ONU, 26th June 2023.
  • The Global Ventotene, How to Finance the Global Green Deal, April 2023.
  • IMF, Proposal for an International Carbon Price Floor among Large Emitters, 2021/001