Action must replace talk on climate change

If the COP26 summit is to be the decisive moment it should be, three things must be done

Martin Wolf

   © James Ferguson


Centuries from now, our descendants may look back on this decade as the one in which the chances of mitigating irreversible climate damage were lost. 

As US President Joe Biden told the virtual leaders summit on climate last month, “This is the decade we must make decisions that will avoid the worst consequences of a climate crisis.” 

Global emissions must turn down now if we are to be reasonably confident of limiting the increase in the Earth’s average temperature to no more than 1.5 degrees above pre-industrial levels. 

We have been talking about doing this for decades, to no effect. 

Now, we must act.

The good news is that Biden’s election has transformed the chances of achieving something real this decade. 

The bad news is that the transformation is from zero to only a modestly positive number. 

This gloomy perspective is not universally shared: Jeffrey Sachs of Columbia University, for example, is far more optimistic, arguing: 

“The summit represents a tipping point. 

The world’s largest economies — the United States, Canada, the European Union, China, Japan, Korea, India, United Kingdom, Brazil — are finally aligning around the goal of deep decarbonisation, meaning the shift of the energy system from fossil fuels (coal, oil and natural gas) to zero-carbon sources (solar, wind, hydro, geothermal, biomass and nuclear).”

I hope Sachs is right. But it is vital not to be complacent: time is limited if the trend in emissions is to be turned down decisively, while the political and economic challenges remain huge.


Certainly, the recent shift in the US position was a necessary condition for global action. 

But it is far from sufficient. Everybody knows that US policy could again reverse, because Republicans remain fiercely opposed to decisive action. 

Moreover, as I noted this week, decarbonising production in one country is not the same as decarbonising globally, since emissions might merely be shifted abroad. 

Above all, even the US, albeit crucial, is not on its own decisive. 

While it is the second-largest emitter, it generates only 15 per cent of global emissions of carbon dioxide.

Indeed, in 2020, high-income countries together generated only 32 per cent of global emissions. 

China alone generated 30 per cent and China plus India 36 per cent. 

Still more important, on what the IMF calls a “business as usual” path, 

China would generate 40 per cent of the increase in emissions between 2020 and 2052, India 15 per cent and other developing countries (excluding Russia) 35 per cent. 

In the long run, these will be the decisive countries. (See charts.)



If the climate change summit (COP26) in Glasgow in November 2021 is to be the decisive change it needs to be, three things have to be agreed there. 

First, the high-income countries must mark themselves as credible leaders by committing to huge reductions in net emissions from their own output over the decade. 

Second, all parties must agree decarbonisation of all relevant systems by 2050, with significant progress by the 2030s. 

Finally, they must also agree to a package of incentives, disincentives and international assistance that will make achieving these ambitious goals feasible.



We are still very far from this. 

While confidence is growing that this is at least feasible, at manageable cost, the outcome will depend on first-class policy and policy implementation across the planet. 

That is indeed a heroic demand. 

So how might this be done?

First, incentives. Raghuram Rajan of University of Chicago has proposed what he calls a “global carbon reduction incentive”. 

Each country that emits more than the world average of about five tonnes a head annually would pay into an incentive fund. 

The payment would be calculated by multiplying the excess per head by their population and the agreed incentive. 

Those that emit more would contribute and those that emit less would receive. 

But all would lose if they increased their emissions per head. 

So they would all face the same incentive to cut emissions.


Second, disincentives. Alternatively (or in addition), countries that commit to imposing a price on domestic emissions would be permitted to put a border tax on emissions-intensive imports from countries that do not. 

If this did not happen, their production might merely shift abroad, with limited impact on global emissions. 

Such a border adjustment would no doubt be a rough and ready mechanism. 

It would also cause global friction. 

But a commitment by big high-income economies to introduce one might also lead to agreement on better policies, including carbon pricing, everywhere.


Finally, assistance. 

The IMF has argued that China, the EU, India, Japan and the US alone can deliver most of the needed change in emissions. 

But, in the long run, every country will need to make the shift towards a low-carbon economy. 

This is particularly true if one considers the role of natural systems in this and so of agriculture and forestry. 

It will be essential, therefore, to develop and spread effective technologies, practices and policies across the entire world. 

This will require aid, including for de-risking the needed investment in energy, transport, construction, agriculture and other systems.


The next decade has to mark a start. 

But this programme will need to be rolled out over decades. 

This then will be the biggest effort at co-operation among countries, between private and public sectors, and across entire economies in history. 

It is necessary and feasible, but hugely complex. 

Yes, things look a bit brighter now. But do not underestimate the challenge. 

We will know quite soon whether there is any plausible chance of its being met. 


High Growth Sectors in the Post-Recovery Decade

The post-pandemic economy could well be defined by the return of robust aggregate productivity growth after 15 years of relative sclerosis. Between the increased availability of powerful new technologies and aggressive fiscal policies, the stars are aligned for a cascading sequence of rapid recovery around the world.

Michael Spence


FORT LAUDERDALE – A multispeed economic recovery is underway, reflecting the significant cross-country variations in containing the coronavirus and acquiring and administering vaccines. 

But notwithstanding these differences in timing, there will soon be a cascading sequence of rapid recoveries around the world.

Sectors that had to shut down because they could not function without unsafe human-to-human proximity will now (or soon) reopen. 

Businesses that survived the pandemic closures (many with support from fiscal programs) will experience rapid expansion, powered by pent-up demand. 

Growth rates will surge for a limited period of time before subsiding toward normal levels. 

We will enter the post-recovery world sometime in 2022 (though it will come sooner for some than others).

For investors, policymakers, businesses, and households alike, a major question is whether and to what extent we will return to pre-pandemic growth patterns. 

Will we witness a shift to some markedly different set of dynamics?

While there are many areas of uncertainty in the post-recovery economy, some industries seem poised for a period of extraordinarily rapid growth. 

Specifically, in sectors with a combination of technological possibilities, available capital, and high demand for creative new solutions, conditions will be highly favorable for investment and new company formation.

Among the broad sectors with the greatest growth potential, my three leading candidates are the application of digital technologies across the entire economy, biomedical science (and its applications in health care and beyond), and technologies that address the various challenges to sustainability, especially those associated with climate change. 

Elevated growth in this context means not just sector growth, but high levels of entrepreneurial activity and innovation, a plethora of new fast-growing companies, and large inflows of capital carrying higher expected rates of return.

These areas are distinct but overlapping, because they are defined more by science and technologies than by outputs. 

All three are viewed as key sources of resilience – for businesses and for society as a whole – and that perception has been reinforced by the pandemic and growing awareness of the effects of climate change. 

Between this changing outlook and the forced adoption of digital technologies during the pandemic, there is now a heightened awareness of both the opportunity and the necessity of digitalization, which is reflected in high and rising demand for technological solutions.

In all three areas, many years of research and innovation have yielded powerful scientific tools and technologies that are becoming broadly available for entrepreneurs and investors who aim to tackle specific problems. 

At the same time, the techno-entrepreneurial ecosystems that were once concentrated in just a few places have expanded globally, resulting in an interconnected web of investors and entrepreneurs sharing insights, transferring technology, and adapting to local conditions.

The start-up “unicorns” once associated with Silicon Valley and a few other high-tech hubs can now be found in growing numbers across a wide range of developed and middle-income countries – and in surprising sectors like education. 

In short, the systems that unleash entrepreneurial talent are increasingly taking root around the world.

This is partly because governments have recognized the opportunities in these sectors and duly stepped up their game. 

The fiscal programs coming out of the pandemic have been far more aggressive than in the past. 

Commitments to invest in infrastructure (including digital), science, and technology are expanding, not just in the United States and China, but also in Europe, across the digital, biomedical, and greentech sectors.

Moreover, policymakers seem to understand that deficient demand has negative effects not only on employment but also on the incentives for adopting new technologies. 

Most governments thus are eager to ensure that the economy is running at high intensity without demand-side headwinds holding back growth and employment.

Given these factors, there is a reasonable chance that the 15-year negative trend in aggregate productivity growth – and hence overall real growth – will be reversed. 

Particularly important is digital adoption by small and medium-size businesses and lagging sectors. 

In India, part of the digital transformation involves equipping millions of small retail businesses and the related supply chains with technological solutions, as opposed to having large entities sweep them away, causing potentially massive job disruption.

The distribution of income is another key factor in productivity growth. 

If incremental income continues to flow mainly to high-income individuals and the owners of capital, that may be good for asset prices, but it will be bad for demand, and hence business investment and productivity.

At least in the US, President Joe Biden’s fiscal plans – which include infrastructure investment, changes in taxation, and a higher minimum wage – are designed to restore middle-income jobs and boost incomes for low- and middle-income households.

As a recent study by the McKinsey Global Institute sets forth, the digital transformation may be broad enough that it will help to raise overall productivity growth substantially. 

For example, innovation in delivery of primary health care (previously a lagging sector) will likely show up not just in the productivity data for that sector, but also in other important measures of performance, including overall health outcomes and quality and timeliness of care.

As for the decarbonization agenda, some might argue that this will have a small or even slightly negative immediate impact on growth and productivity. 

But on this issue, especially, one should be mindful of the relevant time horizons. 

Whatever the short-term effects of an expanded green investment agenda, the goal is not to elevate short- or even medium-term productivity. 

The point, rather, is to avoid or reduce the risk of a massive negative shock to productivity (among other things) in the long run. 

The present value of green investments thus can be very high even if the impact on short-run flow measures of productivity is small.


Michael Spence, a Nobel laureate in economics, is Professor of Economics Emeritus and a former dean of the Graduate School of Business at Stanford University. He is Senior Fellow at the Hoover Institution, serves on the Academic Committee at Luohan Academy, and co-chairs the Advisory Board of the Asia Global Institute. He was chairman of the independent Commission on Growth and Development, an international body that from 2006-10 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.  

In Yemen, Foreign Intervention Is Futile

Foreign meddling is nothing new for the war-torn country. 

By: Hilal Khashan


Yemen has been subjected to foreign meddling for centuries. 

The British occupied Aden in 1839 and didn’t leave until over a century later. 

The Ottomans launched two campaigns in Yemen in the 16th and 17th centuries, both of which failed. 

The Egyptians fought a bloody war there between 1962 and 1967 before pulling out of the country. 

And in 2015, the Saudis launched Operation Firmness Storm to try to wrestle the country away from the Houthi rebels. 

But what all these external players have come to realize is that foreign military intervention in Yemen is futile. 

Its mountains are impregnable and its people are battle-tested. 

Still, that hasn’t stopped many from trying.

Saudi Incursions

Of all the foreign actors that have injected themselves in Yemen’s internal affairs, perhaps none has been more influential than Saudi Arabia. 

During Ibn Saud’s establishment of the Saudi kingdom in the early 20th century, he realized that, to secure the new country, he needed to secure its border with Yemen. 

This was particularly so after the Saudis seized Jizan and Najran with the signing of the Treaty of Taif, which ended the 1934 Saudi-Yemeni war.

After Yemen’s republican coup in 1962, which began the North Yemen Civil War, Saudi attention focused on containing the communist south and controlling the north. 

The government’s tight grip kept the Saudis out of the south, but thanks to generous financial support, they won the backing of northern tribes, keeping the central government in Sanaa politically weak. 

The Saudis failed to prevent a Marxist paramilitary group called the National Liberation Front from seizing power in the south after the British pulled out in 1967, leading to the establishment of the Arab world’s only Marxist country, the People’s Democratic Republic of Yemen, also known as South Yemen. 

North Yemen’s president, Ibrahim al-Hamdi, tried to unite the north with the south and to curb Saudi influence but was assassinated in 1977. 

The circumstances of his death were never investigated and remain a mystery to this day.


Fast-forward four decades and the Saudis are again trying to impose their will on Yemen. 

They launched Operation Firmness Storm in 2015, aimed at recapturing the Yemeni capital, Sanaa, from the Houthis and reinstating the internationally recognized government of President Abed Rabbo Mansour Hadi. 

Hadi was vice president during the 2011 uprising that led to President Ali Abdullah Saleh’s resignation. 

Saudi Arabia helped to put down the uprising, thereby blocking a political transition from taking shape. 

The Saudi-led Gulf Cooperation Council’s 2011 initiative hijacked the peace process, appointing Hadi, a leading figure in the previous regime, as Saleh’s successor. 

But the move backfired, as the Houthis seized the capital, Sanaa, in September 2014. 

They responded to the Saudi-led military campaign by launching ballistic missile and drone attacks into Saudi Arabia – which have only increased in frequency in recent years.

Six years into the conflict, the Houthis are stronger than ever. 

Countless attempts to end the war have achieved little. 

Since the beginning of the conflict, the United Nations has sent three envoys to Yemen and engaged rebels in talks in Geneva and Kuwait, but to no avail. 

It also organized conferences in Stockholm to avert a full-scale offensive on Houthi-held Hodeida in 2018. 

But the Houthis have chosen to keep fighting, having gained momentum despite the Saudis’ involvement.

The Houthis’ determination isn’t the only thing keeping the war going, however. Iran has interests here too. 

The Houthis’ desire to control Yemen’s west coast, especially Hodeida port, is driven in part by Iran’s desire to dominate shipping lanes in the Red Sea. 

Iran, which has supported the Houthis throughout the war, wants access to the Arab region’s southern gate. 

To this end, Iran is also hoping to help the Houthis recapture the Hanish Islands, which were seized by Saudi-led forces. 

For Tehran, Yemen is also an ideal bridge to East Africa, a region Iran hopes to penetrate once it’s free of U.S. sanctions.

A Heavy Toll

Yemen’s collapse is a fall from grace for a country that the Greeks and Romans called “Arabia Felix” (loosely meaning “Happy Arabia”) and that was richer than its neighbors before the oil boom. 

The war has displaced millions and killed more than 330,000. 

Hundreds of thousands of children under the age of five have been left to starve, creating the world’s worst humanitarian crisis in two decades. (It’s also worth noting that addiction to qat, a plant narcotic used as a stimulant, is another major issue for the country. 

Some 90 percent of men, 73 percent of women and 20 percent of children under 12 years regularly use the narcotic, whose production consumes 60 percent of Yemen’s agricultural land and 30 percent of its underground water.)

The war destroyed the country’s infrastructure and decimated its military and security apparatuses. 

Reconstruction will cost hundreds of billions of dollars, money that Yemen doesn’t possess and can’t expect to raise. 

The country was marred by abject poverty and widespread inequality long before the war began. 

Its deep-rooted class, tribal, regional and sectarian divisions have been exacerbated by foreign intervention, further complicating its path to peace. 

The country is a jungle of weapons and unruly militias that have an interest in keeping the conflict going. 

Its wartime economy is so deep-seated that dismantling it might be even more challenging than reaching a political agreement among the warring factions.

The Yemeni national army is highly politicized, split into several factions that support either the Muslim Brotherhood-linked Islah Movement or former President Ali Abdullah Saleh’s General People’s Congress. 

Meanwhile, al-Qaida in the Arabian Peninsula has lost much of its power thanks to frequent U.S. targeting. 

The Islamic State never gained much traction in the country, having alienated the tribes with its brutality, and is unlikely to be much of a threat to Yemen in the future.

Inevitable Agreement

The Houthis are desperate to create new realities on the ground ahead of peace talks. 

Their relentless offensive to seize oil-rich Marib, the last government stronghold in north Yemen, has turned into a quagmire that has had a staggering human toll on both sides. (The Houthis are looking to capture Marib’s Safer oil production facilities to help finance their war effort.) 

The stalemate will pave the way to lengthy talks, likely leading to a shaky peace deal and loose state arrangement similar to several other Arab countries. 

The warring factions’ ties to regional powers prevent a more concrete resolution from taking hold.

The Houthis have committed more fighters to the battle for Marib than any other engagement in the six-year war. 

They have promoted it among supporters as a battle against hypocrites, apostates and Saudi occupiers. 

To Arab critics of political Islam, the Houthis describe the battle as a fight against the Muslim Brotherhood and its Yemeni chapter, Islah, which controls Marib. 

To the international community, they paint it as a fight against al-Qaida and the Islamic State, even though these groups operate in Yemen’s deep south, far from the areas the Houthis are fighting over now. 

The high death toll from the battle has alienated their primary base of military recruitment in Dhamar governorate. 

Their failure to seize Marib would undermine their plans to control the west coast and the Bab el-Mandeb strait. 

The outcome of this battle, inconclusive as it may be, could determine the future course of the war itself as well as Iran’s influence in the country. 


The Peace and National Partnership Agreement that emerged from the 2014 National Dialogue Conference failed to bring the country any closer to peace. 

The Houthis have scrapped plans for a new power-sharing constitution, determined to become Yemen’s dominant political broker. 

In southeast Yemen, the Southern National Salvation Council, which emerged in 2019, opposes the separatist Southern Transitional Council (STC). It seeks to work with other Yemeni groups to launch a new, decentralized political system that recognizes pluralism. 

A north-based National Salvation Front is also in the works and will include the Southern Movement, which is currently at odds with the STC, Islah and the General People’s Congress.

The Saudi-led coalition is now led by Tareq Abdullah Saleh, who defected from the Houthi camp after they killed his uncle, former President Ali Abdullah Saleh. 

He dislodged the secessionist, UAE-backed Salafist Giants brigade. 

His forces will most likely join the post-conflict Yemeni army as new political formations take shape in preparation for more peace talks.

Still, the factions are entrenched in their positions. 

The Houthis have control over most of the north. 

The STC faces stiff opposition in the south. 

Islah has created its own independent government, separate from Hadi’s. 

The Southern Transitional Council set up an autonomous administration in Aden and the surrounding areas. Meanwhile, these groups’ foreign patrons have their own desired outcomes. 

The United Arab Emirates wants to partition Yemen. 

In Mahra governorate, Oman and Saudi Arabia are competing for influence among the local population. 

And Iran is using the Houthis as a bargaining chip in its nuclear talks with the U.S.

These foreign players are unlikely to stop meddling in Yemen’s affairs anytime soon. 

The problem for Yemen is that its social structure and constant need for foreign aid make it relatively easy for its neighbors to attract groups desperate for assistance.