Launch of the Least Developed Countries Report 2022

Statement by Rebeca Grynspan, Secretary-General of UNCTAD

The low-carbon transition and its daunting implications for structural transformation

Good morning and thank you.

I wish we would meet at a better time for the world. But we don’t. Especially not for least developed countries, which are bearing the brunt of an unprecedented cascade of crises.

A continuing pandemic, aggravating climate catastrophe, looming debt meltdown and a global cost-of-living crisis. For most LDCs, this is translating into marked increases in destitution, malnutrition, and energy poverty.

And yet, in the midst of all this, the developing world in general, and least developed countries in particular, are feeling ‘acutely abandoned’.

There are no policy responses on the table that come even close to meeting the magnitude of the problem.

The Least Developed Countries Report we launch today seeks to address that issue head on.

Coming just one week before COP27 in Sharm el-Sheikh, this edition of the report has a specific climate focus.

But the spirit of this LDC Report, which now has over 30 editions in the series, is as always, to address global issues from the LDC perspective, a task that is today more important than ever.

The report comes with three main messages, all addressed towards policymakers meeting at the COP next week.

Firstly. LDCs need urgently a green structural transformation, to reduce poverty and enhance their resilience to climate risks.

LDCs are acutely vulnerable to climate disasters, and uniquely dependent on commodities with high CO2 emissions. This is a double negative: it is bad for the planet, but it is especially bad for LDCs, because it perpetuates underdevelopment through the commodity-dependence trap.

A green structural transformation combines economically, socially, and environmentally responsible growth with rising productivity.

A transition from carbon-intensive "sunset" sectors to low-carbon "sunrise" economic activities, promoting the efficient use of resources (materials, energy, land, and water) along the development path.

We also believe that South-South coordination for a green transition could cut global CO2 emissions below 30 billion tons by the end of the decade and deliver many benefits.

South-South regional financial safety nets, macroeconomic policy coordination and trade deals could generate 200 million additional jobs by 2030 and $1.6 trillion annually in additional green investment. But current policies in advanced economies are making it increasingly difficult for developing economies to invest in a green transition.

As well as strong South-South cooperation, we need strong multilateral cooperation to address the rising costs of debt servicing and commodities, and to deliver required green investments.

This report argues that a green structural transformation is a paramount policy objective for LDCs in the current context of cascading crises.

Because as we have been learning the hard way since COVID, when we lost at times over 10 years of progress in human development metrics in the span of just six months, there is simply no development but sustainable development.

But to achieve this green structural transformation, LDCs need fair treatment, collective action, and immense support.

This brings me to second message of this report. LDCs are the litmus test against which history will judge how fairly we addressed the common but differentiated responsibilities principle enshrined in the fight against climate change.

LDCs pay a disproportionately high and unfair price in terms of economic, social, and ecological consequences from climate change.

The world’s 46 LDCs, home to about 1.1 billion people, have contributed minimally to CO2 emissions.

In 2019, LDCs accounted for less than 4 per cent of total world greenhouse gas emissions. Yet over the last 50 years, 69 per cent of worldwide deaths caused by climate-related disasters occurred in LDCs.

This injustice is not being fully addressed by the multilateral system. This is especially the case when it comes to climate finance for adaptation and mitigation.

LDCs account for 22 per cent of countries with the most recurring appeal to emergency funds in reaction to extreme weather crises.

These risks are aggravated by the failure of developed countries to meet the annual

$100 billion goal in climate finance they originally promised to achieve by 2020, to support developing nations to adapt to the climate crisis.

Climate adaptation has received far less international support than mitigation, not only in terms of financing, but also in terms of technology development and transfer, capacity development and technical assistance.

Today we see international investment projects addressing the climate crisis are falling in the wake of cascading global crises, ending years of growing momentum. Recent research by UNCTAD suggests that climate investments have fallen by over 10 per cent in just the last two quarters alone.

At UNCTAD, we urge development partners to extend special and differential treatment to LDCs by providing targeted, sufficiently flexible, and long-term finance, beyond the commitment to provide ODA corresponding to 0.15 per cent to 0.20 per cent of donors’ gross national income to LDCs.

Addressing this disproportionality also means ensuring LDCs’ legitimate claim of “priority use” of the remaining carbon budget of the Earth. LDCs should not be required to strand their carbon-intensive assets at the same time as other countries. Rather, they should be allowed longer transition periods to make use of these resources in pursuit of their “right to development”, which is enshrined in the UNFCCC.

Our third and final message is that climate-related policies and regulations must explicitly consider LDCs, to avoid producing unintended harm.

Four fifths of LDCs are classified as commodity-dependent, meaning more than 60 per cent of their merchandise exports consist of primary products.

Many of these commodities -- such as minerals, metals, and fuels – entail high CO2 emissions.

Also, these commodities are often inputs to carbon-intensive global value chains including metal products, cement, fertilizers, or electricity. In all, according to our analysis, more than two thirds of LDCs have economies that depend directly on the export of high-carbon-emitting commodities.

Our report therefore warns that, if LDCs lack the financial resources and the technological avenues to transition, decarbonization will raise new challenges for them.

This is not only true in terms of their economic structures, but also in terms of their capacity to comply with trading partners policies, including carbon pricing, and other forms of climate-related regulation. LDCs often lack the institutional capacity to deal with the implications of these regulations, which have risen 15-fold in the last 10 years.

Because of this issue, our report also warns against the risk that LDCs become ‘carbon havens’ that do the dirty production that other, more advanced economies, stamp out of their countries. Offshoring pollution is not eliminating pollution.

We are three days away from the start of the COP in Sharm el-Sheikh. This is a key moment.

I really hope that this report helps policymakers make LDCs central to the discussions starting next week.

I look forward to your comments and questions. Thank you for your attention.