Trade and Development Board, 73rd Executive Session - Item 3: The Least Developed Countries Report 2022
13 February 2023
The Low-Carbon Transition and Its Daunting Implications for Structural Transformation
Your excellencies,
Ladies and gentlemen,
Dear friends,
It is my distinct honour to present to you today our LDC Report 2022, which has arrived at a critical time for the world. This report approaches the climate crisis from an LDC perspective, with a focus on The Low-Carbon Transition and Its Daunting Implications for Structural Transformation, this is a decisive issue for our times.
We have been starkly reminded of the great tragedy that climate change and earth-related disasters can bring, especially in developing countries where resources are scarce, and infrastructure is not resilient.
The LDC report comes with three key messages.
First, LDCs need urgently a green structural transformation, to reduce poverty and enhance their resilience to climate risks.
LDCs are on the front line of climate disasters, and at the same time are 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 needs to combine economic, social, and environmental responsible growth with rising productivity.
Our report suggests ways to diversify the economic structures of LDCs through sustainable production methods and new, low-carbon, productive capacities.
It consists of a transition from carbon-intensive "sunset" sectors to low-carbon "sunrise" economic activities, promoting the efficient use of resources (materials, energy, land, water) along the development path.
This report argues that a green structural transformation is a paramount policy objective for LDCs in the current context of cascading crises.
When, as we saw with COVID, we lose 5, 10, 20 years of social progress in just six months or one year, what this show is that we were calling development something that simply wasn’t. There is no development but sustainable development. As shocks become more frequent, we are learning this the hard way.
This brings me to the 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.
The world’s 46 LDCs, home to about 1.1 billion people, have contributed minimal to CO2 emissions. In 2019 they 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. LDCs pay a disproportionately high and unfair price in terms of economic, social, and ecological consequences from climate change and environmental degradation.
This disproportionality needs to be addressed by the multilateral system and the international community. This is especially the case when it comes to climate finance for adaptation and mitigation.
Because the risk will be aggravated if we fail to comply with our international commitments.
Also, 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.
At UNCTAD, we urge development partners to provide targeted, sufficiently flexible, and long-term finance to LDCs, beyond the commitment to provide them with ODA of 0.15 to 0.20 per cent of donors’ gross national income.
Lastly, addressing this disproportionality also means ensuring LDCs legitimate claim of “priority use” of the remaining carbon budget of the Earth. LDCs 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 international 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. But we call this a spaghetti bowl. For them to disentangle this is really challenging.
Because of this issue, our report also warns against the risk that LDCs become ‘carbon haven’ that do the dirty production that other, more advanced economies, stamp out of their countries. Offshoring pollution is not eliminating pollution. We do not want that.
Ladies and gentlemen,
The LDC Report 2022 is a clear call to action, a reminder of the delicate balance between survival and sustainability. It weaves a tale of resilience in the face of crisis, as LDCs stand at the forefront of the battle against climate change. With its call for a green transformation, the report shows a path to a future where poverty is reduced, and development is sustainable. But this path is not without peril, for the impact of climate disasters falls heaviest on LDCs, and with every passing day that international coordination is missing, and resources are lacking, this path slowly closes on us. We must not let this happen.
There is a path forward that is good for all. We must spare no efforts to travel it.
Thank you very much.
