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The Climate 202

How China, the world’s top climate polluter, avoids paying for the damage

The Climate 202

Good morning and welcome to The Climate 202! As a scheduling note, the newsletter won’t be published on Thursday or Friday. We hope you have a great Thanksgiving, and we’ll be back in your inbox on Monday. But first:

The U.N. still considers China, now the world’s second-largest economy and biggest annual polluter, a developing country

In 1992, the United Nations classified China as a developing country, as hundreds of millions of its citizens lived in poverty.

A lot has changed since 1992: China is now the world’s second-largest economy and the biggest annual emitter of planet-warming greenhouse gases. Average Chinese today are 34 times richer and nearly four times more polluting

But the classification has stayed the same for the past three decades, frustrating diplomats from developed nations who say it has allowed Beijing to avoid paying its fair share to help poor countries cope with the ravages of climate change, Maxine reports this morning with our colleagues Michael Birnbaum and Lily Kuo.

The debate over what China owes to countries that are least responsible for global warming — but most harmed by its effects — has dramatically intensified in the wake of the recent U.N. Climate Change Conference in Egypt. 

At the end of the two-week summit, known as COP27, negotiators from nearly 200 nations agreed to establish a fund to compensate vulnerable countries for the costs of addressing rising seas, stronger storms and other effects of a warming world. Analysts say it is unlikely that China will pay into the fund, despite its rapidly rising contribution to the greenhouse gases heating the planet.

“The facts are clear: China is the largest emitter in the world now,” said Li Shuo, a senior policy adviser at Greenpeace East Asia. “So it is a very valid question to talk about growing responsibility from China on the international stage.”

The question is a politically sensitive one. Beijing policymakers bristle at the suggestion that China should be considered a developed nation, pointing to pockets of extreme poverty that persist across the country. They also highlight the obligations of the United States, which has pumped more greenhouse gases into the atmosphere than any other nation in history, even as China surpasses America in terms of annual carbon dioxide emissions.

“Developed countries, including the United States, must shoulder more responsibilities,” Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said in an email. “This is not moral but with reason. From mid-18th century to 1950, developed countries accounted for 95% of all the carbon dioxide released.”

Liu added that developed countries have still not followed through on their 2009 pledge to provide $100 billion annually to help developing countries transition to greener economies and adapt to mounting climate disasters. In 2020, rich countries fell nearly $20 billion short of what they had promised.

‘A red line for China’

Chinese officials have not officially said whether they will contribute to the “loss and damage” fund. When asked about the issue at COP27, Chinese climate envoy Xie Zhenhua said: “China strongly supports the claims of developing and vulnerable countries for ‘loss and damage.' China is also a developing country, and this year climate disasters have also brought huge losses to China. We sympathize with the suffering of developing countries and fully support their demands.”

Xie added that China has already set aside 2 billion yuan ($280 million) to help developing countries cut emissions and adapt to global warming through a separate South-South Climate Cooperation Fund, rather than through U.N. channels.

Analysts said it appears unlikely that Beijing officials would send more climate aid overseas when they are under pressure at home to address an economic slowdown caused in part by China’s strict “zero covid” policy and a property market downturn.

Lauri Myllyvirta, a researcher at the Helsinki-based Center for Research on Energy and Clean Air, said paying into the fund could set an unwelcome precedent for Chinese policymakers, forcing them to take on more responsibility within the U.N. system.

“It would be tantamount to accepting developed country responsibility, and that has always been a red line for China,” he said.

Don’t count on Congress

While American diplomats agreed to establish the “loss and damage” fund, reversing long-standing U.S. resistance to the idea, there is no guarantee that Congress will appropriate the money. Last year, President Biden requested $2.5 billion for international climate finance but secured just $1 billion, and that was when Democrats controlled both chambers.

This year, Biden has asked for a record $11.4 billion. But Republicans, who generally oppose climate aid, are poised to take control of the House in January, further dampening the prospects for the funding.

“The idea that we owe developing countries some sort of climate reparations is absurd,” Sen. Kevin Cramer (R-N.D.) said in an interview. “If anything, we could send them a bill for all the things we’ve done over the decades on their behalf.”

Cramer called on U.S. climate envoy John F. Kerry to ensure that Beijing contributes money to the effort. “I would think that if John Kerry had any patriotism whatsoever while negotiating this nonsense, he would insist that China pay in,” he said.

Asked for comment, Kerry spokeswoman Whitney Smith pointed to a previously released statement that said the United States will “continue to press major emitters like China to significantly enhance" their climate ambition, but did not specifically address whether it would push China to pay for climate damages.

Agency alert

Transportation Dept. approves oil export terminal in gulf despite climate concerns

The Transportation Department’s Maritime Administration on Tuesday gave the green light to a proposed oil export terminal in the Gulf of Mexico despite environmental and public health concerns, Politico’s Joshua Siegel reports. 

The Sea Port Oil Terminal off  Freeport, Tex., would allow companies to ship about 2 million barrels of oil abroad per day through 50 miles of new pipeline. Environmentalists and residents had urged Transportation Secretary Pete Buttigieg to reject the terminal, saying its emissions would undermine President Biden’s climate agenda and further burden environmental justice communities. 

In July, the maritime office released a final environmental impact statement that found oil processed at the terminal would generate planet-warming emissions equal to 233 million tons of carbon dioxide each year. 

A spokesman for Enterprise, which is jointly developing the project with Enbridge and Chevron, said the company is “pleased” with the approval and still assessing the construction timeline. The Transportation Department did not immediately respond to a request for comment.

Labor Dept. finalizes rule on climate-friendly funds for retirement plans

The Labor Department on Tuesday finalized a rule that makes it easier for employers to consider climate change and other environmental, social and governance (ESG) factors when choosing investment funds for their 401(k) plans, Greg Iacurci reports for CNBC. 

The rule, which will take effect in 60 days, undoes regulations put in place by the Trump administration that made it difficult for businesses to weigh ESG factors when selecting 401(k) funds, senior Labor Department officials said during a Tuesday call with reporters.

Lisa Gomez, assistant secretary of labor for the Employee Benefits Security Administration, called the new rule “common sense.”

“While climate change is a critical issue, that’s not [just] what this rule is about,” Gomez said.

International climate

U.S. and allies near deal on Russian oil price cap

The United States and its allies are expected to reach an agreement as soon as Wednesday for a price cap on Russian oil that could be set at $60 a barrel, according to people familiar with the matter who spoke on the condition of anonymity to describe private talks, Laurence Norman and Andrew Buehren report for the Wall Street Journal. 

A plan by the Group of Seven nations and Australia to cap the price of Russian oil will take effect on Dec. 5, while the European Union is set to ban Russian crude imports starting on the same date. The plans are aimed at hurting Moscow’s economy amid its ongoing war in Ukraine by banning shipments of Russian oil unless it is sold below a certain price.

Also on Tuesday, the Treasury Department issued guidance for complying with the cap that says shippers will not be financially penalized for transporting Russian oil that was loaded and shipped before 12:01 a.m. Eastern on Dec. 5 and unloaded at the destination port before 12:01 a.m. Eastern on Jan. 19, Chelsey Cox reports for CNBC.

Environmental justice

Biden administration unveils environmental justice screening tool

The White House Council on Environmental Quality on Tuesday released a screening tool to identify disadvantaged communities as part of the Biden administration’s Justice40 Initiative, which seeks to deliver 40 percent of the benefits of all federal climate and clean energy investments to communities overburdened by environmental hazards.

The Climate and Economic Justice Screening Tool does not include race as a factor for identifying disadvantaged communities, as administration officials reportedly worried that using race would make the tool vulnerable to legal challenges.

The White House did, however, make two notable changes since the beta version of the tool was released in February: It mentions historical redlining as an indicator of marginalized neighborhoods, and it includes federally recognized tribal nations.

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