Sinking Islands Want To Turn Oceans Into Cash at COP27

Caribbean countries have emerged as innovators in climate finance this year, getting more creative and more direct in calls for compensation

The Nassau Cruise Port in Nassau, Bahamas.
By Zahra Hirji, John Ainger and Akshat Rathi
November 10, 2022 | 07:29 PM

Bloomberg — As rising seas and stronger storms threaten the very existence of the Bahamas, the country’s leader is trying to turn its oceans into a ready source of cash. The proceeds would fund a response to the worsening climate crisis — particularly if rich countries are paying.

“What I’m looking forward to, first of all, is an acknowledgement that the industrialized world that became wealthy as they are today was as a direct result of their use of fossil fuels and coal,” said Philip Davis, prime minister of the Bahamas, in an interview Tuesday in Sharm El-Sheikh, Egypt, on the sidelines of COP27. “So should they not be held responsible for that?”

The Bahamas is already on the front lines. Hurricane Dorian, a massive Category 5 storm in 2019, caused billions of dollars in damage. Davis estimates 40% of the country’s debt is directly linked to the impacts of climate change.

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Caribbean nations have emerged as innovators in climate finance this year, getting more creative and more direct in calls for compensation. Barbados announced a plan in September to restructure some of its debt in a way that will help pay for conserving the ocean. These bold appeals to secure increased climate finance for some of the most vulnerable counties rely on an undeniable fact: small-island nations bear virtually no responsibility for the planet-warming pollution that’s intensifying storms and pushing up the seas.

Philip Davis, Bahamas's prime minister, delivers a national statement at the COP27 in El-Sheikh, Egypt.dfd

“We only account for maybe a half of 1% of emissions,” Gaston Brown, prime minister of Antigua and Barbuda, said at COP27 of island nations like his. “So what we’re asking for is climate justice.”

Developing nations from all over the world are collaborating at COP27 to secure more money to help pay for their transition to clean energy, adapt to increased warming, and respond to destruction caused by climate change. This is the first year that such damages, known as “loss and damage” in bureaucratic speak, is formally on the agenda at the United Nations summit. If adopted, which remains a longshot, a loss-and-damage mechanism would deliver money and technical assistance from wealthy, emitting countries to developing nations that suffer storms, droughts and heat waves.

Pakistan’s recent floods, which left behind $30 billion in damage, has become the clearest test case and rallying point at COP27. Michai Robertson, a lead negotiator for the Alliance of Small Island States, said 2024 would be the earliest date for establishing a compensation mechanism. But first there needs to be an agreement on creating a new fund — and sourcing what could amount to trillions of dollars. So far at COP27, Germany, Austria, Belgium and Scotland are among the few wealthy countries to have committed loss-and-damage contributions valued in the millions.

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Davis isn’t sitting idly by waiting for climate compensation that may never come. Instead, he’s working fast to make the Bahamas the world’s likely first seller of carbon credits linked to the ocean — what he calls “blue carbon credits.” Coastal ecosystems, especially seagrass, are highly effective at storing carbon dioxide, making their upkeep a valuable climate solution. Existing carbon markets have largely focused on “green” credits linked to projects involving forests and grasslands.

“Our seagrasses, our mangroves, coral — we have become one of the largest carbon sinks of the world,” Davis said in the interview. “We think it’s time for us to be paid for it.”

The Caribbean nation announced its blue carbon credit plan in April, with the goal of getting voluntary carbon credits on the international market by the end of the year. A third party identified some $300 million worth of assets, according to Davis. “We feel that it’s worth much more than that,” he said, though declined to say how much more.

The idea of blue carbon credits comes as existing marketplaces for carbon offsets face increasing scrutiny, with an abundance of low-cost credits that too often bring little planetary benefit. Purchasers of these credits usually count them against greenhouse gas emissions generated from running a company. Davis said he doesn’t want the Bahamas credits “to be used as an excuse” for companies looking to further pollute, and said the country is already looking into how to set up such a system, including conversations with the International Monetary Fund.

Davis said he “is also open to putting in place “a 2% levy or tax on oil exports,” a proposal that was discussed in a UN meeting for Caribbean countries, hosted by the Bahamas in August. He wants that money to be put in a fund for covering the costs of losses and damages.

Browne of Antigua and Barbuda is also interested in a fossil fuel tax but proposes something he sees as a little different: a tax on profits. “I know that the idea of taxing a barrel of oil has been around for some time,” the prime minister said in an interview. “The reason why we have not gone that route is because all the fossil fuel companies can just pass on the increase to customers.”

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Speaking at a COP27 press conference, Barbados Prime Minister Mia Mottley also touched on fossil fuel levies: “We have a very simple principle: Those who cause the problem should help pay for the problem,” she said. “Those who benefit from the situation egregiously, in other words, those whose returns are over and above an acceptable level should also put a little something in the pot.”

Davis, Browne and Mottley all agree that something has to change — their lives and communities are at stake. Failing to limit rising temperatures to 1.5C compared to preindustrial times, Davis said, will be devastating for his country. “It’s no longer an existential threat, it’s a crisis for us,” he said. “And we can’t outrun the consequences: We’re either going to be climate refugees, or we’ll find ourselves in watery graves.”

--With assistance from Oscar Boyd and Christine Driscoll

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