IN THE past decade, emissions from the developing world have eclipsed those of the West. China, still considered a developing nation, now pumps more CO2 into the atmosphere than the entire developed world combined. India, with its booming economy, could surpass the United States’ carbon output by 2030. All across the Global South—from Indonesia to Libya to Vietnam—people are using more energy and building out more fossil fuel infrastructure than ever before.

This poses a serious challenge to the prevailing orthodoxy in Western climate policy. Until recently, conventional wisdom held that the key to climate action lay with the West: if the United States and Europe could just decarbonize, many reasoned, then global emissions would plummet. But today, the West is decarbonizing—Europe has seen its emissions drop by 24 percent since 1990, and America’s CO2 output is falling every year. Even as the ongoing energy crisis forces countries like Germany to reopen their coal plants, it has simultaneously led Europe to double down on its clean energy commitments—from fifty-billion-dollar nuclear build-outs in France to doubled wind power investment in the Netherlands. Nonetheless, the world’s emissions continue to climb. The reality is that the vast majority of future emissions are coming—and will continue to come—from the developing world.

That is the bad news. But there is good news too: in the vast majority of industrializing countries, the quality of life is skyrocketing—life expectancy has shot up, and child mortality is down nearly 70 percent. By nearly every metric, from income to living conditions to quality of education, people in the developing world are living healthier, happier lives than they were fifty years ago.

Oil, gas, and coal have been crucial to this development. Indeed, in cooking fuels, in factories, and in most national grids, fossil fuels play a vital role in developing economies. But herein lies the tension in the push for global decarbonization: as economies grow, so too does the demand for energy. Emissions, inevitably, go up. And with a Global South that is poised to industrialize, this tension could grow into the defining climate issue of the twenty-first century.

THE CURRENT outlook for global energy use is not what it was half a century ago. Climate change is a leading issue in public discourse. Renewables and fracked natural gas have all but replaced coal power in North America. Solar is now the cheapest electricity source in history. By all accounts, a new global energy economy is emerging.

But with a system as complex as a national energy grid, competitive prices alone are not enough to spur third-world decarbonization. Questions remain about the reliability of renewables, and path dependence—the notion that energy systems are prone to “technological lock-in”—is a real phenomenon. Vietnam is currently building coal plants, as one report from the Center for Strategic and International Studies (CSIS) puts it, for the simple reason that it built coal plants in the past.

Years of fossil fuel dominance—combined with renewable energy’s continued limitations—have put economic growth at apparent odds with net zero in the developing world. What is to be done?

The world of climate and energy policy is divided on the appropriate response to this challenge. So-called “ecomodernists,” for example, argue that developing economies should pursue a by-any-means-necessary approach to industrialization. In practice, this means that, as demand rises, countries will look to cheap, non-intermittent energy sources like natural gas. Though emissions will increase, so will prosperity—and the West, ecomodernists contend, has no right to get in the way. Alex Trembath, the deputy director at the Breakthrough Institute, an ecomodernist think tank, explains:

The wealthy world should not impede lower and middle-income countries from exploiting natural resources that we also currently use. That means coal, oil, and natural gas principally—but in a more sweeping view, poor countries should be able to determine their own destiny as best they can.

Ecomodernists like Trembath argue that the West itself relied heavily on fossil fuels when it industrialized. Demanding that poor countries do otherwise would therefore represent a major double standard. But this isn’t just the most moral way of thinking about development—it’s also the most practical. As Tembath elaborates, “A world with higher emissions that is warmer, but wealthier, will be better able to deal with climate change than a world with lower emissions, less warming, and less wealth.”

This last point has been the cause of a good bit of controversy in the climate world, particularly amongst “degrowthers”—those who believe that we ought to shrink the economy to fight climate change. That shouldn’t come as a surprise; the idea that higher emissions are a necessary evil runs contrary to any number of preexisting environmentalist dogmas.

But there is a growing body of research to support the ecomodernist view, especially within the context of natural disasters. To be sure, one of the chief concerns surrounding climate change is that it will increase the frequency of destructive weather events such as flooding, hurricanes, and drought. But while the rate of natural disasters has certainly been increasing, the impact of those disasters has dropped dramatically. Since the turn of the twentieth century, as the global population has ballooned and infrastructure has seen rampant growth, deaths due to disaster have declined by over 90 percent. Economic damage as a percent of national GDPs has fallen precipitously. In other words, thanks in large part to economic growth and development, the world is getting more resilient in the face of climate risk.

Ecomodernism thus offers an alternative framework for thinking about climate change: rather than treating warming as the singular measure of climate risk, why not weigh climate impacts against the world’s preparedness to confront them?

To be sure, the data surrounding natural disasters may not capture the whole story. Warming’s effect on geopolitical or strategic interests, for example—its impact on agricultural regions in nations like the United States, its spurring of mass migration events, and so on—is a somewhat different question. But the ecomodernist “trade-off” framework nonetheless provides the right conceptual approach: understanding that climate adaptation, as it were, will be a vital part of climate action.

THE ECOMODERNIST argument operates on the premise that decarbonization and third-world development are largely orthogonal interests, at least for now. As Trembath pointed out, even the United States has yet to figure out how to decarbonize most industries at scale. Transition will be even harder in low-income economies, where there is a severe lack of funding for renewable energy’s high upfront costs. In other words, maybe policymakers are jumping the gun—maybe the rest of the world isn’t ready to take the necessary steps to build a low-carbon economy.

But some thinkers in climate and energy policy argue that aggressive low-carbon development will be a boon, rather than a barrier, to economic growth. In this view, the world is moving inexorably towards net zero. Industrializing nations thus have a material interest in doing the same.

In many ways, where you land on this question depends on what you think the world will look like in twenty to thirty years. Is the energy sector running on solar, nuclear, and next-generation clean technology, or are fossil fuels still the norm? Do electric vehicles dominate the market, or do they still just occupy a niche? Have we cracked the code on low-carbon steel manufacturing? On hydrogen? On battery storage?

Ecomodernists like Trembath believe that the burden of proof still falls with the developed world: it is the West that ought to demonstrate the scalability of clean technology before expecting low-income countries to do the same. But many are looking at the pace of the clean energy transition and concluding that it’s not a question of if the world can go net zero, but a question of how fast. From that point of view, developing countries would stand to benefit from planning for a carbon-neutral world, even if carbon-neutrality still remains elusive.

One of these individuals is Joseph Majkut, director of the Climate Change and Energy Security Program at CSIS. “If you're a country aiming to grow your role in the global economy, it’s better for your long-term prospects to be focused on a development portfolio that can participate in a global economy that is mostly at [net] zero.” In Majkut’s view, there’s also an opportunity for the United States here—not as the world climate police, but as investors in the developing world’s green transition. If American companies make foreign direct investments FDIs) in lower-income energy economies, “it will pay off—and create a supply chain for clean technology and critical minerals that is far more robust than the one we have now.”

Investment in the developing world carries its own risks. Governments can be unstable, restrictions on foreign firms can be severe, and more. But these investments work. A recent study from the London School of Economics found that the last two decades of green FDIs have not only strengthened the innovation capacity of foreign subsidiaries, but actually sped up the green specialization of the investing firms. In other words, when multinational corporations invest in the developing world’s renewables industry, they’re also strengthening their own cleantech knowledge base. This is of significant relevance, given that the International Energy Agency has called for a more than tripling in annual clean energy investment to reach the 2050 net-zero target—the majority of which will go to the developing world.

And there’s another reason to be bullish on FDIs: in a global energy economy dominated by renewable energy and necessary critical minerals, foreign partnerships will be crucial to the United States’ geopolitical strategy. Over the last decade, America’s rivals have increasingly positioned themselves to weaponize clean energy access. China, in particular, has been extremely aggressive, leveraging its massive influence in Africa and South America to secure a near-monopoly on minerals like lithium, cobalt, and copper—all crucial resources in the energy transition. The Chinese Communist Party has also invested heavily in manufacturing: where the United States once controlled cleantech production, China now dominates, producing three-quarters of the world’s photovoltaics and leading the wind turbine industry.

There’s no overstating the impact this could have on the American economy. A disturbing first glimpse came in late 2020, when China explored limiting American military contractors’ access to rare earth minerals in response to arms sales to Taiwan. This could soon become the norm—as the global economy becomes increasingly reliant on renewables, countries with cleantech capacity will be able to leverage energy access as a powerful political tool. Green FDIs thus play a vital role in the United States’ approach to energy geopolitics. The greater the hand America has in the developing world’s cleantech industries—from minerals to renewables—the better chance it will have at securing an energy-independent future.

This is the greater vision of what the U.S.-developing world energy relationship could look like: in which industrializing countries benefit by developing for a net-zero economy, the United States benefits by investing in that development, and the planet itself ends up better off as a result.

A FEW conclusions can be drawn from all this. First, as Majkut and Trembath both note, it is neither reasonable nor effective to force the Global South towards net-zero. Countries will almost always develop according to their own national interests—and in the case of economic growth, these interests will improve the lives of millions.

But second, and just as important, is the fact that planning for a low-carbon economy should be viewed as congruent with those same national interests. Clean technology is becoming cheaper and more effective by the year, and fossil fuels are falling out of favor as powerful international institutions move to make addressing climate change a priority. Lower and middle-income nations would do well to recognize this trend and invest heavily in the energy infrastructure that will power future economies. On this second point, Trembath and Majkut might disagree on questions of scale. While both expect cleantech to have a role in lower-income economies, Trembath holds that the developing world will have to rely almost entirely on natural gas as it industrializes. Majkut, meanwhile, is more bullish on renewables’ prospects.

But far more importantly, both agree on a central premise: the United States, and the West more generally, can set the developing world on a cleaner path by investing in its low-carbon industries. It’s a talking point that has become so overused that it’s almost banal, and yet it still holds true: carrots, not sticks, will be the way to promote international climate action. If America is successful in limiting third-world emissions, it won’t be because of restrictions and finger-wagging—it will be because of long-term financing and international supply chains.

Developing nations will have a role to play here too. Domestic decisionmaking will dictate the terms by which emerging economies can benefit from foreign investment. This thus raises the question: what does smart policy look like in the industrializing world? To this, it appears the success of pro-growth climate action in the Global South will come down to two main themes: strong political leadership and smart incentive structures.

One thing we’ve learned from the last several years of the energy transition is that declining clean energy prices will only spur widespread adoption when there’s sufficient political will to do so. As CSIS’s Nikos Tsafos and Lachlan Cary stated in their 2020 report on emerging economies, “Energy systems do not necessarily follow the path of least cost—politics, political economy, and institutions matter.” This may sound like a simple prescription, but it’s one that has already been proven out across the developing world. The same places that had early success in the cleantech market are also the ones whose leaders made it a priority. Thanks to India’s first electric vehicles (EV) scheme, for example, the Indian state of Gujarat has managed to foster a growing EV industry. This, in turn, attracted automakers like Ford and General Motors, who have set up assembly plants in the region. A similar case is apparent in Vietnam, where the government’s implementation of feed-in tariffs for new solar farms has triggered a boom in its commercial and rooftop solar sectors.

These successes don’t just owe themselves to the forces of the market. In India, Prime Minister Narendra Modi’s early solar policies came at a time when coal was still the vastly cheaper option. Rather, in the cases of both Gujarat and Vietnam, the growth of the cleantech industry was driven by top-down leadership—and both times, these decisions led to massive economic opportunity.

A QUESTION worth asking here is whether there really exists a one-size-fits-all climate policy for the developing world. Some regions get three hundred days of sunshine a year; others get only eighty. Many countries are reliant on coal; others have the benefit of possessing rivers, and thus, hydropower. With so much variability in the geography and political economies, policies that work in one country will often not work in another.

Nonetheless, there are some key market-based mechanisms that have already been implemented across the developing world, often with a great deal of success. One particularly popular policy has been feed-in tariffs like the ones in Vietnam, wherein producers are offered above-market prices for the clean energy they deliver to the grid. These tariffs have worked well in the early stages of industry growth, when production would not have otherwise been economically feasible. But they can also create problems later on, when the tariffs are inevitably reduced and distribution companies are saddled with expensive, long-term power purchasing agreements.

Another option, then, is a carbon tax. Talk of carbon taxes in the United States still draws incredulity from those who have seen the policy suffer one crushing Congressional defeat after another over the last three decades. And indeed, though the tax is increasingly popular with the American public, it still faces an uphill battle on the Hill. That is a shame so far as American climate action is concerned: according to a 2019 Brookings Institution report, a price on carbon could slash national emissions by as much as 40 percent by the end of the decade.

But carbon pricing has taken hold across much of the rest of the developed world, and countries are already feeling the benefits. In Europe, the combination of national-level carbon taxes and the European Union’s cap-and-trade system has led to a 20 percent reduction in CO2 emissions since 2005, all whilst having little to no impact on the economic performance of regulated sectors. Other countries have started to follow suit: in 2019, citing Europe’s environmental and economic success, Singapore became the first country in Southeast Asia to introduce a carbon tax. Though the policy is still relatively new, Singapore has already announced plans to raise the price over the next few years, arguing that it will not affect the competitiveness of the national economy.

There is good reason to think that carbon pricing schemes could work in the developing world, too. The International Monetary Fund (IMF) has done much of the research here, and has recommended that there be a tiered, worldwide carbon price floor by 2030. Under this plan, advanced, high-income emerging market and low-income emerging market economies would be subject to price floors of $75, $50, and $25 per ton of CO2, respectively. This approach would reduce global emissions by 23–24 percent by 2030 compared to business-as-usual while allowing lower-income economies more flexibility as they industrialize.

There are a number of advantages to this approach. First, there are ways in which the carbon tax can pay for itself. Lower-income countries are often heavily reliant on coal power plants, and emissions controls would thus significantly reduce local air pollution and improve health outcomes. One recent study in Environment International projects that an electricity and cement sector cap-and-trade system in China would reduce deaths by tens of thousands by 2030. Second, as developing countries enter the middle-income space, the costs of state services go up. This puts stress on governments to expand their tax base—and even at just $5 per ton, a price on carbon could raise a substantial part of that revenue, increasing access to essential services and improving quality of life. Third and finally, there is the aforementioned larger point around economic growth: a carbon tax would set lower-income countries on a cleaner development pathway, thus allowing them to participate in an increasingly carbon-neutral economy.

There is, therefore, good reason to think that carbon pricing could play a crucial role in the international decarbonization project. Year in and year out, the list of countries considering the tax grows—with a group that now includes Brazil, Indonesia, Pakistan, and Russia. One can reasonably assume that this is a reaction to the policy’s increasingly clear economic, and not environmental, potential. Policymakers should see this as an extraordinarily promising development.

NO MATTER what policies the developing world ultimately decides to pursue, several axioms will hold true: the outlook for clean technology gets better every year, and the economy of the future will be low-carbon. Despite this, getting there will demand proactive cooperation between the developed and developing world. In industrializing countries, this means leadership and fiscal policy. In the West, this means investment and institution-building.

So much is wrapped up in our global push for decarbonization; its role in the fight against climate change, of course, will be huge. But just as importantly, it has the potential to remake the world order. First movers in clean technology will be granted immense economic leverage. Those who lag behind will find their influence greatly reduced. In both wealthy and lower-income nations, the decisions we make today—in our energy investments, in our trade partnerships, and with our climate policies—will have an extraordinary impact on our global standing tomorrow.

Thomas Hochman (@thomashochman) is a Fellow at Citizens’ Climate Lobby. His work has been featured in The National Interest, The Washington Examiner, and a number of other outlets.

Image: Reuters.