COP31: The Political Economy of Climate

The Paris Agreement built climate diplomacy around carbon. Antalya will have to rethink it through power. Because the world on which Paris was built no longer exists.

Thirty years of climate diplomacy's vocabulary also shows how the issue has changed. First we spoke of emissions and mitigation. Then came 1.5 degrees, net zero, the carbon budget and nationally determined contributions. The climate crisis was described primarily as a physical carbon problem. That was not wrong, but it was incomplete.

Carbon accumulates in the atmosphere. But the bill for reducing it lands in a country's budget, a company's investment decision, a worker's profession, a state's debt or another country's exports. Carbon is global; its cost is local. This is the fundamental tension at COP31, which opens in Antalya on 9 November.

The Paris formula

The genius of Paris was to create a shared direction without imposing the same policy on everyone. Instead of allocating a global emissions budget from above, each country would set its own target, targets would be renewed every five years, and greater transparency would raise ambition. The driving force was not sanctions, but voluntary commitment and mutual scrutiny.

The model rested on an assumption: time would work in favour of climate policy. Technology would become cheaper, capital would flow into the transition, and as costs fell, ambitious targets would become politically possible.

That is not what happened. Yes, part of that promise materialised on the technology side. But global politics moved in another direction. Geopolitical competition intensified. Industrial policy returned. The boundary between trade and security blurred. Global polarisation increased. Critical minerals, batteries, semiconductors, electricity grids and clean energy technologies became strategic assets, not merely economic ones. Climate policy consequently moved beyond the boundaries of environmental policy.

A solar panel no longer merely reduces emissions; it establishes a production chain. An electric car does not simply lower oil consumption; it reshapes the future of the automotive industry. A carbon standard does not merely measure emissions; it affects which producer can enter which market, and at what cost.

The central agenda of climate policy is therefore changing too. How will economic power be distributed in a decarbonising world? This is where COP31's critical importance lies.

Has 1.5°C collapsed?

UNEP's Limiting Overshoot report, published on 2 September, says that the 1.5-degree threshold we spent years describing as a boundary that must not be crossed will most likely be exceeded within the next few years. In the best-case scenario, warming could peak at around 1.8 degrees before being brought back down. Under current policies, however, we are heading towards 2.6 degrees by the end of the century.

Scientifically, this is a change of framework. Politically, it is something much larger. We are no longer only trying to prevent disaster; we are simultaneously dealing with damage that is beginning to occur. New questions join “How much will we reduce emissions?”: “Whom will we protect first? Where will adaptation resources go? Who will compensate for which loss? Who will be displaced, and who will bear the cost?”

There is another uncomfortable question too: “Is temporary overshoot a form of scientific realism, or a new and polite justification for inaction?”

The political economy of the transition

Alongside “implementation summit”, the concept that defines COP31 may well be the political economy of the transition. Because the issue is not simply how much carbon we will reduce, but how capital, risk, technology, costs and new economic opportunities will be distributed during the transition, and among whom.

Developing countries have limited access to affordable capital. Governments' fiscal space is under pressure from debt, growth, security and social spending. Adaptation finance falls short of need. Critical minerals and clean technology production are concentrated in particular countries. In many places, electricity grids cannot keep pace with renewable energy investment. Every climate decision consequently becomes a decision about economic distribution as well.

Which project will be financed? Who will take on the risk? Which technology will receive support? Where will new factories be built? Which sector will carry the cost of the transition? Who will receive priority in adaptation resources? Where will the value created by the new green economy accumulate?

These questions may look technical, but they are fundamentally political. The broad direction of the answers is already clear. Those with access to affordable finance transition faster. Those who develop technology win markets. Those who set standards determine the production conditions of others.

Europe's Carbon Border Adjustment Mechanism is one concrete example. Europe has effectively established its carbon club. Not at the negotiating table, but at its own customs border. Pricing carbon ultimately means rewriting the rules of competition.

There is money, but its price is not the same

Political economy is at its most exposed in finance. The roadmap from Baku to Belém aims to increase climate finance for developing countries to at least $1.3 trillion a year by 2035. At the Climate Finance Summit in Istanbul, meanwhile, speakers emphasised that global needs were in the range of $7.5–9 trillion, with existing flows falling far short.

At first glance, the problem appears to be a shortage of resources. But the issue is not merely quantity. Capital does not circulate around the world at the same price.

The same solar panel produces the same electricity wherever it is installed. The atmospheric effect of a tonne of carbon does not change according to the country in which it is reduced. But the price of money does. According to the International Energy Agency, the cost of capital for clean energy projects in developing economies is two to three times that in advanced economies. In other words, the countries with the smallest historical contribution to the climate crisis install the same panel using the most expensive money.

As long as risk remains on the balance sheets of developing countries, capital becomes more expensive. Expensive capital slows investment. A delayed transition increases climate risk, and growing risk makes capital still more expensive. This vicious circle is one of the knots Antalya must untie.

Who will the bridge carry across?

The Climate Implementation Bridge (BRIDGE), which Türkiye has brought to the COP31 agenda, matters precisely at this point. With Ethiopia, Fiji, Indonesia, Pakistan and Uzbekistan as pilot countries, the mechanism aims to turn climate and development goals into portfolios of finance-ready projects.

The approach is reasonable. But we must also recognise the limits of the concept of “investability”. In finance, being valuable is not enough in itself. Risk must be measurable, revenue predictable and, if possible, cash flow calculable. A solar power plant can meet these conditions. But what about a wetland? A poor neighbourhood that needs protection from extreme heat? A community that must relocate because of rising sea levels? Cultural heritage at risk of disappearing?

Not every “value” has a price. Not every “need” generates revenue. The test for the Climate Implementation Bridge is therefore not simply to bring more projects into the financial system, but to create a financing arrangement that can also protect public and social values that markets cannot readily price. Otherwise, means and ends change places. Instead of climate finance serving climate policy, climate policy begins to take shape around the investment criteria of the financial world.

The Pacific's question of survival

This is why the Pre-COP taking place in Fiji this week and the leaders' gathering in Tuvalu are not merely symbolic stops.

Pacific countries have used the same slogan for years: “1.5 degrees to stay alive.” Science says that threshold will now be exceeded. On one side are temperature curves; on the other, island countries with an average elevation of two metres above sea level.

The new tension in climate diplomacy lies in the distance between these two languages. Countries whose contribution to global emissions is tiny are living with the consequences of other people's carbon burden on their own territory.

This is one of the climate crisis's starkest asymmetries of power. The actor making the decision is not the one living with its consequences. The Pacific is therefore not only Antalya's conscience, but its mirror too.

When the world says “temporary overshoot”, Pacific countries made up of thousands of islands ask: Temporary, but for whom?

Türkiye's distinctive space

The COP31 arrangement between Türkiye and Australia originally emerged from a compromise over hosting. But the resulting structure could become a prototype for the new climate order.

While Türkiye holds the COP Presidency and leads the action agenda, Australia leads the negotiations. The Pacific, as host of the Pre-COP, occupies a more indirect position within the process.

At first glance, this dispersed structure may look like a weakness. Yet climate leadership is no longer centred in a single place. Europe has regulatory power, China has manufacturing capacity, financial centres have capital, development banks have risk-reduction instruments, and Pacific countries possess powerful existential legitimacy. No actor holds all of these alone.

Translation may therefore be one of the important capabilities of the new climate diplomacy: translating the language of finance into the language of development, science into politics, global targets into national interests, the Pacific's existential demand into the decision-making rooms of major economies, and Europe's carbon standards into the industrial transition of developing countries.

In my view, this is Türkiye's distinctive space. Türkiye stands at the intersection of many of these tensions. It has strong ties to Europe's economic and regulatory sphere, experiences the cost of capital of a developing economy, is trying to decarbonise its industry, wants to reduce energy imports, and faces the Mediterranean's growing climate risks.

This position does not automatically confer an advantage. But it could open up a critical space for strategic translation. A translator is someone both sides trust. Trust is earned not through rhetoric, but through what is done at home. The Emissions Trading System Regulation that has entered into force, the Climate Law and the Green Finance Strategy are therefore Türkiye's strongest diplomatic cards. Being a bridge does not mean standing in the middle. It means having the credibility to bring different interests onto common ground.

Antalya's success

In these circumstances, it will not be enough to measure COP31's success solely by how many new targets are announced, which wording appears in the texts, or how many billions of dollars in finance are pledged.

We need to ask harder questions. Can risk in climate finance genuinely be shared? Can the cost of capital for developing countries be lowered? Can adaptation finance also reach areas where markets cannot easily generate revenue? As clean technology production concentrates in a handful of economies, do other countries remain merely consumers? Does temperature overshoot produce scientific realism, or offer a new justification for inaction? And can climate action cease to be a cost set against countries' economic interests and become part of those interests instead?

Paris gave countries a shared direction. But agreeing on the direction does not mean sharing the costs and returns of the journey. The achievement of 2015 was to gather different countries around a common climate goal. The task of 2026 is much harder: to distribute the costs, risks, opportunities and power involved in reaching that goal in an acceptable way.

If we fail, the climate regime will not disappear. Targets, indicators, funds, projects and new initiatives will continue to multiply. But shared politics will weaken, and impact will become blurred.

Carbon tells us where we need to go. Political economy determines who will get there, at what cost and with what power. Antalya will be the first major stage on which this second question is asked.