Tag: Finance

CAN Submission: Cancun Building Blocks, October 2010

THE POST-COPENHAGEN ROAD

A fair, ambitious and binding deal is needed more urgently than ever. Climate science is more compelling by the day. Impacts are coming harder and faster. Disastrous flooding in Pakistan, heat waves and forest fires in Russia and hottest recorded temperatures around the globe, amongst other devastating climate-related events, all point to the need for urgent action. Levels of warming once thought to be safe, may well not be, 1.5˚C is the new 2˚C. 

Negotiations Post-Copenhagen
Copenhagen was a watershed moment for public interest and support for climate action – and people have not lost interest. More people in more countries than ever have put their governments on notice that they expect a fair,
ambitious and binding global deal to be agreed urgently. Trust-building is essential after the disappointment of Copenhagen. Developed country leadership must be at the core of trust building efforts. Countries must show
their commitment to the UNFCCC process by driving it forward with political will and flexible positions, rather than endless rounds of repetitive negotiations. Many countries are troublingly pessimistic for Cancun, and are working to lower expectations. While others, including countries most vulnerable to climate change, maintain high expectations.

Challenges ahead of Cancun
There are many challenges to getting a full fair, ambitious and binding deal at Cancun, including:

  • Lack of a shared vision for the ultimate objective of the agreement, and the equitable allocation of the remaining carbon budget and emissions reduction/limitation commitments;
  • Sharp divisions on the legal form of an eventual outcome;
  • Failure of the US Senate to pass comprehensive legislation this year; and
  • Current economic difficulties facing many countries, which make it difficult to mobilize the substantial commitments to long-term climate finance needed as part of any ambitious agreement. 

Positive moves afoot
However, more and more countries, both developing and developed, are stepping up their efforts to pursue low-carbon development and adaptation, despite the absence of an international agreement. This can be seen in a variety of ways:

  • Investments in renewable energies have continued their exponential growth, increasing to 19% of global energy consumed;
  • Progressive countries are working to move the negotiations forward;
  • There is a growing perception that low-carbon and climate-resilient development is the only option to sustainably ensure the right to development and progress in poverty reduction. 

So, what does a pathway forward look like?

Firstly we must learn the lessons of Copenhagen. The “nothing’s agreed until everything’s agreed” dynamic from Copenhagen could mean that nothing would be agreed in Cancun. An agreement in Cancun should instead be a balanced and significant step toward reaching a full fair, ambitious & binding deal at COP 17 in South Africa. This will require parties to work together in good faith to create sufficient gains at Cancun, and a clear roadmap to South Africa. This paper outlines how that could be achieved. 

‘Round Midnight

As ECO went to press, the Committée de Paris had just resumed its work again. The outcome of the final round of negotiations is still uncertain. That need not stand in the way of a hard-nosed analysis of the new text, though, with the really big issues still left to be decided. Overall, ambiguity is the mot de vogue with several decisions still bracketed yesterday now ‘simply’ postponed. ECO makes a final plea to ministers and their heads of state, who will be asked to weigh in at the last minute:

Ambition
Parties chose to land in the ‘well below 2°C’ zone, while still pursuing a 1.5°C warming limit. This is, however, not compatible with GHG emission neutrality somewhere in the second half of this century. Full decarbonisation, with no tricks (like non-permanent offsetting and geoengineering), is needed and should be what those who claim to be ambitious fight for!

Differentiation
The endless variations in the new text trying to reframe the Convention’s preambular ‘common but differentiated responsibilities and respective capabilities and their social and economic conditions,’ [ECO’s emphasis] are a reflection of a genuine global struggle to come to terms with new realities. ECO does not romanticise the past, nor ignore historical responsibilities. The Paris Agreement can only deliver on its goal if all respect the Convention in full.

Finance
Which brings us to means of implementation. The floor of US$100 billion seems to now be established. But the agreement does not enough to ‘shift the trillions.’ ECO believes the Paris Agreement sends a signal to investors about the long-term direction. It pays lip service to setting a carbon price. Yet, Parties are about to fail in their duty of care, which would make them commit to finally end all fossil fuel subsidies, stop financing carbon-intensive investments or indeed commit to divestment.

INDCs
That the current INDCs, many of which are conditional on adequate international support, are not enough to limit warming to well below 2°C, let alone 1.5°C, is acknowledged and shockingly taken for granted. For now, there is no plan to close the resulting gap. We do not need to wait until 2018 for the IPCC to tell us that the pathway we are on forecloses limiting warming to 1.5°C. Independent assessments have already shown that developed countries in particular are lagging behind. The facilitated dialogue in 2019 merely opens the door for countries to rethink their lack of ambition. In 2025, ECO does not want to be looking back on the Paris Agreement, and with the benefit of 20/20 hindsight judge that this was a grave error. The five-year cycles of updating and enhancing #### (shall we just call them NDCs?) can start immediately upon entry into force.

Loss and Damage
The fight for loss and damage continues in dark corners of Le Bourget. To the most vulnerable, we say: Stay strong! To the blockers: You let the genie of liability and compensation out of the bottle. Please put it back in, as nobody is calling for it in this agreement.

Transparency, MRV and Compliance

After a decade of building confidence and trust through these talks, the Paris Agreement still reflects the fear that transparency on implementation and meaningful review of outcomes could be punitive. Shining a light is something ECO has done since 1972. In light of the bottom up character of the INDCs and the facilitative nature of the proposed review we urge all to lighten up and embrace transparency.

On a related note, ECO always understood the Durban mandate was ‘to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties,’ to mean an international agreement would have some teeth. Simply put: the bracketed wording on ‘compliance’ needs to be included in the Paris Agreement.

Human Rights

ECO is shocked that countries have surgically removed human rights from the core climate change agreement.

A broad coalition of civil society organisations and indigenous peoples have come together to collectively support joint text for Article 2, the heart of the agreement. All attempts were made to keep it simple for Parties. Instead, civil society’s voices are being ignored. You forgot that you represent us. You forgot that your job is to speak for us.

President Hollande: When you said that ‘COP21 would be a new step for human rights’, what exactly did you mean?

ECO praises Mexico and other champions for their work in promoting human rights in the operative text of the agreement. We owe it to the world’s vulnerable—those least responsible for and most impacted by climate change.

Today, Friday, a new moon will rise over Paris. ECO still has hope it will mark a new era. The change that is needed takes all of you. Soit brave!

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Carbon Markets: All Cards on the Table

The new draft text still features brackets around the sustainable development mechanism provision. Decisions to be made in the next 24 hours include whether offsetting will be allowed (please, NO!), whether developed countries will be able to play the offset generation game, accounting rules, guiding principles and a share of proceeds for climate finance purposes.

ECO suggests:

  • Disallowing the use of offsetting. To achieve the 1.5C goal, we need to focus on emissions reductions
  • Enhancing inclusion of ’environmental integrity‘. by inclusion of the additional principles‚ real, permanent, verified and supplemental for any international exchange of mitigation outcomes under this mechanism
  • Elaborating how to avoid double counting. ensuring a corresponding adjustment by both Parties for an exchange of mitigation outcomes covered by their ###
  • Establishing eligibility rules to participate in carbon markets. If offsetting is to be allowed (against ECO’s stern advice) developed countries should definitely not compete with developing counties for project financing. It would be inequitable. Use of international credits should be supplemental to ambitious national action. Only countries with absolute, multi-year targets (budgets) should be allowed to engage in markets
  • Aachieving sustainable development.  Given the goal of the mechanism is to support sustainable development, there should be a work program agreed to develop modalities for sustainable development indicators and a ‘do no harm’ assessment.
  • Crating new and additional climate finance. Agree a share of proceeds on all use of markets including in 3.20 (and ideally universally)
  • Achieving net atmospheric benefit. Any new offsetting mechanism (still not listening to ECO??) should reduce emissions through the cancellation of a share of credits used.
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A Fashionable Trend

ECO noticed that a small but potentially mighty paragraph that would scale back international public financial support for high-carbon fossil fuels has taken a beating.

Prior to being discussed behind closed doors yesterday, Article 6, paragraph 7 aimed to ensure international public finance was not used to fuel (pun intended) the very problem this entire agreement is trying to solve: the climate crisis. In the new text just released, it is clear that what is now Article 6, paragraph 4, option 3, fell victim to Parties pandering to the interests of big oil, coal and gas.

This text is not about dictating domestic development choices: it is the no-brainer that says that all-too-scarce international public financing should be used to solve the problem, not make it worse. Countries have just a couple of days left to make sure that big polluters don’t leave their dirty fingerprints all over this deal. It is high time to follow the advice on the stylish scarves that many seem to be sporting and #StopFundingFossils.

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Show Love for the Adaptation Fund!

The Adaptation Fund (AF) is a UNFCCC success story: more than 50 adaptation projects are currently underway in Latin America, Africa and Asia, providing support to vulnerable people.

However, the AF operates under a high level of uncertainty. While more and more countries put forward project ideas—the last board meeting has seen an unprecedented amount of proposals—the AF will run out of money as early as 2016 with the resources available today.

Countries need to follow Sweden’s pledge of US$17.5 million and help the AF to meet its fundraising target of $100 million in 2015.

While cash is required in the short term, countries also need to define a long-term perspective. Strengthening the AF in Paris would be a big help for supporting vulnerable people and countries. It would also safeguard one of its unique features—its ability to multilaterally harness alternative sources of finance for developing countries—as an option for the future.

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Crystal Ball of Climate Finance

Running from one meeting room to the next and eating many a crêpe must be tiresome for ministers. But fear not, ECO is here to summarise the crucial things on climate finance for our new arrivals.

If ECO had a crystal ball for climate finance in future years, this is what it would show:

  1. Climate finance needs a level of certainty. In a post-2020 world, this could be met by setting collective targets for financial support. To keep us on track, these targets should be reviewed and updated every five years, with separate targets for mitigation and adaptation. This leaves no room for error in our crystal ball predictions.
  2. Developed countries should continue to lead the way in providing financial support after 2020. In fact, ECO’s crystal ball foresees that starting with at least US$100 billion annually provided by developed countries.
  3. The crystal ball envisions the growing role of other countries, with an accent on South-South cooperation, to complement developed countries—based on comparable responsibilities, capabilities and stages of development.
  4. Flows of finance that align the goals of the Convention. In other words, moving all money out of dirty, polluting energy and into low-emission, climate resilient actions—something we can all look forward to.

Last but not least, there’s our forecast for the years before 2020. Our crystal ball has indicated that adaptation finance needs to take higher priority in these years. The figure $50 billion is floating in front of us. Something to seriously consider this week.

So go forth, ministers, and make these predictions a reality.

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The Gap In the Text

ECO is disappointed that Parties seem to have all agreed on the ‘no text’ options for the following numbers:
The emissions gap: [The emissions gap in 2020 is estimated to be 8-12 Gigatonnes] [The emissions gap in 2030 based on the current INDCs is estimated to be 12-18 Gigatonnes]
The adaptation gap: [The Adaptation finance needs alone will be USD 150 billion per annum by 2025 (even if we were on track for 2°C) yet the starting point for climate finance in 2020 is only USD 100 billion per annum]
The finance gap: [Recent analysis by the International Energy Agency finds that we need to up to $2 trillion annually worldwide by 2035 for the energy transition. This will require at least $166 billion in public finance per year]

These numbers are real, even if they do not appear in any text. Without a strong process to address these gaps, the Paris outcome will  be little more than an agreement to leave the leaders of 2030 with an insurmountable challenge. Instead, the Paris outcome could ensure that the gaps are filled:

1) Parties should agree to a five-year cycle where intended targets (for finance and mitigation) and contributions (for adaptation) are submitted well in advance of each commitment period. These intended targets should then be collectively reviewed against equity and climate science with ample time to improve their efforts.

2) More important, we cannot wait for the next round of INDCs to be developed to increase ambition. Parties must agree that they will revisit their INDCs, from the perspective of science and equity through a facilitative dialogue in 2017 or 2018 so that they can work together to increase these pledges before implementation begins. For such a review to succeed, finance commitments and adaptation contributions need to be part of the consideration.

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Lame Danes Win Fossil for Undermining Ambition

Oh, Denmark! In a not too distant past, Denmark was an inspiration to many–setting ambitious targets and rolling out renewables such as wind energy. But today we are not talking about great Danes, we are talking about lame Danes. That’s because today the Danish government is aiming to cut climate targets and shrink climate finance contributions.
The new minority Liberal government of Denmark came into power in July and clearly thought there was too much climate leadership going on. So they decided to dial it down—waaaaaay down.
As negotiators in Paris worked to deliver a durable and ambitious climate regime, Danish Minister Lars Christian Lilleholt declared his preference to scrap Denmark’s  ambitious carbon reduction target of 40% by 2020. This signalled his government’s intent to put the handbrake on Denmark’s ambition, evan as other countries around the world take the opposite approach and gear up to accelerate the transition to a renewable energy future.
While looking to cut their own ambition, the Danish government seemed to want to restrict the ambition of developing countries as well. The new government has a steady stranglehold on climate finance—squeezing the budget from an initial 500 million Danish Krone, which is around 72 million US dollars, to only a projected 39 million US dollars next year. Skammeligt!
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The Not-So-Golden Ratio

What does Notre Dame de Paris have in common with the Green Climate Fund? Sadly nothing. The golden ratio, so beautifully on display in the cathedral’s architecture, is nowhere to be found when fossil fuel subsidies are compared to Green Climate Fund pledges.
Ratios have been on ECO’s mind ever since a stroll to Notre Dame. So ECO despaired when it discovered a ratio that was totally out of whack. Analysis released yesterday shows that the ratio of fossil fuel subsidies to Green Climate Fund pledges from 8 key countries is 40 to 1!
You read that right. Australia, Canada, France, Germany, Italy, Japan, the United Kingdom and the United States provide a total of roughly US$80 billion per year to support fossil fuel production, but have only pledged a combined total of $2 billion per year to the Green Climate Fund.
That ratio unsettling. It also pushes the climate talks in exactly the opposite direction of progress. While finance negotiators wander the halls looking for more finance to offer up, billions of dollars are being sucked away to support dirty fossil fuels.
It’s time to #StopFundingFossils and start funding the solutions!
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