Tag: Finance

Many parties commented in the COP plenary about this year’s record temperatures and extreme weather events. This comes as ECO reflects on the Royal Society’s recent treatise on a rapidly warming +4 degree world . . . the kind of world resulting from a lack of ambition. The need for dramatic action on mitigation has never been so clear.
Which brings us to the LCA. ECO welcomes the work by the Chair this year. Her approach to helping parties reach consensus is to be commended.  In a spirit of mutual support, we present the following recommendations on the Chair’s possible elements.

The Shared Vision must safeguard the planet for future generations.  Limiting warming to 1.5° C is necessary to avoid severe impacts, such as a loss of the Mesoamerican Barrier Reef System, a small part of which is off the shores of Cancun, the second longest in the world and a locale for priceless biodiversity. Parties must aim for a 1.5° C temperature threshold, commit to a process that examines this objective, and agree a global peak in emissions no later than 2015.  Mere preparation of a review in 2015, as currently proposed, would not be a call to action but a homily to squander a once-only opportunity.
The Finance section of the Chair’s note is useful in streamlining the text and identifying potential middle ground in some areas.  It is also missing some crucial elements, such as a proper balance between mitigation and 
adaptation finance, participation of vulnerable populations, civil society and women.  And yet it is a very promising basis to build on. With additional refinement, it can provide a way forward to a substantive decision on creation of a new fund under the COP, establishment of an effective oversight body, and a process to decide on sources of funding, including innovative sources of public finance.
The text on Technology unfortunately does not ensure that the technology mechanism will be under the authority of and accountable to the COP. This weakens the objectives of setting up the architecture of cooperation through the Technology Executive Committee and Technology Network Centres, as there is no rules-based multilateral mechanism proposed. It also allows an ad hoc set of arrangements to emerge that invites prominent roles for the World Bank and regional development banks. Just to be clear, they still fund fossil fuels over conservation, energy efficiency and renewables.  Even US clean energy companies are sceptical of the role of the World Bank.  They and others would benefit from institutional arrangements that are clearly under the COP’s guidance.
CRP.1 as drafted effectively sidetracks CAN’s proposed building blocks for Capacity Building. The text drops the proposed CB Technical Panel, which should be the front end of a design-and-build programme for new, real and integrated CB to start happening in real places, in real time, backed by real and new resources.  Without the front end the entire pathway essentially vanishes. Additionally, the text drops a proposed legal lock creating an obligation on developed countries to adequately support new CB.
The establishment of a strong Adaptation Framework for Implementation is essential and within reach. While not perfect, the Chair’s text lays out steps for a post-NAPA process for developing country parties and for loss and damage. The text also demands a decision on an Adaptation Committee but remains weak on linking the provision of finance to adaptation actions, a necessary connection.  ECO is most pleased that references to response measures have been removed from the text.
Ironically, while Mitigation is arguably the most important element of a climate agreement, progress has seemed beyond reach. While the Chair’s text delivers only a very general and concise outline of the expected outcome, agreement on specific elements of mitigation is an essential part of the outcome from Cancun.  Elements could include the creation of a mitigation registry to track action and provide support, recognition of the Gigatonne Gap that exists between targets and the level of action required, a process for addressing the gap, and preparation of zero and low carbon action plans.
Given the complexity of issues related to Mechanisms (both market-based and non-market-based), the Chair’s suggestion to establish formal processes to examine them is sensible.
The principles laid out in the Annex V include some useful language such as ‘moving beyond offsets’ to ‘net decrease in global GHGs’ and ‘preventing double counting’ of emissions.  However, Parties should bear in mind that there is no room – or indeed need – for offsets with the current inadequately low pledges by developed countries.
The MRV text remains a blank canvas. A mere 36 words are dedicated to an issue that has blocked progress in these negotiations. Robust MRV is crucial for environmental integrity, but it must be equitable. Critical issues such as common accounting standards for Annex 1 countries, modalities for MRV of support in national communications, and a differentiated approach for verification of voluntary/unsupported actions taken by developing countries must be tackled in these negotiations. Let’s not forget that transparency should apply to the MRV process as well, assuring public access and participation throughout, and developing countries must be supported in their efforts to build domestic MRV capacity.
Finally, the text is silent on the ultimate Legal Form of the LCA outcome. Parties are going to have to come to terms with this question soon, since it is inextricably tied to progressing a second commitment period under the KP. Moreover, the text is silent on what mandate the LCA will have going forward. A clear sense of how both the AWG-KP and AWG-LCA will proceed after Cancun is essential to ensure progress towards a Fair, Ambitious and Binding deal.
The analogy of Swiss cheese has been suggested in this regard. Dearest delegates, ECO urges you to plug the remaining holes in this text – the result of which could well be the politically balanced package you have been looking for.

In the lead-up to Copenhagen and since, climate finance ranked has ranked higher and higher on the list of make-or-break issues. It’s both vitally important and politically challenging. As COP16 kicks off, however, there are worrying signs that negotiators may be taking their eye off the ball and sleepwalking toward a result that does little to resolve the inad­equacies of existing institutional arrange­ments.

To be sure, there is good news also. Over the course of 2010, talks on a new global climate fund have been produc­tive – and now there are proposals and options on the table to provide for its es­tablishment here in Cancun, with details to be worked out in time for COP17. But the establishment of the Fund and related climate finance decisions are far from a done deal. Many of the emerging ‘areas of convergence’ on the table may not de­liver the fair, legitimate and effective cli­mate fund that’s really needed.

For example, many Parties appear ready to accept equal representation between Annex I and non-Annex I on the Fund Board. Because there are roughly three times as many developing countries, this means that each developing country will have one-third the voice in the Fund’s governance. This notion of ‘equal representation’ is a big step backward from the precedent established by the Adaptation Fund, which additionally has two seats from each of the UN regional groups plus one each for LDCs and SIDS. It’s hard to see how, in the end, this would deliver arrangements that are any different from the GEF. Is this the “balanced’ guaran­tee of interests needed for all UNFCCC members?

Secondly, none of the textual propos­als tabled so far guarantee any balance between adaptation and mitigation fund­ing – something most countries agree in principle even though it has not been de­livered in practice to date.

Adaptation currently receives scarcely 10% of the overall climate finance port­folio. Unless Parties agree a dedicated adaptation window in the new Fund with at least 50% of the monies channelled to it, we can only assume the current trend will continue. Is this what Parties really mean by ‘balance’?

Third, textual proposals for guidelines to ensure that the most vulnerable com­munities, especially women in rural ar­eas, will ultimately benefit aren’t diffi­cult to improve – only because right now there aren’t any such proposals. But this is easy to address with a few lines of text and it’s hard to imagine any country op­posing it. Who is against guarantees that gender equity will receive particular at­tention in adaptation support?

Finally, everyone knows building an­other near-empty fund is pointless. Sev­eral options to deliver predictable sources of innovative financing – such as a levy on international shipping and aviation as part of an emissions reduction scheme – were presented by the UN Secretary General’s High-level Advisory Group on Climate Finance less than a month ago.

In fact, it’s clear from the AGF Report that raising $100 billion or more in pub­lic finance is possible. But unless Parties work in concert to map out options for putting such proposals into practice, a de­cision to establish a new Fund could de­liver an empty shell. Is this what Parties had in mind in Bali when they agreed to ‘improve access to adequate, predictable and sustainable financial resources’?

­The decisions taken here in Cancun may not result in the FAB deal that is increasingly overdue. But they will have profound, long-standing implications for the institutional architecture of the future international climate regime.

A fair climate fund is definitely within reach, and ECO calls on all Parties to stand up for it.