Finance: Flashback or Fast Forward?

While seriously short of the mark, some limited progress was made on climate finance in Copenhagen. Developed countries promised to mobilise $100 billion per year and resolved to establish a new fund to deliver it.  All that opens the door to to fast-forward, not slow-walk, this building block in 2010. Cancún must offer more than just a flashback, a rehash of weak pledges. To unlock wider progress in the negotiations, Cancún will need to deliver a robust agreement on:

* Financing institutions, including establishment of a new fund under the UNFCCC and provisions for its  governance.

* Scaling up new, additional and predictable climate finance through innovative sources, using the finance targets agreed in Copenhagen as a milestone for progress.

* Institutions, guidelines and procedures for measuring, reporting and verifying support for climate actions as well as the actions themselves, including a registry for both actions and support.

The task here in Bonn is to define clearly and lock in the loose pledges of Copenhagen, and provide a road map towards ambitious, binding finance commitments in Cancún. This will mean continuing the discussion of sources in the AWG-LCA so that negotiators can take the appropriate recommendations of the Advisory Group on Climate Finance (AGF), build on them, and agree a package of new sources that can meet the scale of needs. It will also mean clarifying the minimum scale of public finance required, to turn big numbers into meaningful commitments. Finally, it will mean taking a practical, no-nonsense approach to texts on architecture and governance to deliver finance that works for the developing countries it is meant to assist.

Real progress on climate finance at this session here in Bonn offers the best chance to lift the cold, damp, Copenhagen fog and reveal the path to sunny success in Cancún.

Related Newsletter : 

Make the FAB deal real

The choices leaders make this week will determine whether the world achieves a tipping point. A tipping point into a new era of cooperation and solidarity, or a disastrous tipping point in the climate system leading to direct conflict about the remaining environmental space.

The world demands nothing less than a Fair, Ambitious and Binding (FAB) deal. Three major gaps can and must be bridged in the remaining time: the gap between current emission reduction pledges and the science; the gap between the finances on the table and the need in developing countries; and – perhaps most critically – the gap between nations where trust must be forged. We clearly need a radical transformation.

ECO has written before about the “gigatonnes gap.” Put simply, the emission reductions currently on the table, from developed and developing countries, will fail to meet the challenge posed by the science. Independent experts ranging from Lord Stern to McKinsey for Project Catalyst and Ecofys/PIK, show that we are way off track for staying well below 2°C, not to mention 1.5°C, which the latest science and most vulnerable countries demand.

At the heart of the problem lie the industrialised country targets (particularly the USA, Canada, Australia, and New Zealand). So far, the industrialised countries’ targets are proving much more effective at capping ambition and innovation than they are at capping emissions. The picture gets even bleaker when the huge loopholes – notably “hot air” allowances and bogus LULUCF accounting – are taken into account. Under the current approach these would lock economies and the planet into a costly high carbon future and undermine a green new deal that could pave the way out of economic recession. They render mute any shared vision referring to keeping warming below 2°C. Without urgent triage, there is no prospect of a peak in global emissions before 2020. Without a radical departure in Copenhagen, the world risks staying the course for warming of at least 3°C, very likely 4°C or more – even the prospect of “Venus” conditions on Earth.

The second huge gap is the finance gap. Again, there is a crisis in ambition. The EU has put forward figures for long-term finance, but these fall far short of the need. Norway and Mexico have proposed a new green fund. But, collectively, developed countries have failed to quantify the scale or to commit to a specific contribution.

Closing these two gaps will be even more difficult without clear action to close the trust gap. In these complex negotiations, fear, mistrust and suspicion have come to rule – particularly between industrialised and developing countries. The reality of historic responsibility, the vast disparity in per capita emissions, the legitimate development needs of countries whose populations struggle with the crisis of poverty and the existential threat posed by climate change must be faced.

Without trust the discussion has persistently returned to legal architecture – drowning out discussion of substance. Each side is afraid to be taken advantage of by the other, prefering to debate who will be bound to what, instead of what they will do. Challenging times require creative solutions, demonstrating real action and sowing seeds for a new spirit of international cooperation.

The most obvious step that would change this dynamic is for the US to offer a more ambitious target and deliver on climate finance. Everybody in Copenhagen recognizes this as “the elephant in the room”, while understanding the challenging political situation the US administration finds itself in. The good news is: studies show the US can reduce its emissions by 18% below 1990 levels by 2020 – it’s probably easier than to go back to the moon.

Parties could embrace a large number of hard-edged practical measures that can wipe out gigatonnes to make a FAB deal. Here are some creative ideas to spur the transformation. Why not take: Action on a global feed-in tariff for renewable energy? Ambitious global standards to improve energy efficiency and drive forward clean technology? An accelerated phase-out of HFCs and other potent greenhouse gases in consumer products? A targeted fund to address non-CO2 industrial greenhouse gas emissions in developing countries instead of relying on an expensive offset mechanism? Clear measures to strip out the hot air and LULUCF loopholes? New and concrete agreements on key technology IPRs, now?

There are similarly innovative ideas to plug the public finance gap and mobilise complementary private money to fuel the transformation. Decisions could be taken in Copenhagen to reduce emissions and raise money from international aviation and shipping or the auctioning of allowances. The USA recently proposed to the G20 to agree to redirect fossil fuel subsidies by 2020. George Soros last week here in Copenhagen suggested better utilising Special Drawing Rights. Some of these ideas may need more work, but without vision they will remain orphans.

As Lord Stern said: “If we assume people and politicians will be irretrievably short-sighted, quarrelsome and narrow in their judgment of their interests and act accordingly, then our pessimism will be self-fulfilling.” Now is the time for politicians to show that such an assumption is unfounded. Fight for the FAB deal!

COP out?

Will the doors slam shut at this highest-profile climate negotiations in Copenhagen this week? Will civil society, which has played such a constructive and vital role in the Conference so far, be left out in the cold by unjustifiable restrictions on access – well beyond the legitimate security needs of the Conference?

Accountability and transparency at these negotiations are a must, and cannot be secured without direct public participation. Civil society brings insight, oversight and connection to people around the world who depend on the work of NGOs to pursue the credibility of the process and integrity of the outcome.

The Rio Summit-derived Agenda 21 aptly observes: “One of the major challenges facing the world community as it seeks to replace unsustainable development patterns with environmentally sound and sustainable development is the need to activate a sense of common purpose on behalf of all sectors of society.” How can civil society get onto the same page if we’re not in the building when the real work is being done?

This meeting can go down as a milestone in human history, a watershed moment in the annals of participatory democracy. The Bella Center today is truly the world, earnestly at work on solutions to its most pressing problems. Implementing those solutions will require the active and direct mobilisation of government, business and civil society on an unprecedented scale. Any perception that the process is closed or rigged would severely undermine the prospects for success in Copenhagen and beyond.

The Rio Declaration on Environment and Development affirms that “non-governmental organisations play a vital role in the shaping and implementation of participatory democracy.”

Excluding civil society would not only be inconsistent with UN Principles. It would be profoundly counterproductive to the spirit of the conference and the practical value of its outcome. To launch the world toward a sustainable future, the process over the critical next four days must be accountable and transparent so that the result will have the power of broad ownership by all sectors. Nothing less than the full and active participation of civil society can produce such an outcome.

Finally, this move goes against the aspirations of the UN Secretary-General himself who called upon civil society to create a movement and support the world’s governments to deliver the strongest outcome possible in Copenhagen.

Closing the door will give the perception that what governments are saying is a greenwash.  It was the public pressure generated by civil society which will soon result in more than 100 heads of state descending upon Copenhagen. Don’t let the reward for this outstanding achievement be a shut out from the Bella Center. Keep the doors open. Don’t COP out!

Fast trick financing?

Remember the G8 summit in L’Aquila this year? World leaders proudly offered US$20 billion to tackle the global food crisis. Subsequently it was reported that only US$3 billion was going to be ‘new’ money. The rest had already been committed or was to be handed out as loans.

This scenario makes ECO wonder: How much of the €2.4 billion a year that the EU has now put on the table for fast track financing, over 2010-2012, will be new and additional? ECO’s estimate is that it will be less than 5%. We fear that most of the remainder (EU, prove us wrong!) will come from re-packaging and double-counting previous pledges. ECO requests EU delegates to be transparent and accountable and explain to developing country delegates how much of the €2.4 billion has already been pledged elsewhere.

ECO points out that both fast track finance and long-term financial support in particular need to be committed, and provided in addition to developed countries existing ODA targets. This is because climate finance, which is meant to meet the additional cost of adapting to climate change, is not aid.

The means to overcome double counting is transparency. There has to be clear reporting on what is ODA, what is additional to ODA for climate finance and what has been pledged. Under the Copenhagen Agreement, Parties must agree that funding contributed once as climate finance will not be pledged elsewhere. There is ample opportunity over the next four days to ensure that the five months after the empty coffers of L’Aquila, world leaders will not be making the same mistake again.

Close the logging loophole now

Most developed countries came to Copenhagen asking the world to ignore planned increases in greenhouse gas emissions from logging and erase them from the books. It was a proposal that never deserved to see the light of day at a climate conference. Now it has to be put to rest.

The Climate Action Network has developed and proposed to negotiators a reasonable, technically sound and objective way to close the logging loophole: Account for all changes in forest management emissions compared to the average level of emissions between 1990-2007. It is so simple and so obvious that it’s boring.

It is imperative this loophole is closed if we are to have an agreement with environmental integrity. Closing this loophole will also strengthen overall targets by nearly 4%.

Will developed countries make this most basic commitment to environmental integrity or will they insist on keeping increased forestry emissions out of accounting even though they are in the atmosphere.

Austria, Australia, Canada, Finland, Japan, New Zealand and Sweden – ECO is looking right at you.

Pages

Subscribe to Tag: Copenhagen