ECO is pleased to see the discussions on long-term finance in Panama finishing on a better note than they started. Too many hours in Panama were lost as developed countries pondered whether there was a need to even discuss how to mobilize the money they committed in Cancun. At one stage one developed country party even seemed to query what climate finance was.
Let’s hope all that is now water under the bridge (or through the Panama canal). Yesterday the EU joined their partners in AOSIS, the Africa Group, India and Saudi Arabia in submitting text on long-term finance. As ECO goes to press, there is news that Japan and even the US are bringing their own ideas to the table. That sounds like consensus on the need to negotiate a package on long-term finance in Durban. The homework countries face until then, is what that package will contain.
Two upcoming meetings in the meantime may give them some ideas. First, the final session of the Transitional Committee will start to clarify the ambition of the Green Climate Fund. Many developed countries have said they are waiting to hear more about the contours of the fund being created before committing the resources that will ensure it is not an empty shell. ECO hopes that the final meeting will again capture the imagination of governments North and South. The world needs a new kind of fund to meet the climate challenge and spur commitments at the scale of resources needed.
Second, G20 finance ministers and leaders will discuss the report they requested from the World Bank and IMF on sources of long-term climate finance. The leaked preliminary report indicated an encouraging analysis of the potential to raise large sums from the international shipping sector, without hitting the economies of developing countries. ECO was told the report will show that a $25 per tonne carbon price will increase the costs of global trade by just 0.2%, while generating around $25 billion per year. ECO was particularly pleased to hear that the World Bank and IMF have found that it is possible to compensate developing countries by directing a portion of these revenues to them, ensuring they face no net incidence as a result of these measures. That would be a unique international solution to the high and rising emissions of a unique international sector.
ECO has never questioned the legitimacy of the UNFCCC process to take the final decisions on questions such as sources of finance. But any responsible country that is serious about generating the scale of resources so urgently needed – especially by the poorest countries – will not ignore such strong evidence to help do that.
So ECO leaves Panama with cautious optimism on the finance track. Countries have finally come together to negotiate text. With the inputs they will receive from the Transitional Committee meeting and the G20, there is every chance they can arrive in Durban ready to strike the real deal on long-term finance that developing countries need.