UN Climate Chief: Consensus Building on Climate Financing for Poor

US 'Will Pay Its Fair Share,' White House Says

Dec 4, 2009

As the Copenhagen climate summit approaches, international consensus is building for a short-term financing deal under which wealthy nations would contribute $10 billion a year for the next three years to "kick-start" climate financing for poorer countries.

Today, the White House gave that plan and the summit itself a much-needed shot of adrenaline.

In an official statement, the White House announced that President Obama supports the "kick-start" plan and has decided to shift his appearance at the Copenhagen talks from Dec. 9 to Dec. 18, to be there during the summit's crucial final days.

"This week, the president discussed the status of the negotiations with Prime Minister Rudd, Chancellor Merkel, President Sarkozy and Prime Minister Brown and concluded that there appears to be an emerging consensus that a core element of the Copenhagen accord should be to mobilize $10 billion a year by 2012 to support adaptation and mitigation in developing countries, particularly the most vulnerable and least developed countries that could be destabilized by the impacts of climate change," the White House statement said.

"The United States will pay its fair share of that amount, and other countries will make substantial commitments as well."

The world should not expect any agreement on long-term funding this year, though. While Copenhagen should offer at least "the prospect" of stable dollar commitments, even this will be "a big challenge," UNFCCC Executive Secretary Yvo de Boer told reporters earlier this week.

The hurdles to sealing a long-term financing deal include the basics: how much money is needed to fend off the effects of greenhouse gas emissions and who will pay what.

Reaching a short-term funding accord in Copenhagen could help unclog the long-term financing impasse, de Boer said.

The White House statement agreed that world leaders need to work toward a longer-term financing plan, but it offered no numbers:

"We also need to address the need for financing in the longer term to support adaptation and mitigation in developing countries," the official statement said. "Providing this assistance is not only a humanitarian imperative — it's an investment in our common security, as no climate change accord can succeed if it does not help all countries reduce their emissions."

The kick-start financing plan came out of the European Union last month. During the summit of Commonwealth leaders last week, UK Prime Minister Gordon Brown pitched the idea of $10 billion per year from 2010 to 2012 to assist developing nations; the 53 nations of the Commonwealth backed it.

The money primarily would be used to help developing countries adapt to the immediate impacts of climate change, de Boer said. It would also carry another benefit — time.

The $10 billion a year would help poor nations "prepare the solid adaptation and mitigation strategies that the world will need in order to be able to estimate real costs over time," de Boer said.

Estimating long-term financial needs is not an exact science. There are "ballpark" figures on the table for what is needed by 2020 and 2030, but they are "not precise," he added.

Experts assert that worldwide investment to fight global warming in poorer nations would need to reach at least $100 billion per year by 2020. In November, hopes were high that the G20 countries would advance a pledge supporting this figure. But in the end, the summit failed to produce results.

Developing nations have cautiously welcomed plans for starter financing. Some climate advocates say the amount is grossly inadequate, while others accuse the rich of using "fast-track" money to buy off the poor in the absence of a legally binding climate deal.

De Boer said that getting a commitment on long-term funding is still one of the cornerstones of success in Copenhagen. For the poorest nations, serious financing "must be in an agreement that holds water," he said.

But it also remains unclear whether countries showing willingness to deliver kick-start dollars through 2012 are in the position to also deliver clarity on longer-term figures anytime soon.

With that in mind, De Boer's prediction for Copenhagen is that the world will be able "to agree to the fact" that around $100 billion per year will be needed.

De Boer took an even less sanguine view of burden sharing. Currently, there is a total lack of agreement on how financing should be divvied up among individual countries, he said.

A "long-term burden-sharing formula in Copenhagen" would be "fantastic," but getting there "will be very difficult if not impossible."

For now, the world must get clear on who contributes what to short-term finance, de Boer added.


Road to Financing Goes through U.S. Senate

Danish climate envoy Connie Hedegaard told Reuters on Thursday that a commitment from President Obama on financing would "give a very constructive push to the negotiations throughout the first week."

However, Michael Allegretti, senior U.S. policy advisor of the Climate Group, notes that "the balance of power in the U.S. climate debate rests with the U.S. senate," and "when they're even talking about financial assistance, senators are talking about around $2 billion."

Sen. John Kerry (D-Mass.), a leading voice for U.S. climate legislation, has called for $2.5 billion to $3 billion in U.S. funding as a jump-start, but he said this week: "There is not a specific figure in the Senate" on short- or long-term financing.

The lack of concrete financing commitments from the U.S. is likely to come into sharp relief in Copenhagen, along with the country's proposed mechanism for delivering long-term finance.

"We see the U.S. speaking about a global fund for climate ... through a multilateral development bank," such as the World Bank, Allegretti said. Contributions from countries would be "weighted toward private sector investment."

Under the plan, all nations would be expected to contribute, with the exception of the least developed countries (LDCs), Allegretti said. There's at least one major catch: The contributions would be voluntary.

Developing nations, in stark contrast, want a fund administered by the UN where they would have more power over cost-sharing decisions. They want mandatory contributions and more public financing than private dollars, which
they see as a way for big polluters to shirk their historical responsibility to clean up climate pollution.

Poorer nations remain highly skeptical of voluntary climate pledges from the rich. Wealthy countries have failed to make good on promises made in 2001 to provide the 49 LDCs with just $2 billion for immediate adaptation.


High Cost of Continued Inaction

In a new report out of Harvard on climate finance, researchers say that "assuring delivery and appropriate use of the financial resources ... is as vital as agreement on emission caps." And yet, "a comprehensive framework on financing for mitigation and adaptation is not in sight."

The stalemate, they write, reflects the lack of trust between developed and developing countries.

If trust cannot be achieved and differences bridged on finance, expect planet-wide effects, de Boer said.

"Insufficient financial support for both adaptation and mitigation will have two impacts. First of all it will drive up emissions, especially in developing countries where economies are growing fastest, but it will also result in severe impacts in climate change that, in turn, could lead to [international] social and political instability," he said.

The scientific community is already pointing to the fact that as early as 2020, some 250 million people in Africa could be confronted with water stress from climate change, and that could trigger mass migrations, de Boer noted.

A seminal report by climate economist Nicholas Stern in 2006 said the cost of failing to act on climate change would be much higher than the cost of decarbonizing the global economy. The economist's updated 2008 analysis concluded that tackling climate would cost 2 percent of world GDP. If the world does nothing, Stern concluded, some countries will face losses of up to 20 percent of their GDP.

De Boer remains hopeful:

"Many countries are beginning to realize this," he said.

 

See also:

Nations Threatened by Climate Change Call on Developed World to Give 1.5% of GDP

Public Financing or Offsets? How Best to Fund Clean Tech for Developing Nations

'Climate Principles' Refocuses Banks on Sustainable Behavior

The Third Rail of Climate Change: Climate Refugees

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