A stumbling block at COP 23 – Finance

huddle-Fiji-in-BonnThe cost of mitigating climate change is estimated at 200-350 billion Euros (236-413 Billion USD) per year by 2030. It is a manageable sum in terms of a global burden, only 1% of global GDP. In terms of who pays and how much to pay, however, it becomes a disputed figure. For example, developed countries agreed in 2010 to “mobilize” 100 billion USD annually by the year 2020 in paragraph 98 of the COP16 decision 1/CP.16. Unresolved issues regarding this commitment remain, even in 2017.

Philosophically, this divide has on one side the developed countries as having the ability and the responsibility to pay. Developed countries use more energy than under developed countries. On the other side, the underdeveloped countries need financing and the know-how to ensure that future development in their countries is environmentally friendly and sustainable.

At COP23, this issue came to the forefront where it stopped the APA closing plenary dead in its tracks on Wednesday afternoon, the day the APA was scheduled to close. Negotiations lasted through the night. The underdeveloped countries, led by the G77, wanted developed countries to make concrete commitments through the biennial communication requirements as required by Article 9.5 of the Paris Agreement. The G77 also referred to Paris Agreement Articles 13 (transparency) and 15 (compliance) to make this requirement enforceable.greendollars

In response the developed countries argued that Article 9.5 is a procedural matter and that the G77 countries want to discuss the dollar commitments. They argued that this is beyond the scope of the Paris Agreement.

The result was to urge both sides to act on their commitments and to refer this matter to a High Ministerial Dialogue for further discussion.  In other words, onwards to 2018.

 


Behind the scenes of the US-China negotiations

Rolling Stone recently published this intriguing backstory of the US-China climate change announcement made just two weeks before COP20 kicked off in Lima, Peru.  Obama and Xi Jinping

The bilateral conversation started last February with a phone call from U.S. Special Envoy on Climate Change Todd Stern to his Chinese counterpart, followed up by a private letter to President Xi from President Obama a month later. (Xi had already traveled to the U.S. in the summer of 2013 just after becoming China’s president, to meet with Obama for two days of informal talks that resulted in an agreement limiting HFC emissions.) In early June, the EPA formally announced the Clean Power Plan, aimed to cut carbon dioxide from power plant emissions by 30% by 2030. This development showed the Obama Administration’s seriousness about using its executive branch power to limit GHG emissions.  According to Rolling Stone, “a few weeks later, a swarm of U.S. diplomats, including Kerry, Podesta and Stern, flew to Beijing for the Strategic and Economic Dialogue, a high-level diplomatic meeting between the United States and China.”  Despite private, data crunching meetings with Chinese officials, they left without a deal.  President Obama then sent President Xi “a focused two-page letter on what could be delivered during the November APEC visit to Beijing, and it emphasized the climate joint announcement.” In September, when Xi turned down Ban Ki-Moon’s invitation to the UN Climate Change Summit (going to India instead, where he and Prime Minister Modi signed new trade deals) and sent his VP in his place, little was expected from China in New York.  But behind the scenes, VP Gaoli told Obama that Xi wanted to do the deal and announced it at the upcoming APEC meeting.  This development set off a flurry of negotiation on the details that still weren’t set when Obama traveled to Beijing for the regional economic meeting.

In addition to providing a somewhat breathless account of these secret negotiations, this gripping article analyzes a number of pragmatic points about the deal.

COP20 decisionFirst is the potential political payoff from closer climate change relations between the world’s current highest GHG emitter (China) and the country it unseated for the top spot.  For the U.S. (and other developed countries), it means a breach in the UNFCCC/Kyoto Protocol wall between developed (Annex 1) and developing (nonAnnex 1) countries.  As Jairam Ramesh, a member of Indian Parliament and climate negotiator, was quoted, “In one move, Obama and Xi broke the logjam of climate politics. Until now, China has insisted that the U.S. and the EU are largely responsible for climate change. But this raises the bar for other nations.”  Of note is China’s influence on other advanced developing countries, like Brazil, South Korea, India, Mexico, and Indonesia. The deal also provides a retort to the U.S. climate change skeptic argument that any U.S. GHG reductions would be for naught given China’s high emissions.  As Democratic Senator Sheldon Whitehouse of Rhode Island was quoted saying, “now China is doing something pretty significant, while Republicans are still huddled in the dark castle of denial.” For China, with the dramatic announcement on the eve of COP20, President Xi had proven his diplomatic skill by cutting a deal with a world superpower while simultaneously attending to the national need to reduce China’s infamous air pollution.**  Second is the economic pay off of this deal for both countries. The stated focus on renewable energy while weaning themselves off carbon-based fuels provides clear signals from the U.S. and China to the business community about where to invest money.

john podesta in greenMost interesting for this blogger is the central role that John Podesta is credited for playing in bringing the deal to fruition.  Recall our opening question when he was hired by the Obama Administration last December?  While he may not have had an impact on last March’s special ADP meeting in Bonn, there is no doubt that he will at this February’s special ADP meeting in Geneva. And more to come in the long term, if Rolling Stone’s conclusion about his role in the next administration proves true!

 

**This news update: With asthma cases alone on the rise, the Asia Asthma Development Board says that China has the world’s highest mortality rate from asthma, with 36.7 out of 100,000 patients failing to survive.


Nations Commit $9.3 Billion Towards Climate Action: Is it enough?

Yesterday international leaders pledged $9.3 billion towards the United Nations (UN) Green Climate Fund (Fund) at the first Pledging Conference in Berlin, Germany. Formally established in Cancun in 2010, the Fund aims to help developing countries mitigate and adapt to climate change. In this way, the capital would help those countries least to blame for, but most at risk from, climate change. The Fund would provide grants, loans and private capital for renewable energy and green technologies. big mills It is a step toward the far more ambitious goal announced in Copenhagen in 2009 for industrialized nations to mobilize $100 billion a year by 2020 for broader climate finance.

The initial capitalization of the Green Climate Fund is critical to the intergovernmental negotiations. The pledges act as an economic and political catalyst, spurring international climate action. “The [Fund] is the epicenter that determines the direction of both public and private investment over the next decades,” said Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC). Resources allocated to the Fund unlock financial flows from the private sector. Private investments are viewed as essential to the transition to a low-emission, climate resilient economy. These investments are stimulated through application of concessional public financing from the Fund.

Politically, the pledges build trust between developed and developing countries. “The result of today’s capitalization of the [Fund] is foremost an unmistaken sign of trust building,” said Hela Cheikhrouhou, Executive Director of the Fund. “This creates a positive atmosphere for the start of successful negotiations in Lima in less than two weeks,” stated H.E. Mr. Manuel Pulgar-Vidal, Minister of the Environment of Peru.

Twenty-one nations made pledges, including contributions from four developing countries. Their combined contributions are the “largest amount the international community has ever mobilized for a dedicated climate finance mechanism,” said the Fund executive members.  Earlier this week at the G20 Summit in Australia, the 20 biggest economies in the world emphasized their commitment to “strong and effective action to address climate change.” The United States pledged $3 billion and Japan $1.5 billion to the Fund.Canada’s Prime Minister, Stephen Harper, broke from his usual ally on climate issues, Australian Prime Minister Tony Abbott, when announcing Canada’s commitment the Fund.

At the Pledging Conference, Germany and France each promised $1 billion, Britain pledged more than $1.1 billion and Sweden contributed over $500 million. Other countries that made pledges include the Czech Republic, Denmark, Finland, Italy, Luxemburg, Mexico, the Netherlands, New Zealand, Norway, South Korea and Switzerland. big graphUN Secretariat Ban Ki-moon said the pledges “demonstrate that governments increasingly understand both the benefits derived from climate action and the growing risks of delay.

Nevertheless, some wonder if momentum is building towards meaningful climate action. Critics point out that the international community failed to meet the UN goal of $10 billion. Oxfam called the $9.3 billion “a bare minimum” compared to the $10-15 billion it and developing countries call for. Oxfam further pointed out that Australia, Austria, Belgium, Canada and Ireland have not yet made any pledges. “Financial support from developed countries should be a building block for a global climate agreement, not a stumbling block,” said the group’s Alison Woodhead. Marlene Moses of Nauru, chair of the Alliance of Small Island States (AOSIS), called the pledges “still well short” of the target. “If it’s a struggle to get $10 billion once-off, how difficult is it going to be to get to $100 billion every year?” said Yvo De Boer, who oversaw the UN global warming talks from 2006 to 2010. “Much more has to be done if the promise made to developing countries to provide financial support of $100 billion per year in 2020 to tackle climate change,big fireStephen Krug, a policy analyst at Greenpeace in Germany said. “While climate change is developing faster than expected, the financial support for those who are the most affected still evolves at a snail’s pace.

Climate experts have warned that time is running out in the battle against climate change. Are world leaders committed to meaningful climate action? Does $9.3 billion reflect the pressing need to combat what is proclaimed the “most defining issue of our time?” Only time will tell.