What’s happening with Climate Finance? A New Zealand perspective

Heya, my name is Jonathan and I’m a member of the New Zealand Youth Delegation. We’re a group of ten young Kiwis who are attending COP-17 in Durban, South Africa. There’s a few main policy areas we’ve been working on this year as a team, and they’re all relevant to the negotiations this year.

NZYD!

To begin with, we’re deeply worried about the effects of warmer temperatures and sea level increases on Pacific Island communities who have contributed the least towards climate change yet will feel the effects first and hardest. The prospects for a Fair, Ambitious and Binding deal to reduce carbon emissions are as always on the agenda, as are the inner workings of the Global Research Alliance which is meant to figure out how to produce research to lower emissions from agriculture. The issue of climate financing for developing countries is also a massive priority for Durban, as negotiations surrounding how the Green Climate Fund will be run have been in full force since the 2010 Cancun text was agreed upon at COP-16.

What I’ve been focusing on most intently during our time here has been the last issue in our policy document; that of climate finance. Climate finance is an issue that unfortunately doesn’t seem to get much press (well, nothing to do with climate change does in my opinion, but I’m a bit of a grumble guts) relative to how important it is.

The gist of climate finance, in a nutshell, can be explained as follows: developed countries, who have a historical responsibility for the lion’s share of global carbon emissions responsible for the climatic changes we’re beginning to experience are morally obliged to give funds towards helping developing countries (who don’t have much money) reduce their emissions and engage in sustainable development, as well as adapting to the effects of climate change which are unavoidable. The important thing to remember is that climate finance isn’t the same thing as charity; it is something that the developed world has an obligation to give to make up for the damage to the environment that they have caused during the process of development. This means that climate finance has to come from different sources than traditional development aid.

Another key thing to remember is that climate finance is NOT the same thing as the money states give towards the UNFCCC to host these conferences; it seems unbelievable but there are some countries who are trying to pass off their dues to the UNFCCC as climate finance! The money we give also needs to be ‘new’ as opposed to coming from existing aid budgets, and it needs to be given in the form of grants, not loans. It should also be mainly public, not private in nature: in my opinion New Zealand has been too forceful in advocating for private forms of finance as opposed to public. Private finance such as the leveraging of pension or insurance funds has its place, but I want us to focus on rigid and regulationist approaches as opposed to ‘hands-off’ ‘the market will fix it for us’ neoliberal ones..

A 50/50 split between adaptation and mitigation funding is also important: some states have been prioritizing mitigation measures as they’re more financially rewarding, while ignoring adaptation which is a vital priority for low-lying island nations in the Pacific, for instance. I want to praise New Zealand for recognizing this important issue, as we were told in a briefing that our climate financing in the Pacific has a 70/30 adaptation/mitigation split!

As always, the most important part of climate finance has to do with the actual money itself. How much needs to be allocated towards the Green Climate Fund (GCF) and where is it going to come from? These are two questions I’ll try to answer, and to slip in some details about New Zealand’s stance on the issue.

It is widely acknowledged that the GCF needs at least $100 billion US per year by 2020 in its coffers to meet its goals of helping developing countries mitigate and adapt to climate change. This money also needs to be delivered incrementally in the years leading up to 2020 - nobody in their right mind actually believes that if we have $0 in the fund on December 31st 2019 a hundred billion dollars will magically appear in it overnight! (Actually there probably are people who believe this…)

The issue of where the money comes from is where it gets really contentious. Again, nobody really believes that in this age of neo-liberal austerity that countries are going to stump up money out of their own domestic budgets. If this is the case, we’re going to have to get money from what are called ‘innovative’ sources, i.e those which are new and extraneous of domestic sources. There’s a few main ones of these that I’ll run through.

1) The Financial Transactions/Robin Hood Tax.

This is a simple and brilliant idea which could raise anywhere up to hundreds of billions of dollars a year by placing a tiny (0.05%) tax on financial transactions such as share, currency and bond trading. Every time somebody trades a share they would have to pay a small tax, which already happens in the United Kingdom where it’s called the ‘Stamp Duty.’ This would have two benefits: firstly it would raise large amounts of money that could be spent on development assistance and climate financing. Second, it would lower the amount of speculative, low-margin, high-volume and potentially destructive trading which assisted in no small way towards the 2008 global financial crisis.

There are a couple of variants of the Robin Hood Tax, varying from a simple tax on banker’s bonuses (this was instituted in the UK in 2010 & raised a modest amount of money) to the full blown FTT. The FTT is supported by many and varying institutions and actors, both progressive and conservative. Ban-Ki Moon, the European Commission, the African Union, Bolivia, Pakistan, Bangladesh, Zambia, France, Germany, Spain and Argentina all support it as do notable economists and actors such as Paul Krugman, Joe Stiglitz and Bill Gates who referenced the tax in his recent report on world development.

New Zealand, unfortunately, is a laggard on the FTT. We are taking very much a ‘wait and see’ approach to it, offering no formal support but quietly realizing that in the future it will probably have to happen. New Zealand desperately needs to advocate for this tax, but our domestic leaders either don’t really know what it is, or have hard-line ideological opposition to it (I lobbied on the issue last year & met much resistance.)

2) Bunker fuels and Aviation.

These are two really interesting sources of finance: international shipping and aviation each account for a similar % of global emissions as Germany, one of the world’s largest economies. They are also currently un-taxed and represent a massive efficiency loss in terms of pricing carbon globally. Putting a tax on bunker fuels could raise $25 billion a year, of which at least $10 billion would go towards climate financing, with the rest re-imbursing developing countries. We also need to price aviation emissions, as it is predicted that they could rise to 15% of global emissions in fifty years as mitigation is performed in other areas.

New Zealand’s position on these issues is again unfortunately weak. We are again taking our ‘wait and see/don’t rock the boat’ approach, instead of vigorously advocating for a tax on shipping and aviation. New Zealand needs to get tough on these issues, so that the Durban agreement includes language mandating the International Maritime Organization to swiftly investigate and enact shipping taxes, and to support the European Union’s aviation taxes from lawsuits by India and the United States by advocating for their protection and extension – we can’t stand by and do nothing!

3) Ending Fossil Fuel Subsidies.

I’d like to end on a nice note, so I’ll talk about this issue. The value of fossil fuel subsidies globally at present is half a TRILLION dollars per year. It is completely and utterly ludicrous that such a massive amount of money is spent on promoting such a destructive and wasteful industry while climate change is already killing people in developing countries. New Zealand is a member of the ‘Friends of Fossil Fuel Subsidy Removal’ group that works to advocate for their removal by G-20 nations, alongside the OECD. This seems like a no-brainer, but it’s great that we’re taking a hands-on advocacy role in this issue. It feels goods to know that despite our inadequate mitigation targets and LULUCF (land use/forestry) loopholes we’re carving out to appease our forestry and farming industries we’re actually doing something decent. Maybe our negotiators should give that stuff up & focus more on finding innovative forms of climate finance – it’s what I’d be doing were I in their shoes!