In the climate finance negotiations in Warsaw, the debate on Long Term Finance included a battle between the US and the Philippines (representing the G77 group of developing countries).
After the massive Typhoon Haiyan in the Philippines, there are obviously calls for finance to prevent the climate-related disasters that will become even more regular with increased sea surface temperatures.
The UN Secretary-General Ban Ki Moon, speaking at the Ministerial, highlighted climate finance is essential for “confidence in the process” and to scale up climate action.
Yet currently pledges lead us toward a catastrophic 3.7 degrees of warming by 2100, even higher than projected previously, and Japan’s pledge became LESS ambitious last week. This is almost double the ‘safe’ 2 degree target (2 degrees of warming will still destroy most coral reefs).
Climate finance is essential to raise ambition and prevent disaster. It was hoped Warsaw would be the ‘finance COP’ – but what happened?
Ambitious pledges were blocked by big emitters of fossil fuels (US and Canada) - the ‘usual suspects’ who block progress in climate negotiations.
Developed Countries Must Commit Finance: A Matter of Equity and Climate Justice
Insiders said that in the first week, the US was pushing for the Long Term Finance text to state that “all Parties willing to do so” should “continue” to provide climate finance.
In effect, the US negotiator wanted to remove the mention of ‘developing’ countries at one point, thereby undermining the principle of ‘common but differentiated responsibilities (CBDR) in the UNFCCC Convention.
There were heated exchanges between the US and the Philippines (representing the G77 group of countries), who were calling for support to be adequate, predictable, transparent, adequate and accessible. All these words were removed from the final text.
Meanwhile, the only country to have committed substantial funds to the Green Climate Fund is South Korea, which committed $40 million, a country that does not even have an obligation to do so and has historically lower emissions.
At the heart of this debate is the call for climate justice. It is an ethical issue. Many poor countries who did not cause climate change are suffering from impacts, which is why the developed nations with historical responsibility for emissions must provide finance to support them.
Monitoring and Transparency of Finance: Who will be monitored?
Another debate going on will be the review of finance under the Standing Committee on Finance (SCF). Developed countries were pushing primarily for monitoring of impacts of climate finance. Developing countries, in particular, called for transparency in flows of climate finance.
Greater transparency would be a win-win scenario that would ultimately benefit both parties. Ironically, the climate finance negotiations were themselves un-transparent with major debates going on behind closed doors in side meetings.
The proposed guidelines for the fifth review – found here in Annex IV - were once again hacked to pieces. The final guidelines make no mention to direct access, and left out the part about a global paradigm shift. It also removes the mention to “new and additional” resources.
Resources must be additional to have a meaningful impact, and to prevent development aid from being diverted from other important areas.
Yet, urrently, the majority of climate finance is non-transparent and is made up of recycled development aid (not additional to ODA). There are concerns about whether ‘pledged’ climate finance actually reaches intended recipients; which is why developing countries are calling for transparency on finance both provided and received.
Capitalisation of the Green Climate Fund
The Green Climate Fund is the great hope for action on climate change. However at the moment, it remains an “empty shell”. Even though it was announced three years ago, it struggled to materialise.
As the President of Tanzania recognised in the High-Level Ministerial yesterday, the USD 100Bn pledge under the Green Climate Fund must be “the minimum that is provided if we are to tackle climate change”.
The scale of the climate change problem is much bigger than just the $100Bn pledge. UNFCCC estimates that between USD 200-210 Billion per annum is needed in 2030 for mitigation alone.
The Warsaw COP has led to operationalization of the Green Climate Fund, but when will it actually be capitalised?
The Need for a Roadmap to Scale up Finance up to 2020: Next Few Years are Critical
Developing countries have declared dedicated NAMA (Nationally Appropriate Mitigation Actions) actions, but there must be finance available if we are to have a chance of keeping climate change within ‘safe’ limits.
Scientists warn that these are critical years. If we wait until 2020, there is a risk the world’s climate system will cross irreversible “tipping points” with potentially catastrophic environmental, economic and social consequences.
Ban Ki Moon called for building confidence in the process, and concrete numbers are essential to build confidence.
Many people hoped the Warsaw conference would result in a ‘roadmap’ for scaling-up climate finance, including a mid-term target. There is a need for concrete numbers. Instead the final text urged developed countries to “maintain continuity of mobilisation”.
The loss and damage agenda has highlighted the danger of crossing irreversible thresholds which we cannot adapt to. In fact, if losses occur, this will need additional finance above and beyond the USD 100Bn target committed by developed countries. The greatest losses and damages can be avoided through effective mitigation now.
It is clear these are critical years ahead up to 2020 to drive forward ambitious mitigation: countries must make firm commitments to scale-up public finance.
With Warsaw providing little momentum, the Climate Summit organised by Ban Ki Moon for next year will now be absolutely critical.
Additional Finance: Tackle Fossil Fuel Subsidies Now
Crucially, climate finance must not come from recycling development aid pledges, otherwise this could leave many millions even more vulnerable. If it is non-additional, it could make the situation worse by reducing funds to vital sectors like health or water. This is why commentators call for finance to be ‘additional’ to development aid. If it is non-additional, it could make the situation worse by reducing funds to vital sectors like health or water.
The additional public finance is clearly there and exists in many different forms. In fact, OECD countries alone subsidised fossil fuels by up to 90 Billion per year in 2011. The finance clearly exists: in fact Poland’s coal producers got 7 Billion Euros of fossil fuel subsidies over 1999-2011.
The problem is not a shortage of resources, but their ineffective use. The right policies are also needed to provide clear signals to the private sector.
We will see if the US, Canada, and Australia want to be on the right side of history, or will continue blocking on the road to a global climate treaty.
World leaders must prioritise the future of the planet for the sake of us and future generations. The fight has only just begun.