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Entries tagged "UNFCCC"

7 Things to Look Out for in the UN's Green Climate Fund

February 13, 2014 ·

Green climate fund1. Is the GCF a Fund or a Bank?

The main purpose of the Green Climate Fund (GCF), put very simply, is to receive climate finance from developed countries (in accordance with their obligations under the UN Climate Convention) and disburse that money for activities in developing countries. But there are considerable signs of mission creep and the paperwork framing discussions in Bali contains numerous references to the revenue generating capacity of the Fund’s loans, and the potential for bonds, to replenish the Fund’s coffers.

A key part of the value in having a GCF lies in its ability to fund projects and programs that commercial lenders wouldn’t touch. The GCF should not aspire to be a World Bank for Climate Change, let alone its Goldman Sachs. If the GCF focuses on supporting projects that have genuine development benefits, including most of those that address the need for adaptation to the effects of climate change, it’s unlikely that it can at the same time generate sufficient returns on investment to keep the Fund afloat – and nor should it. Climate finance is an obligation of developed countries for their disproportionate role in causing climate change, and the GCF should be based on regular financial replenishments from developed countries, supplemented by innovative mechanisms like Financial Transaction Taxes.

2. Will the GCF fund fossil fuel infrastructure?

It is often difficult to see the wood for the trees within the thicket of paperwork that surrounds GCF Board meetings. But any mention of phasing out fossil fuels through a transition to renewable energy is conspicuous by its absence. Unless there’s a rapid about-turn the GCF could, perversely, become a major source of funding for fossil fuel infrastructure, even as other international financial institutions are belatedly moving to phase out some of the coal-fired excesses of their energy portfolios.

There are still some ways to prevent this fate. The Fund’s “initial results management framework” seeks to measure only tonnes of greenhouse gas emissions, but could instead set strict performance standards (or output limits) that would rule out dirty energy. The GCF could draw up an exclusion list of dirty energy project types. It should also adopt strong environmental and social safeguards, so as not to avoid promoting the displacement of people and biodiversity loss that comes with large hydroelectric dams, as much as with fossil fuel projects.

The prospects that the GCF will exclude dirty energy projects look slim, given that its Board contains several members keen to promote fossil fuels (and their proxies like “carbon capture and storage”), while large transnational corporations, including Bank of America (dubbed “the coal bank” by activists), play a significant role in shaping the Fund. But resistance to this corporate capture is growing.

3. Whatever happened to the promise of civil society participation?

The GCF Secretariat recently invited observers to an event in Bali, swiftly followed by two recall messages and an instruction to disregard the first message. This little administrative blunder is an apt metaphor for how the Fund treats currently civil society participation: “invite – recall – recall – please disregard.” The Governing Instrument (in effect, the Fund’s constitution) asks that the Board should “develop mechanisms to promote the input and participation of stakeholders, including private-sector actors, civil society organizations, vulnerable groups, women and indigenous peoples, in the design, development and implementation of the [Fund’s] strategies and activities.” But the proposals tabled for discussion at Bali backtrack on a lot of this.

The proposed process for approving GCF financing gives no clear idea as to when and how the views of “stakeholders” will be considered, not least communities where projects are located. The “no objection” procedure, introduced to ensure active engagement from civil societies in the development of the climate strategies funded by the GCF, is reduced to a box ticking exercise that can assume “tacit” consent for projects. Instead of the “participatory monitoring” that the Governing Instrument suggests, the monitoring of GCF activities could be limited to greenhouse gas calculations and cost-benefit analyses, offering limited insight into the wider benefits (or harms) that a broader, qualitative framing could show up.

Civil society groups are becoming increasingly agitated on these issues as past promises have not been kept. For example, having decided to appoint civil society representatives to its Private Sector Advisory Group, the GCF Board and Secretariat have apparently snubbed the representatives chosen by the coalition of civil society groups observing the Fund. Instead, secretariat staff cherry picked advisors.

4. Will the GCF balance mitigation and adaptation?

One of the key decisions that will be taken in Bali is on “allocation”, setting guidelines for how the GCF’s funding will be distributed. The headline figure here concerns the balance of mitigation (reducing future emissions) and adaptation (tackling climate change impacts that are already happening). An initial assessment by the Fund’s Secretariat suggests that it should aim for “50/50 as the medium-term allocation target.” But the proposal that the Board is being asked to decide upon magically transforms this into a “target range of 30-50 per cent for both adaptation and mitigation.” Fans of math will note that both targets could be hit without adding up to 100 per cent, whilst followers of climate finance have long complained that support for adaptation repeatedly falls short in the finance provided by developed countries and via other international financial institutions.

The Board will also discuss a target of 20 per cent of GCF financing going to its Private Sector Facility. As that’s widely expected to focus on mitigation, that could make any broader balance more difficult to achieve.

5. What protection will GCF environmental and social safeguards offer?

Safeguards set out some basic ground rules to ensure that finance will “do no harm”, a principle that encompasses social, gender, economic and environmental impacts. The GCF is formally committed to building upon the “best practice” elsewhere. Although no decision on safeguards will be taken until May 2014, the meeting in Bali will introduce the first draft of the Fund’s proposed safeguards. To describe these efforts as “disappointing” would be an understatement. The proposed standards offer a short and apparently voluntary set of guidelines based upon the UN’s Adaptation Fund, whose lending practice are far narrower and less risky than what the GCF is likely to engage in. As a broad coalition of civil society has already suggested, any safeguard policy worth its salt will be mandatory, and must be particularly careful in how it treats finance via intermediaries, with the Fund directly disclosing and monitoring the impacts of sub-projects.

6. What are “intermediaries” and why does their role keep expanding?

The role of intermediaries merits just one mention in the GCF Governing Instrument, but the scope and use of the term has grown considerably since then. In setting out how “direct access” to GCF financing will happen, a definition has now been offered of “intermediaries” that widens their scope still to include “financial structuring”, “origination of structured products for financial engineering” and “insurance mechanisms,” as well as other tasks “to be defined as they become relevant and appropriate.”

In the same vein, intermediaries are now defined as “a broad concept not limited to banking institutions.” That’s the equivalent of opening up the GCF to the murky world of shadow banking, where entities such as hedge funds or private equity funds could be recipients of GCF financing. Later in the year, the GCF Board will discuss offering other forms of financing, such as risk guarantees and taking equity (ownership) stakes in companies. It’s a worrying trajectory, although it’s not yet too late for the Fund to take a different path, rejecting a broad role for intermediaries and refocusing on the grant and concessional lending that the GCF has a mandate to engage in directly.

7. How concessional will GCF concessional lending be?

When the GCF finally starts funding projects, it will finance them through a mix of grants and concessional loans. The “concessional” part means offering rates that are more favorable than those available from commercial lenders, but the extent of the concession remain open for debate. The GCF secretariat is proposing to offer “softer” and “harder” concessional loans, but the terms of these compare unfavorably with those offered by the Clean Technology Fund (one of the World Bank-led Climate Investment Funds) and the International Development Association, the part of the World Bank Group that is generally seen as a standard-setter for “concessionality.”

The biggest issue here is that the GCF would set interest rates according to the “benchmark” for a chosen currency – US 10-year Treasury bond rates, or Euribor rates in the Eurozone. While those are at all-time lows, that’s not true globally. For example, benchmark rates in India are currently eight per cent, while in Nigeria they’re 12 per cent and close to 20 per cent in Argentina. By contrast, CTF and IDA concessional lending interest rates don’t rise about one and a half per cent. Adopting “benchmark” rates could discourage lending in local currencies, which is often key to both avoiding public indebtedness and allowing small to medium-sized enterprises to participate without significant risks.

Moreover, no definition is given as to whether interest rates would be fixed or variable during the period of concessional loans: if the latter, changes in interest rates for dollar loans could add billions to developing country debt, as happened following the Volcker shock when US rates rose sharply in the early 1980s. The GCF Board should reject this idea of “benchmark” rates. At the same time, it should also decide a clear policy to insist upon grants for public lending in so-called “vulnerable” countries, so as not to increase indebtedness.

The Green Climate Fund’s 6th Board meeting takes place from 19-21 February in Bali, Indonesia. More details of the IPS Climate Policy program’s work on the GCF can be found at www.climatemarkets.org

Corporate Capture in Warsaw: The 'New Normal' in the Disaster Zone

November 18, 2013 ·

Robbie Watt in front of COP19's plenary session boxes, sponsored by the corporation ArcelorMittal

We are half way through the 19th summit of the UN Framework Convention on Climate Change (UNFCCC) in cold, grey Poland. Far away in the Philippines thousands of people have lost their lives to Typhoon Haiyan and hundreds of thousands struggle to find food, water, and shelter.

This typhoon makes climate chaos dramatically visible as current reality—not just future possibility. The pictures and stories of the devastation are a reminder that as the planet warms, mega-storms like Haiyan are expected to become more frequent and more fierce. A typhoon hit the Philippines at the time of the COP last year too, as if devastating storms are becoming a ‘new normal’ at the climate negotiations.

The immediate and future impacts of climate change make the case for an urgent response – yet in Warsaw delegates seem to be responding with words instead of action.

As has been the case since the signing of the climate convention in 1992, a priority of international negotiations is for rich countries to agree and then act to cut their greenhouse gas emissions. Commitments are not really on the table here, but are supposed to be agreed by 2015, when the summit meets in Paris. Unfortunately governments are not showing much ambition, and are even outlining plans to do less than they had previously agreed to. Australia, Japan and Canada have been set a bad example to this effect, while the United States’ position as a laggard has hardly changed.

There are plenty of technical questions under discussion here in various work programmes and subsidiary bodies, keeping the delegates busy. But without any ambition on pollution cuts we are left with the clear impression of running around going nowhere, like a hamster racing round on the exercise wheel in its cage. With the meeting rooms arranged in a ring inside the circular national stadium, delegates are literally running around in circles at this negotiation.

Officials in Warsaw are already resigned to the idea that we must wait until 2015 before reaching a new global climate deal, and many countries—particularly developed ones—have accepted the notion that we’ll wait another five years after that before any of these plans are implemented. If that happens, the next 8 years will be filled with another ‘normal’ at these negotiations – all talk and no walk.

Only an emotional speech by Philippine head of delegation Naderev Sano about the lives and livelihoods lost in his home country and his pledge to fast until “a meaningful outcome was in sight” seemed capable of rousing the attention of both delegates and international media. 

‘Green’ Corporate Sponsorship

Meanwhile, another ‘new normal’ is emerging at the climate summit. The negotiations in Poland have attracted an unprecedented number of corporate sponsors and lobbyists from big business and dirty industry, such as General Motors and the French energy conglomerate Alstom.

ArcelorMittal—one of Europe's most polluting firms, with a track record of lobbying to make millions out of Europe's failing experiments with carbon markets—constructed the temporary steel boxes in the national stadium (where the talks are taking place) to house plenary sessions, giving the impression that climate negotiations are literally being imprisoned under corporate control.

An entire floor in the stadium has been dedicated to private companies peddling ‘solutions’ to the climate crisis in the form of false-hope technologies such as pumping pollution underground and burning trash. Negotiators can relax in Emirates Air beanbag chairs, strategically placed all around the stadium. And many delegates carry complimentary goody-bags, a gift from the 11 official for-profit partners representing the aviation, auto, fossil fuel, and heavy industrial sectors.

The Polish government defends corporate sponsorship, claiming that the businesses involved provide ‘green’ products and services. In making this claim, the Poles are ignoring the compelling evidence of these firms’ environmental destruction and are legitimizing their dangerous presence at the negotiations, as outlined in the COP19 Guide to Corporate Lobbying.  

Of course the private sector has to be part of solving the climate crisis—but first, they have to get out of the business of polluting for profit. We find the corporate capture of the climate conference problematic in three major ways.

First, the 11 corporate partners are enjoying privileged access in return for their support while civil society observer organizations—the groups that represent the public interest—have experienced unexpected restrictions in their ability to participate in the UNFCCC.

Second, many of the ‘solutions’ corporate partners offer are not ‘green’ and will not stop the release of greenhouse gases. Instead, these proposals serve to protect corporate interests while creating new opportunities for profit.

Third, climate change is a problem that can only be properly addressed through collective action. However, it’s becoming ‘normal’ to frame climate change as a business opportunity, where companies can make money from flawed carbon markets and the ‘Green Corporate Fund’.

COP19 is being branded as the first full-out corporate COP. This sets a dangerous precedent and should not become a 'new normal.' The apparent normality of disasters and lack of action associated with climate politics is already bad enough. 

Bonn Climate Talks

June 7, 2011 ·

The Institute for Policy Studies has joined with Friends of the Earth International, Jubilee South Asia, Pan Africa Climate Justice Alliance, Third World Network, and other movements and organizations fighting for climate justice in the international policy arena at the UNFCCC intercessional talks in Bonn.

We will provide regular updates on key policy areas and issues being debated here at the climate talks — such as emissions reductions, climate finance, halting deforestation, and carbon markets, among other issues.  We invite our allies to use these updates to help inform regional and national activities, provide information for media outreach, and enhance national and regional advocacy plans. Please feel free to circulate.

Update No. 1: Bonn Climate Negotiations

The Big Picture

United Nations climate negotiations resumed in Bonn, Germany, on June 6. This session follows the slow progress made at earlier talks in Bangkok in April, and are essential for building momentum toward the Durban climate conference in November.

The Bangkok talks were focused on setting the agenda for the negotiations for the rest of the year and were setback by divisions between countries over the scope of international climate talks. In Bangkok, some rich developed countries insisted on limiting the negotiations to implementing the narrow range of issues agreed at Cancun; in contrast most countries supported continuing under an agreed workplan from 2007 (the Bali Action Plan).[1]

The Bonn talks are to be based on the broad agenda advocated by most countries in Bangkok, but the clash in the "paradigm" for the negotiations will underline further disagreements in Bonn. These fault-lines include:

  • Setting binding emissions reduction targets through the Kyoto Protocol
  • Insufficient emissions reduction targets currently on the table
  • The Green Climate Fund

1. Setting new binding emission reduction targets in 2011?

The Kyoto Protocol represents the current model of international climate law – it requires developed countries to set binding emission reduction targets and to meet them over a 5 year period. The first five-year period ends in 2012 and time is running out to agree on targets for the next ‘commitment period’ (2013-2017/2020) in accordance with the mandated negotiations, which have been running since 2005.

Developing countries, particularly the Africa Group, have made clear that a continuation of the Kyoto Protocol is essential, as it provides a paradigm of legally binding emission reduction targets. Some developed countries, including Russia and Japan, have indicated they will walk away from their international legal obligations to agree commitments for the period after 2012. The United States is similarly opposed to binding emissions reduction targets. Instead of negotiating science-based targets reflecting their fair share of the global effort, they are now proposing a “pledge-based” system in which each country does whatever it determines domestically.

Bonn represents a pivotal moment for the future of the Kyoto Protocol. The Bonn climate talks need to pave the way for agreement in Durban on the next phase of legally binding emission reduction targets. Durban is the last chance to agree, as the first phase of commitments ends in 2012. If there is no agreement in Durban, the world may be faced with climate anarchy, without an international regime in place.

2. Will those new pledges be enough?

The latest science shows that negotiators at Bonn will be out of touch with what the latest science clearly requires if the world is to avert dangerous climate change. The current pledges risk warming of 2.5 to 5 degrees according to the United Nations Environment Programme. The problems with developed countries’ proposed targets are manifold: they are too low to meet what the science requires but they are also accompanied by ‘creative accounting’ proposals which result in emissions reductions only on paper. Furthermore the extensive use of offsets will see rich countries shift the burden for reducing emissions to developing countries – while doing almost nothing at home.

Analysis revealed in Bangkok showed that when emission reductions were converted into gross amounts – rather than percentages – it was clear that developing countries’ pledges for emission reductions were even higher than those from developed countries (3.6 Gigatonnes to occur in developing countries with only 1.9 Gigatonnes to occur in developed countries).[2] Together, these pledges fell well short of the 14+ Gigatonnes the UN says is necessary to be on path to remain below 2 or 1.5 degrees C.

In addition, the emissions reduction targets proposed by developed countries are ridden with loopholes. The rules currently being considered do not take into account emissions from shipping and aviation, overestimate emissions reductions by forests and land use in developed countries and allow the carry-over of unused pollution permits and offset credits . This means that the total emission of developed countries could actually increase even if their ‘official’ targets say they are making reductions.[3]

The debate over these rules, how they shift the burden of reducing emissions to developing countries and whether they are in line with the science will be of central importance in Bonn – particularly as the agenda sets particular time for addressing this issue.[4]

3. Creating a "Green Climate Fund"

In Cancun, one of the few areas of agreement was the establishment of a "Green Climate Fund" (GCF) to oversee the collection and disbursement of "climate finance." Currently the details of the GCF are being negotiated by a ‘Transitional Committee’ (TC) which has already met in Mexico in April and again in Bonn from May 30.

Flashpoint issues in the negotiations of the GCF have already included the role of the World Bank as its trustee, given concerns regarding its potential conflicts of interest due to its role in financing fossil-fuel based projects, and its practice of mixing roles as a banker, financial advisor and project implementer (known as the "Arthur Anderson syndrome" following the financial crisis). This conflict may be compounded by proposals relating to secondments and staffing of the new fund, which draw heavily on the World Bank as a source.

Similarly, many observers are concerned that the process of the GCF is off-track. It is currently heavily focused on technicalities and structure – without having agreed to what the priorities of the fund should be or the actual scale of public funding. In Cancun, countries agreed to a "goal" to "mobilize" $100 billion by 2020 from “a wide variety of sources”. However, developed countries are yet to commit to any specific level of public funding.

A further critical question here is what a "balanced" allocation of finance between adaptation and mitigation really means.[5] It is to be expected at Bonn that developing countries, who are the most vulnerable to climate impacts, will push the GCF to identify the needs and priorities of recipients before designing structures to best meet those needs.

Finally there is concern that the GCF is too focused on "private finance" options (through loan guarantees, publicly-provided insurance, or other risk sharing instruments) and thus risks putting too much power into the hands of profit-driven interests. Market failures and distortions by private interests are a significant structural cause of the climate crisis and many countries fear a continued focus on the private market could have the effect of financing projects that are ineffective at confronting climate change but are very effective at transferring public monies into private coffers. These countries and observers will be pushing for the GCF to be primarily funded through public sources (including innovative mechanisms such as Special Drawing Rights and the "Robin Hood Tax").

 

[1] See recent affirmation of the importance of the Bali Action Plan and the Kyoto Protocol at the India-Africa forum, 25 May 2011, (para 7), http://pib.nic.in/newsite/erelease.aspx?relid=72319

[2] Stockholm Environment Institute, “The Implications of International Greenhouse Gas Offsets on Global Climate Mitigation” (March 2011), www.sei-us.org/Publications_PDF/SEI-WorkingPaperUS-1106.pdf

[3] Stockholm Environment Institute, “Assessing the current level of pledges & scale of emission reductions by Annex I Parties in aggregate, AWG-KP In Session Workshop, Bonn, 2. August 2010; and, Kartha, S. “How Accounting Tricks, Loopholes, and Strategic Carbon Banking Could Negate Developed Countries’ Copenhagen Pledges”, Tellus Institute Brown Bag Lunch Series, 10 November 2010.

[4] On Thursday 9 June 2011 according to preliminary schedule.

[5] This is a reference to the objective of the fund from the Cancun outcome document – see Annex III of 1/CP.16, http://unfccc.int/resource/docs/2010/cop16/eng/07a01.pdf#page=2.

Shielding Climate Talks from Public Scrutiny

December 7, 2010 ·

It’s the beginning of the second week of the climate summit here in Cancun and everyone — from NGOs, to governments, to the policy wonks — is starting to get jumpy as it becomes clear that a battle is brewing between those who want a climate deal at any cost, and those who only want one that is just, equitable and effective.

It started yesterday before we even left the hotel zone.

I’ve been hitching a ride on the Friends of the Earth bus to the negotiating venue — an "all-inclusive" resort called the Moon Palace. Actually, it's quite exclusive. It’s located an hour from the hotel zone and only accessible after passing through multiple security screening points and additional bus trips.

Holding talks at the Moon Palace srategically discourages participation from all but the most dedicated climate wonks. The Mexican government and the UN climate convention secretariat have said they don’t want a repeat of last year’s talks in Copenhagen where people who weren't officials (oooohhh scary) participated in a creative diversity of actions to get government delegations’ attention on key issues.

Last year, the secretariat went so far as to kick Friends of the Earth out, claiming that flash mobs (spontaneous gatherings in the hallway usually accompanied by a stunning visual and catchy chant) put delegates at risk.

 Huh?

I guess that the secretariat was concerned that by being exposed to regular people’s ideas and demands government officials would be on the hook for having to respond. Being seen as uninterested in whether your negotiating positions doom small island states to inundation or African communities to drought and starvation can certainly be risky — especially if the press catches you.

So instead, this year, the secretariat worked with the Mexican government to assemble a temporary warehouse — which they’ve decorated with posters, potted plants and “ethnic” baskets to make a bit homier — as a civil society holding pen.

To get to the actual negotiations at the Moon Palace you have to get on a second bus. Last week, traffic flowed freely between these two spaces. But now, anyone going to the Moon Palace has to pass through an additional checkpoint before boarding the shuttle bus. And if last year is any indication, you can bet that civil society will be stopped from even getting on the bus.

Access to the actual negotiating hall is already restricted for Tuesday to a total of just 100 non-governmental observers from all of civil society around the world.

It’s astonishing to think that we — the members of the public here in Cancun — are allowing the secretariat t get away with this. But we are.

I think it’s mostly because of the threat of being locked out of climate negotiations forever if you make a fuss. And for many of the people who came here, attending these global conferences is their life’s work.

Climate justice activists, however, are a bit more averse to flying low under the radar. But before even getting anywhere near the venue our bus was pulled over by the federal police.

Most of us were busy reading the latest negotiating text or checking our BlackBerries and didn’t notice until an officer in full swat gear and touting an automatic rifle boarded the bus.

It turns out that as we passed the first check-point on the road to the Moon Palace the police noticed that our bus was registered in Chiapas. Not only is Chiapas home to the Zapatista movement — which has taken on the Mexican government with gusto in the past two decades — it’s also the state from where a caravan of peasant farmers had come from over the weekend.

So we sat in the bus for about an hour while the bus driver smoked a cigarette on the grass and the police tried to figure out if we were an uprising of militant campesinos.

We were finally allowed to move ahead, but under the condition that the federal police escort our bus to the negotiations. There was one black Hummer in back, and another one in front, each with four heavily armed soldiers training machine guns on our coach.

I have to admit that I think we all took the police harassment as a kind of a badge of honor. But it's becoming crystal clear and making me increasingly uncomfortable that the Mexican government, as the climate talks' host, and the countries and institutions that control the UN climate convention, don't want public scrutiny of the kind they received in Copenhagen. They have made careful arrangements to castrate any possibility of a potent climate movement impacting their conversations. And they’ve got a contingency plan that includes very heavily armed security forces if that should fail.

Given the lack of direct action in the halls, and a dearth of interventions to call attention to a general lack of climate justice, it seems — disappointingly — that the pacification plan at the climate talks has worked. I hope to be proven wrong in the next four days. In the meantime, I'm marching in the street with Via Campesina between plenary sessions.