A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.
- climate justice
- State Of The Union
- wall street tax
- Green Climate Fund
- robin hood tax
- Pete Seeger
- climate finance
- carbon trading
- United Nations
- John Kerry
Baltimore Nonviolence Center
Barbara's Blog, by Barbara Ehrenreich
Blog This Rock
Busboys and Poets Blog
CODEPINK's Pink Tank
Demos blog: Ideas|Action
Dollars and Sense blog
Economic Policy Institute
Editor's Cut: The Nation Blog
FOE International blog
Kevin Drum (Mother Jones)
The New America Media blogs
Political Animal/Washington Monthly
Southern Poverty Law Center
US Campaign to End the Israeli Occupation
Entries tagged "climate finance"Page 1 • 2 • 3 Next
February 13, 2014 · By Oscar Reyes
1. 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
November 12, 2013 · By Oscar Reyes
To mark the start of the UN Climate Change Conference (COP19) in Warsaw, Poland, a new series of Climate Justice briefings has been released offering critical perspectives on a number of the crucial issues under discussion.
First up, A Vision for Equity argues that negotiations should focus on setting a “global emissions budget” to keep temperature rises within the 1.5 degree target that would avoid dangerous climate change. Using historic emissions data as well as records of current per capita emissions, it calculates what developed and developing countries would need to do within that framework to contribute their fair share to addressing the climate problem.
A system of international climate controls based on science and the principles of equity is needed to achieve that target, which means climate negotiators should resist any attempts to deregulate international climate controls. That’s the subject the next briefing, which sets out a case against the “pledge and revenge” approach that many developed countries are pursuing within negotiations for a new international climate treaty.
The new system risks being even weaker than the outgoing Kyoto Protocol, while threatening to retain or even expand upon the carbon markets—one of the most problematic aspects of the existing agreement. This briefing on markets explains why carbon trading is not the answer. Instead of setting up “new market mechanisms,” the failure of existing markets should be grounds for a moratorium on the development of new ones.
Non-market approaches should be pursued instead, and that’s the subject of the fourth briefing in this series, which looks at the positive role that could be played by Globally Funded Renewable Energy Feed-In Tariffs.
Background on COP19
The web is awash with reports on the UN climate talks, but to cut through to the core issues you could do far worse than starting with this useful guide to “the Big Fights, Red Lines and Initial Predictions” from [Earth in Brackets], who will also be blogging and tweeting. Our colleagues at climate-justice.info have also issued this useful media background briefing covering the basic issues from Poland, alongside some snappy quotes.
The Warsaw conference is being hailed in some quarters as a “finance COP,” the implication being that debates on the money needed to address climate change will take center stage. At the same time, we’re witnessing an attack upon and dilution of the very notion of “climate finance”, which refers to public transfers of resources from developed to developing countries. Brandon Wu of ActionAid USA picks up the story here.
In other quarters, COP19 is being talked about as a haven for corporate lobbyists – an impression that the Polish Presidency of the meeting has done little to counter, by seeking sponsorship from “climate crooks” such as ArcelorMittal, Alstom and BMW. Corporate Europe Observatory and the Transnational Institute look at corporate influences on the UN Climate Change Conference with itsCOP19 Guide to Corporate Lobbying. They’ll also be blogging from Warsaw.
During the COP itself, it’s easy to miss the latest developments with several meetings taking place simultaneously. Third World Network’s briefing papers are an invaluable resource to find out who said what in the meeting halls of Poland’s national stadium.
And finally, as the COP in Warsaw gets underway in the shadow of the deadly Typhoon Haiyan in the Philippines, it’s worth pausing to take in the words of that country’s lead negotiator, Yeb Sano, who reminded delegates of the true costs of continued inaction on climate change.
July 18, 2013 · By Daphne Wysham
When President Obama made his climate speech at Georgetown University in which he urged an end to almost all public financing of coal, Jim Vallette, former research director of the Sustainable Energy & Economy Network at IPS, dropped me an e-mail and we reflected on how many years it had taken us to get to this point.
The first visit I made to a World Bank-financed coal mine in India in 1996 is still etched in my mind. Traveling for miles by train, bus and then taxi to get to the site, I saw first-hand what our "poverty alleviation" funds were doing. It was a moonscape, black, grey, with nauseating smoke billowing out of perpetual fires, deep underground. A child covered in flyash, was standing next to a black river, desperately trying to get a drink of clean water.
I later learned the wells had all run dry; the coal plant had used it all for its cooling towers. And the river was black with flyash, dumped by the World Bank-financed Talcher coal burner directly into the Nandira River. The only way this child could get a drink of water was to try to dig a hole in the sandy riverbed and hope that would filter out the pollutants.
I came back to Washington in 1996, and Jim and I got fired up to fight the public financing of coal, much of it being done in the name of poverty alleviation and sustainable development.
When we released a series of reports examining public financing of fossil fuels, starting with the World Bank, then on to the EBRD, then, in 1999 on OPIC and Ex-Im, we didn't know when these banks we had set our sites on would finally be forced out of coal. But we knew it had to come.
That day came on June 25, when we finally heard the following words uttered by President Obama:
"Today, I'm calling for an end of public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there's no other viable way for the poorest countries to generate electricity. And I urge other countries to join this effort."
Were these words to be believed? On July 16, the World Bank approved a new energy strategy which would effectively phase out the Bank's institutional support for coal. The paper "affirms that the World Bank Group will 'only in rare circumstances' provide financial support for new greenfield coal power generation projects, such as 'meeting basic energy needs in countries with no feasible alternatives.'"
Then, on July 18, we got the following news: The US Export-Import Bank had rejected a coal plant in Vietnam. It was the first rejection of a coal burner since Obama's climate speech of several weeks ago.
This day came too late for that child and others in that community in India, who were forced to drink poisoned water. And I'm not pleased with the caveats Obama placed on his pledge. Nor am I pleased with the possibility that the World Bank, Ex-Im Bank and others may simply switch from coal to gas, especially if that gas is derived from “fracking,” which can be worse for our already unstable climate than coal.
But hopefully, this is the dawn of a new day, when public financing of coal mines and power plants around the world is no longer acceptable. It's not enough, of course, but after 16 years of persistent pressure from IPS and other groups, our government seems to finally be listening.
June 26, 2013 · By Daphne Wysham
President Obama's speech at Georgetown University was a milestone on climate change. It is a milestone in two ways. First, he made it clear he is not afraid to tackle coal as the primary culprit in climate change. Second, he made a major pivot in how he framed the Keystone XL pipeline debate. He’s no longer talking about "energy security" or "jobs" when talking about the pipeline but instead linking "our national interest" with whether or not the pipeline would have a significant impact on the changing climate.
Virtually all climate scientists who have weighed in on the Keystone XL pipeline agree that tar sands oil, if exploited, would result in a net increase in greenhouse gas emissions. NASA's former top scientist, James Hansen, said it would be "game over" for the climate if the pipeline went forward.
But more significantly, Obama signaled in this speech that he is ready to use his executive authority, and not willing to compromise on two key things: the climate impacts of coal and tar sands.
He made a major pronouncement in stating that public financing of coal should end, such as financing via agencies such as U.S. Export-Import Bank.
The Institute for Policy Studies was the first organization, together with Friends of the Earth, to document the significant climate impacts of U.S. Export-Import Bank and Overseas Private Investment Corporation's fossil fuel investments in 1998. That research resulted in a lawsuit filed by Friends of the Earth, Greenpeace, and the City of Boulder challenging both of those public financial institutions with violations under the National Environmental Protection Act, for not calculating the cumulative emissions of their projects on the global climate. Obama's statement today takes that research and legal action one step further and calls for an end to almost all U.S. government funding of coal overseas. The White House statement released today says:
"...The President calls for an end to U.S. government support for public financing of new coal plants overseas, except for (a) the most efficient coal technology available in the world’s poorest countries in cases where no other economically feasible alternative exists, or (b) facilities deploying carbon capture and sequestration technologies. As part of this new commitment, we will work actively to secure the agreement of other countries and the multilateral development banks to adopt similar policies as soon as possible."
While this statement allows for some wiggle room on coal – if the carbon produced from the coal can be captured, which currently is not financially or technically feasible – it would eliminate U.S. backing of coal financing in countries like India and South Africa, both of which have recently received billions of public dollars for massive coal-fired coal plants.
Obama also said he would encourage developing countries to transition to natural gas as they move away from coal, a posture consistent with what he is calling for at home. Such a statement is unfortunate as it encourages the expansion of fracking on U.S. lands, which results in fugitive methane emissions, water contamination, and health problems for nearby communities. The low price of natural gas, while welcome as a replacement for coal, is making truly clean and renewable energy less attractive financially.
Obama also continues to support nuclear power – a surprising posture in the aftermath of the Fukushima nuclear meltdowns, a disaster that is transforming Japan, causing it to shut down its nuclear power plants and replace them with renewable energy.
And Obama was unafraid to call out the climate deniers – the "flat earth society" – and shame them, while urging the public to "invest, divest," a statement sure to warm the hearts of students and faith groups across the country, who are urging their institutions to divest their endowments of fossil fuels.
But the significance of this speech is that Obama is finally showing us he is willing to fight – on coal, on tar sands, and on climate. Obama remains an "all of above" champion who believes he can simultaneously frack and drill our country's oil and gas resources and solve the climate crisis. But his apparent feistyness and willingness to challenge the climate impacts of coal and tar sands – after years of silence on both topics – is cause for some celebration.
The World Bank likes to talk a good game on climate change. But when it comes to taking action, its approach can be “too narrowly focused, small scale and uncoordinated,” admits Bank President Jim Yong Kim. Worse still, it often backs entirely the wrong strategies, like carbon markets, while continuing to invest billions every year in new fossil fuel infrastructure.
VIEW NEW WEBSITE HERE: www.climatemarkets.org.
Since taking the helm, Jim Kim has made repeated promises that addressing climate change – and the devastating impacts it has on development – will be at the center of the Bank’s agenda. Key to this is a new Presidential Task Force on Climate Change, which will examine fossil fuel subsidies, carbon markets, “climate smart” agriculture, and partnerships to build cleaner cities. At the same time, the Bank’s low-income focused International Development Association (IDA), and its private sector arm, the International Finance Corporation (IFC), have both identified climate financing as a priority area.
The World Bank-IMF spring meetings convening in Washington DC provide an opportunity for the Bank to flesh out a new approach. The early signs are not promising, though. Carbon markets remain a central pole of the bank’s strategy, with $110 million pledged to a “Partnership for Market Readiness” that is encouraging the creation of new markets modeled on a European scheme that has already virtually collapsed.
There are indications, too, that much of the Bank’s “bold” new thinking is based on reaching out to the financial sector, using some of the same Wall Street tricks that proved so devastating for the United States and global economy in the 2008 crash. The Bank isn’t alone in this approach: the Green Climate Fund, and many of the other international financial institutions, are looking to encourage (“leverage”) private sector finance to plug the massive holes in climate financing left by industrialized countries failing to meet their obligations.
Dusting down the same old financial approaches isn’t going to work. In climate circles, it's already possible to hear the familiar refrain that rich-country austerity means that “There Is No Alternative” to courting the private sector. To which we’d respond: the United States is not broke, and neither are the other industrialized (“Annex I”) countries that should be making far larger public financial contributions and developing ambitious domestic plans to curb the greenhouse gas emissions that cause climate change. On the financial side, these could be supplemented by a range of genuinely “innovative” approaches, including financial transaction taxes, or a "Robin Hood tax."
We’ve set up a new website on Climate Finance and Markets (climatemarkets.org) to explore these new approaches, and to monitor how the World Bank, the Green Climate Fund and others are courting the financial sector.
The site, put together by IPS with the support of the Heinrich Böll Foundation North America, offers a range of materials that could help climate activists and advocates understand the new financial tools that are emerging, the role of key private sector actors (from banks to private equity funds), attempts to “leverage” private investment, and alternatives to this Wall Street-driven approach. Bank staff, public officials and journalists attending the World Bank-IMF spring meetings could even learn a thing or too as well.