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Entries tagged "climate finance"Page Previous 1 • 2
April 10, 2013 · By Janet Redman and Antonio Tricarico
Government officials from an elite group of developed countries meeting in Washington, D.C. at the invitation of U.S. climate envoy Todd Stern appear to be on the brink of instigating yet another corporate handout and big bank giveaway—this time in the name of fighting climate change.
If it follows a recently leaked agenda, the meeting will focus on using capital markets to raise money for climate finance. The goal is to fill the void left by the United States and other developed nations that have failed to meet their legal obligations to deliver funding to poorer countries for climate programs.
In this corporate-oriented approach, countries would provide generous loan guarantees and export subsidies that sweeten investments for private firms and give them the chance to net big profits while leaving governments (and the taxpayers they represent) to cover the losses if investors’ bets don’t pay off. Wealthy countries would then be able to claim that they had moved billions of dollars of new climate investments.
Unfortunately, the projects best placed to benefit from large-scale private investment and market mechanisms—like mega-infrastructure projects and fossil fuel-powered ventures that hide behind a “low-carbon” label—are likely to be those that have fewest sustainable development benefits. In many cases, the funding will channel windfall profits to corporations that would have invested profitably even without these new channels of support.
The sad fact is that this has happened before. Nations spent five years negotiating the Kyoto Protocol—the only multilateral treaty to regulate emissions of greenhouse gasses and spell out binding targets for reducing climate pollution. But before the treaty was finalized in 1997, the United States led a push to replace the enforcement mechanism—a fine for missing reduction targets paid into a clean development fund—with a market mechanism meant to lower the cost of compliance for polluting companies. The accompanying clean development mechanism (CDM) was born so that companies in the industrialized world could purchase ultra-cheap carbon pollution credits from developing nations to offset their continued pollution at home.
In the end the United States pulled out of the Kyoto treaty. But by shifting a global regulatory regime into a market-based regime centered on enticing private-sector investment with promises of profitability, Washington left its mark.
A decade and half later, carbon markets have collapsed, developing countries are awash with carbon credits for which there is no demand, and the planet keeps getting warmer.
Meanwhile, the clean development mechanism has led to private sector investment in spurious projects like mega-hydropower dams and coal-fired power plants that have delivered little in the way of sustainable development outcomes—and in some cases have further harmed the environment and human health.
Passing the Buck
And now Washington is at it again, hijacking the debate about how to support the global transition to a low-carbon, climate-resilient economy—and keeping the public, the press, and even developing countries out of the conversation. They’re repeating the same tired story that rich governments are broke and thus have to call in the private sector to finance climate change solutions.
In today’s economy, mobilizing private finance means going to the capital markets to raise money. But relying on financial markets for funding to support renewable, clean energy or to resettle climate refugees would subordinate climate action to the speculative whims of bankers.
Americans have visceral reminders of the consequences of leaving decisions about critical needs to the market—the more than 1.6 million families locked out of their homes and the $2.5 trillion in taxpayer dollars handed over to bail out Wall Street and U.S. car companies are just two. Europeans can point to the recent bailout after the carbon bubble burst. If a global climate finance bubble were to burst, we wouldn’t just lose our houses; we might have lost our chance at averting catastrophic global warming.
Governments in the developed world shouldn’t pass the buck to the private sector. They must act now. They can start by cutting subsidies for fossil fuels, including for natural gas “fracking” in the United States, and set binding regulation for reducing climate change pollution. Then governments can adopt innovative ways to raise public money, like taxing pollution from shipping or financial transactions. Indeed, even a very low financial transactions tax would generate substantial revenue and deleverage capital markets.
And of course, if there is any hope of creating a new paradigm of climate-sound development, there will have to be a role for the private sector. But the micro, small, and medium enterprises of the developing world would be preferable partners to the multinational firms that have been responsible for sucking wealth and resources out of countries for decades, leaving pollution and poverty in their wake.
At some point—and for the sake of the future generations who will bear the results of our decisions, we hope it’s sooner rather than later—the government officials who place their bets on private finance will have to learn that putting corporate profits over the needs of climate-impacted people is a risk the rest of us are not willing to take.
Antonio Tricarico is director of the New Public Finance program of the Italian organization Re:Common based in Rome and a former economic correspondent at the Italian newspaper Il Manifesto.
Janet Redman is the co-director of the Sustainable Energy and Economy Network at the Institute for Policy Studies in Washington, DC.
Editorial support by Peter Certo and Oscar Reyes of the Institute for Policy Studies.
** This piece originally appeared in Foreign Policy In Focus
December 6, 2012 · By Janet Redman
While the costs of mitigating and adapting to climate change rise and thus the need for climate finance in developing countries grows, wealthy governments shift focus from public support to private finance. But can the private sector meet the needs of those most impacted by climate change?
In the halls of the UN climate negotiations in Doha, Qatar, you will hear a mantra that’s being echoed by developed country governments from their capital cities to international forums. It goes something like this: We’re broke. There’s no public money. And so, we have to use the scarce resources we do have to leverage massive wealth in the private — and particularly the financial — sector.
You’ll also find in the halls of the annual climate summits the faces of private interests — industry reps, investors, and carbon traders. They’re a regular fixture here, but this year the private sector has taken centre stage in debates over climate finance.
At COP18 there are seven times as many side events about getting private finance and carbon markets engaged in climate action as events highlighting the role of public funds.
There has also been a strategic shift in the rhetoric of developed countries away from talking about “providing” climate finance to speaking about “mobilising” money. The former implies public flows. The latter suggests countries are shifting emphasis toward looking outside national budgets for financial resources.
Nowhere is the trend toward privileging the private sector more apparent than in the Green Climate Fund (GCF) — the newest financial institution under the climate Convention. After many contentious debates during the Fund’s design phase, industrialised nations succeeded in creating a sub-fund that guarantees the private sector direct access to the fund.
Countries did win one concession — a ‘no-objection procedure’ that is meant to keep multinational corporations and international investment banks from going directly to the Green Climate Fund to undertake work in countries without the knowledge of national capitals. But investors are already starting to push back, saying that any kind of vetting process by the UN would make private sector engagement untenable.
In light of these challenges, the GCF’s board will have to grapple as they write the Fund’s business model this year with the question of what the ultimate purpose of the Green Climate Fund is — to maximise the involvement of the private sector, or to support low-carbon, climate-resilient sustainable development in poorer nations as its mandate states?
While these two aims don’t have to be mutually exclusive, lessons from existing private sector institutions – like the World Bank’s International Finance Corporation – show that private finance often bypasses low-income countries, fails to reach the poor in middle-income countries, and prioritises large corporations over small and medium enterprises.
In addition, the use of financial intermediaries to repackage and channel capital leads to serious challenges in transparency and public accountability. Particularly important is the fact that private sector money flows where the profit potential is greatest. For a climate fund this means big, mainly mitigation activities — not community-scale projects, adaptation, or disaster relief.
Certainly, the private sector plays a critical role in any economy – and without its participation in making the shift away from dirty energy and polluting industry there will be no transition to a low-carbon future. But the private sector efforts that the Green Climate Fund should support are domestic enterprises that will reinvest wealth to meet the climate priorities of the people and communities most impacted by global warming.
October 9, 2012 · By Janet Redman
Civil society to World Bank president Dr. Jim Kim, "add your voice to the choir of support for an FTT"
Today, the Institute for Policy Studies sent the newly appointed World Bank president Dr. Jim Kim a letter signed by 58 organizations from around the world urging him to champion financial transaction taxes (FTT) – a tiny tax on stocks, bonds, currency and other derivatives trades - as an innovative way to raise much-needed money to address climate change, health and other development priorities in poorer countries. The groups – including WWF, Greenpeace, Oxfam, AFL-CIO, World AIDS Campaign, United Methodist Church, and the Main Street Alliance – come from a broad cross-section of civil society and show a growing consensus that it's time for developed countries to get serious about meeting their promises on climate and development finance.
The letter was sent in anticipation of the World Bank's annual meeting in Tokyo later this week, where high-level finance ministry officials from developed and developing countries will assemble to discuss poverty eradication, sustainable development and the world economic outlook.
In the letter, groups urged Dr. Kim to "[p]romote FTT as a source of innovative finance for developing countries’ efforts to address climate change. Such revenues are needed for the Green Climate Fund and … it would be helpful to promote FTT as a source of climate finance in the context of studies and reports mandated by international bodies such as the G20 and the UN."
In conjunction with the Bank meetings the Leading Group on Innovative Financing for Development will hold a symposium highlighting the role of FTT on meeting the funding gap for climate and development left by the global economic crisis. Two of the countries featured in the event – France and Germany – are part of an eleven-country 'coalition of the willing' that announced their commitment to implement an FTT today at the European Union Finance Ministers Meeting (ECOFIN). The letter to Kim emphasized that "[a]t this key moment in their decision-making, it is particularly important to urge European leaders to allocate part of FTT revenue to development and climate."
Now that countries have taken this leap forward, the World Bank's leader should make his own bold move and support an FTT.
Note: Besides the four biggest economies in the Eurozone – France, Germany, Italy and Spain – Austria, Belgium, Estonia, Greece, Portugal, Slovakia and Slovenia have pledged to implement a financial transaction tax at ECOFIN. This "coalition of the willing" approach will still need to be given the green light by EU heads of state, but the political momentum is clearly strong.
Dr. Jim Yong Kim
The World Bank
1818 H Street, NW
Washington, DC 20433
October 9, 2012
Re: Financial transaction taxes as a source of innovative finance
Dear Dr. Kim:
We, the undersigned 58 organizations, congratulate you on your position as World Bank President. We are hopeful that with your impressive track record, you will bring fresh thinking to this important financial institution.
We are writing now to encourage you to use your prominent position of influence to become a vocal champion of innovative ways to ensure sufficient resources are available to tackle the most pressing problems faced by the world’s poorest and most vulnerable people.
Given the budget constraints facing many of the largest donor countries, it is widely accepted that new sources of financing are needed. Our organizations are part of a growing international campaign to promote one of the most promising forms of innovative finance – small taxes on trades of stock, derivatives, currencies, and other financial instruments.
We have long advocated that such financial transaction taxes (FTTs) are a practical way to generate revenue to fill domestic and international financing gaps, discourage the type of short- term financial speculation that has little social value but poses high risks to the economy, and serve as a predictable and sustainable source financing for health, climate, development, education, and job creation. In a recent paper, the UN Department of Economic and Social Affairs concluded that “financial and currency transaction taxes are technically feasible and economically sensible. They could readily provide the means of meeting global development financing needs.”
Over the past two years, we have been encouraged by significant shifts in the debate, with influential leaders such as Bill Gates, UNAIDS Executive Director Michel Sidibé, Bishop Desmond Tutu, Kofi Annan, and Pope Benedict XVI coming out in support. Now is a critical time to add your voice to the call.
A group of at least 11 European governments appears on track to forge an EU agreement to implement a FTT by the end of 2012. However, with the exception of France, they have made no clear commitment yet on how the resources would be allocated. Your support could help ensure that a substantial portion of the revenue goes to meet the needs of the world’s poorest people, rather than simply paying down deficits.
1. Raise FTT in the context of your work to publicize the new World Development Report focusing on jobs. As governments look for sources of financing for job-creation strategies, FTT should be promoted as one potential source.
2. Promote the FTT as part of a plan to achieve internationally agreed global health, education and other development goals. For example, with the prospect of ending AIDS closer than ever, FTT revenues could help achieve Millennium Development Goal #6, aimed at reversing the spread of HIV/AIDS and ensuring universal access to treatment and help fully fund implementation of the 2011 Political Declaration on HIV/AIDS.
3. Promote FTT as a source of innovative finance for developing countries’ efforts to address climate change. Such revenues are needed for the Green Climate Fund and other funds of the UN Framework Convention on Climate Change, including the Adaptation Fund, Least Developed Countries Fund, and the Special Climate Change Fund. Further, it would be helpful to promote FTT as a source of climate finance in the context of studies and reports mandated by international bodies such as the G20 and the UN.
4. Bring these messages to the general public and world leaders. At this key moment in their decision-making, it is particularly important to urge European leaders to allocate part of FTT revenue to development and climate. We also recommend that you publish an open letter on this theme in major newspapers.
5. Meet with civil society and independent experts on this timely issue. We would be very pleased to organize a briefing that would include participation by leading experts in the field. Over the past several years, many of our organizations have been involved in similar briefings with the International Monetary Fund, the Gates Foundation, the European Commission, and national governments. We would appreciate the opportunity to share research and analysis of the feasibility and potential benefits of this means of generating additional finance.
We look forward to hearing from you. Sincerely,
Alliance for a Just Society, USA
Australian Council of Trade Unions (ACTU)
Balance Promoción para el Desarrollo y Juventud, Mexico
Campaign for the Welfare State, Norway
Canadian HIV/AIDS Legal Network
Center for Economic and Social Rights, USA
Chicago Political Economy Group, USA
Coalition 15%, Cameroon
Comisiones Obreras (CCOO), Spain
Confederazione Generale Italiana del Lavoro (Ialian Geneneral Confederation on Labour)
CPATH (Center for Policy Analysis on Trade and Health), USA
Ecologistas en Acción, Spain
Europeans for Financial Reform
Friends of the Earth U.S. Gender Action, USA
Global Health Advocates France Global South Initiative, Nepal
Halifax Initiative, Canada
Health GAP, USA
IG Bauen-Agrar-Umwelt (Trade Union for Building, Forestry, Agriculture and the Environment), Germany
INPUD (International Network of People who Use Drugs), United Kingdom
Institute for Policy Studies, Global Economy Project, USA
Interagency Coalition on AIDS and Development (ICAD), Canada
International Civil Society Support International HIV/AIDS Alliance
International NGO Forum on Indonesian Development (INFID)
International Trade Union Confederation
Kampagne: Steuer gegen Armut (Tax Against Poverty Campaign), Germany
KOO-Koordinierungsstelle der Österreichischen Bischofskonferenz f.internationale Entwicklung und Mission, Austria
Main Street Alliance, USA
Maryknoll Office for Global Concerns, USA
National Union of Public and General Employees, Canada
NSW Nurses and Midwives' Association, Australia
Public Services International
Réseau Accès aux Médicaments Essentiels (RAME), Burkina Faso
Robin Hood Tax Campaign, United Kingdom
Stamp Out Poverty, United Kingdom
Trades Union Congress, Great Britain
Treatment Action Group, USA
UBUNTU - World Forum of Civil Society Networks
Unión Sindical Obrera (USO), Spain
United Methodist Church, General Board of Church and Society, USA
Wealth for the Common Good, USA
Women in Europe and Central Asia Regions plus (WECARe+), Germany
World AIDS Campaign International, South Africa and Kenya
World Democratic Governance project Association
World Federalist Movement Japan
December 6, 2011 · By Janet Redman
As UN climate negotiations in Durban, South Africa, go into their final week, IPS got a quick update from Janet Redman, co-director of IPS’s Sustainable Energy & Economy Network, who is in Durban at talks.
Janet spoke to us from the corner of a crowded conference room at the summit about the current state of the negotiations:
Interviewer: It’s recently been announced that 2010 saw the most dramatic upswing in greenhouse gas output on record. How are folks in Durban reacting to this?
Janet Redman: Greenhouse gas emissions rose between 2009 and 2010 by a record-breaking 6 percent in one year. There’s a real sense of urgency here in Durban because of the news that emissions are growing at such an alarming rate.
But unfortunately that sense of urgency is not translating to action by the biggest historical polluters here.
In particular, what’s happened this week is a blame game that’s now shifted to the big developing countries. Developing economies still have incredibly high rates of poverty, even in countries that are considered “emerging economies” such as India and China. The EU and the U.S. are pegging the potential failure to reach a climate deal here in Durban on those two countries.
But we don’t need a new deal – or what some are calling a new mandate. What we really need out of this next week is to see countries agree to a second commitment period of the Kyoto Protocol, and to see a completion of the Bali action plan, which was a set of commitments and obligations that developing countries said they would take on with the support of developed countries and a commitment by the United States to take actions comparable to those of other wealthy northern countries. This was the compromise world leaders struck because the U.S. said it would never, ever sign the Kyoto Protocol.
The big news is that if developed countries are willing to agree to fulfill their own obligations that already exist in the convention and in this Bali action plan, then developing countries are considering negotiating internationally-binding activities that could take effect in 2020. That’s a pretty big deal. So basically, China’s already doing more than the U.S. is on renewable energy, but they’re even saying, we’re willing to take on binding commitments in the near future, as long as you show us good faith that you’re willing to do what you said you would do in Bali in 2007.
Interviewer: It sounds like there’s a lot of discussion on just renewing what’s already been agreed upon. Do you think that renewing or approving these already-negotiated terms would be enough?
JR: Well, in some sense it’s a first step toward a bigger change. One of the things that we’re hearing here is a call for a new mandate. I think that’s a real mistake because there are two existing mandates right now.
Again, the Kyoto Protocol is one mandate, and the Bali action plan is another mandate. The convention has set that up very clearly, so the idea of asking for a new mandate here in Durban actually undermines existing commitments that are science-based that have been agreed to already in the past 20 years since the UN Framework Convention on Climate Change was established.
So I think having movement on agreements would be enough to set the negotiations on a really positive track for subsequent periods after the second period of the Kyoto Protocol, but also on a positive track in terms of implementing the convention which of course is what this is all about.
Interviewer: There’s been discussion on possible threats to climate financing for developing countries. Are there any further observations that you’d like to share about that?
JR: Last week we were really concerned about the U.S. obstructing talks on opening the doors of the Green Climate Fund. As of earlier today, it looks like almost every country is satisfied with moving forward on the Fund, and building the Board that will put more meat on the bones of the GCF over the next year.
What’s still incredibly frightening is the blatant cooptation of the Green Climate Fund by the private sector, with unabashed support from the U.S. and the UK. If the financial sector and multinational corporations have direct access to the Fund and can bypass sovereign national governments, then we have a real potential for serious problems with democratic control, transparency, the application of social and environmental safeguards and basic standards, and the Fund’s effectiveness in achieving climate goals.
Finally, even if we get the Fund here in Durban it may be nothing more than an empty shell. The U.S. is still blocking a conversation on long term finance – both the scale that should be delivered on and the sources of where that money should come from. A text released last night did mention innovative sources of finance, but an outcome here in Durban needs to be much more specific about how countries will make that real. One thing they can do right now is commit to a work plan for implementing some of the leading proposals, such as a financial transaction tax.
Interviewer: Thanks very much for taking the time to talk to me, Janet!
JR: Thank you!