IPS Blog

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.

As the second week of international climate negotiations begins here in Doha, Qatar, rich and poor countries are staking out very different positions and digging in their heels. The big debates on the floor are about how rich and poor countries will strike a deal to reduce their emissions of climate-altering greenhouse gases. And the provision of fair and effective finance for clean development, adaptation to climate change, and compensation for loss and damages is emerging as the make-or-break flashpoint.

Essentially, rich countries are obstructing the process by demanding positions that poorer countries say they cannot take. Their approach would condemn millions of people to suffer loss of life and livelihood in the wake of severe climate disruption. Climate negotiators from developing countries should call their bluff and stand together to halt the talks.

For climate realists watching from the United States, the best action in the short term is less clear. There is little anyone can do in three days to alter the position of the United States. The American people sealed the fate of these negotiations when we voted Barack Obama back into office before extracting a promise from him around denying a permit to TransCanada for Keystone XL pipeline, or around stepping back from his announcements that he was going to make the United States into the “Saudi Arabia of natural gas.”

In the longer term, however, the crisis currently unfolding in Doha has made one thing clear. After this round of negotiations, it’s up to the populations of the rich countries to make it politically impossible for their governments to take these positions again.

Read the rest of this post on Yes! Magazine.

This week, OtherWords unpacks the fiscal challenges furrowing the brows of our lawmakers and just about every Obama administration official. Columnist Sam Pizzigati highlights the way billionaire Peter Peterson bankrolled the misleading portrayal of Social Security cuts as the only way to balance the budget. The Green Party's Jill Stein points out that the biggest problem we're facing is the "climate cliff" and that any "grand bargain" should do something to stop global warming. I explain that at least $881 billion in creative revenue-raisers and spending cuts belong on the table. If you'd like to check out this deficit-reduction proposal, please download the new report that the Institute for Policy Studies is releasing today.

Be sure to visit our blog, where I recently posted more highlights from the avalanche of fan mail that followed Donald Kaul's heart attack. We're also running bonus pieces from Jim Hightower there — such as his recent take on Texan secessionists. And, consider subscribing to our weekly newsletter if you haven't signed up yet.

1. Mother Nature Belongs at the Bargaining Table / Jill Stein
   Throwing the nation over the climate cliff will make our current fiscal challenges look like a minor bump in the road.
2. Snake-Oil Deficit Savings / Ryan Alexander
   Like things you spot in your side-view mirror, many of the budget numbers flitting around the debt talks are larger than they appear.
3. The Fiscal Hoax / Peter Hart
   Don't believe the cliff hype.
4. For Pete's Sake, What's Happened to Our Democracy? / Sam Pizzigati
   One billionaire has the wherewithal to totally redirect America's political discourse.
5. Dodging the Fiscal Swindle / Emily Schwartz Greco
   With a little creativity, we can easily balance the budget without cutting Social Security.
6. Solving the Twinkie Murder Case / Jim Hightower
   Equity hucksters plundered the company to feather their own nests.
7. The Answer Is Blowing in the Wind / William A. Collins
   Do we all have to drown in rising seas or broil in epic droughts before we decide it's time to switch to renewable energy?
8. Highway Robbery / Khalil Bendib (Cartoon)

The 2012 UN climate negotiations are not expected to be a breakthrough moment in solving the unfolding ecological crisis, but these talks will set the course for a future deal that countries have agreed will enter into force by 2020.

What’s at stake is more than a little overwhelming.

Global warming has to be kept to less than 2 degrees Celsius above pre-industrial temperatures if we want to avert climate disaster. Scientists say that means we can send 565 more gigatons of carbon dioxide into the atmosphere. Meanwhile fossil fuel companies are planning to burn enough oil, coal and gas to release 2,795 gigatons.

And the impacts of a warming planet are already hitting home. Because of sea level rise the island nation of Kiribati in the Pacific Ocean is in negotiations to resettle its entire population in Fiji. And in the United States we’ve just experienced a summer of record-busting heat waves followed by a super-storm the likes of which meteorologists have literally never before seen.

From where I sit in Doha, however, any agreement to avoid predicted extremes in weather, economic disruption and loss of life that will accompany global warming looks a long way off.

According to the Intergovernmental Panel on Climate Change — the experts group that provides the climate convention with the latest science — global greenhouse gas emissions would have to peak and start coming down by 2015. That’s right — in three years. Then, by 2050, the nations of the world would need to halve their overall climate pollution.

For the United States that translates into something like a 50 percent reduction by 2020 and deeper than 80 percent cuts by 2050 — a quasi-political calculation based on our responsibility as far and away the greatest contributor to climate change and one of the economies most capable of adapting.

Delivering serious emissions cuts won’t be easy for any country. Re-orienting a nation’s infrastructure to be climate smart — from energy to food to manufacturing to transportation — won’t be cheap.

Not surprisingly, no country wants to be the only one — or one of only a few — that is obliged to overhaul its entire economy to be low-carbon and climate resilient. It would put them at a distinct competitive disadvantage, at least at first (of course, every dollar spent on prevention saves three in disaster cleanup later).

And so the two largest economies and biggest polluters on the planet — the United States and China — have somewhat cleverly staked out positions that set them on the dangerous path of Mutually Assured Inaction. Neither of them will act on climate until the other does — but neither of them really wants to anyway.

The U.S. climate team said in no uncertain terms before leaving Washington DC for Doha that a second Obama term doesn’t translate into a shift away from blocking a climate deal that big countries like China are not legally bound by.

Lead negotiator Jonathon Pershing has repeatedly insisted that he can’t bring home a deal he can’t sell to Congress — and unfortunately Congress is still in the pocket of polluters (look no further for evidence than a recent letter to President Obama from 18 Senators who accepted more than $11 million from dirty energy companies urging him to approve the Keystone XL pipeline and unlock the Canadian tar sands).

At the end of the first week of negotiations, with a fair and effective climate deal looking out of reach, it’s hard to see how developing countries — or civil society — can compel the industrial world to take bold action and live up to their responsibilities.

UPDATE Friday, November 30, 2012, 11:30 AM ET:

Janet Redman, Co-Director of the Sustainable Energy and Economy Network, will be at the UN Climate Summit in Doha, Qatar, providing live updates from the conference and advocating for innovatice sources of finance – such as a “Robin Hood” tax on financial transactions – to fill the Green Climate Fund. She's just spent her first day at the summit,

Redman is calling for the United States to take bold action at the UN climate summit. Faced with extreme weather, environmental instability and a growing sense of economic vulnerability, Americans rejected inequality and climate denialism in the voting booth, she says. Now, they are calling on newly re-elected President Barack Obama to take bold action to stop climate disruption in Doha, Qatar, at the 18^th Conference of the Parties to the UN Convention on Climate Change (UNFCCC).

“We recognize there are constraints on the president – in no small part from Congress – but the electorate wants action on climate change before Superstorm Sandy becomes business as usual.” Redman added, “There are measures we can take now. We can join European countries and agree to tax financial transactions, which could raise hundreds of billions of dollars for climate programs and other public goods. And we can promote the Green Climate Fund as the main channel for public finance to support low-carbon and climate resilient sustainable development priorities of countries and communities most impacted by climate change.”

While some at the center of Obama’s climate team warn that a second term will not bring a new approach to the administration’s foreign policy on climate, Redman asserts that, “re-election is a mandate for the U.S. to be a constructive player that supports equitable action on climate. That means the U.S. has to take responsibility for its historical contribution to global warming by committing to deeper pollution cuts and providing support for poorer countries to respond to climate change. It’s time to hold Obama’s feet to the fire.”

Janet will be tweeting @Janet_IPS and blogging at http://www.ips-dc.org/ and will be available for interview from the climate summit in Doha.