UN Panel to be a Dangerous Disappointment

How much money is on the table to combat climate change, where it comes from and how it flows will be at the heart of global climate negotiations at the end of this year in Cancun.

Answers emerging from a UN panel on climate finance co-chaired by Norwegian Prime Minster Jens Stoltenberg and Ethiopian Prime Minister Meles Zenawi have developing countries and civil society worried that public sources of finance are getting short shrift and that the overall scale will fall far short of the need.

In March, UN Secretary General Ban Ki-moon assembled a High-Level Advisory Group on Climate Finance (known as the AGF) to study mechanisms for raising the money developed countries have committed to providing poorer nations to adapt to a warmer world and transition to low-carbon economies. The panel will release their findings early next month in a report that evaluates public and private sources of climate finance according to criteria such as predictability, feasibility, and equity.

But on Tuesday, at the close the AGF’s final meeting, Stoltenberg announced that the study, “will not be a blueprint with an exact formula of how exactly to raise $100 billion.” This seems to confirm fears that serious disagreements remain among members of the advisory group even as their work draws to a close.

With the Wrong Frame, Picture Gets Skewed

The lack of consensus is not surprising. The panel’s work has, from its inception, drawn criticism because of its framing as an outgrowth of the Copenhagen Accord. The controversial document released at the end of the UN climate talks last year included provisions for mobilizing $100 billion per year by 2020, but only in return for commitments from developing countries to cut their greenhouse gas emissions.

This condition flies in the face on the UN climate convention, which was built on the foundation that support from wealthy nations largely responsible for causing the climate crisis would make possible mitigation and adaptation actions by poorer countries.

Additionally, this framing has limited the scope of the AGF’s investigations to $100 billion. According to Stoltenberg the panel’s main conclusion is, “that it is challenging but feasible, achievable to raise the $100 billion.”

The sum is a far cry from the $500-600 billion the UN Department of Economic and Social Affairs has estimated will be needed each year by developing countries to deal with climate change. And the fact that raising $100 billion is achievable is not news. Governments raised trillions of dollars in a matter of months to bail out failing banks, and developed countries continue to mobilize around 6% of GDP for security budgets each year. The issue is not feasibility, but political will.

Politics at Play

The advisory group’s job is to provide analytical work, but deeper politics are at play. The more than 130 developing countries in the G77 negotiating block in the UN climate convention have called for rich counties to commit 1.5% of GDP through national budgets in climate finance. Developed countries, on the other hand, are pushing for the private sector and carbon markets make up the majority of these funds.

Development, environment, and food-security advocates argue that public funds are essential to support adaptation activities and the development and transfer of clean, renewable technologies that are not yet competitive with dirty options. They point out that the carbon market is riddled with fraud — like the recent case of a corrupt forest carbon offset deal in Liberia — that makes their emissions-reducing power dubious, and their reliability as a source of finance precarious.

Jim Harkness, president of the Institute for Agriculture and Trade Policy, added that, “including carbon as a commodity in the same poorly regulated global markets that so recently tore apart developing country economies and pushed a hundred million more people into hunger is highly irresponsible.”

The advisory group will look to civil society for a nod of approval when it releases its report on sources of climate funds in advance of the UN climate talks in Cancun. But if advocates for fair and effective finance are disappointed in the report’s treatment of public money, scale and equity, panel members will be disappointed in a lukewarm reception, at best.

This article was originally printed in Carbon Market Europe and is reprinted here with permission of the editor. Carbon Market Europe is available by subscription at http://www.pointcarbon.com/news/cme