COP24 Summit: Paying for the climate clean-up
The fight against climate change needs huge flows of money, and who produces the cash — and how and when — has long been at the heart of the disagreement between the developed and the developing world
Participants in the plenary session during COP24 in Katowice on Monday. (Reuters Photo)
Money has been central to many a fight at the climate negotiations. The UN Framework Convention on Climate Change (UNFCCC), the mother agreement of 1992 under which climate talks have been taking place, requires a group of rich and developed countries to, apart from other things, provide financial assistance to developing nations to deal with climate change, because it was the (now) rich world’s emissions over the last 150 years that caused the climate problem in the first place.
For many years, the fight was to get the developed countries to commit themselves, in writing, to providing this money. That happened, after a lot of struggle, at the 2015 climate meeting in Paris — even though the $100 billion figure, which the developed countries agreed to “mobilise” for the developing nations every year from 2020, was not mentioned in the Paris Agreement itself, but was part of other decisions taken at the meeting.
But the written commitment has not ended the fight, and has not assured developing countries a steady supply of at least $100 billion from 2020. The fight is playing out in various ways — and it is among the most contentious issues at the ongoing meeting in Katowice, where countries are trying to agree on the rules that will govern the implementation of the Paris Agreement.
Transparency
Framing the rulebook means agreeing on such things as common standards to measure emissions, processes for monitoring, reporting and verification (‘MRV’ in climate jargon) of the various actions being taken by individual countries, and guidelines and institutions to facilitate diffusion of appropriate technologies to countries and regions that need them. It also means putting in place clear and transparent accounting mechanisms to measure and verify flows of climate finance.
How to agree on processes that will ensure transparency, especially on the issues of finance, is a subject of major discussion here, and a significant faultline. Developed and developing nations have been arguing over what can constitute adequate levels of transparency, and how much information about finance flows needs to be mandatorily reported.
The Paris Agreement makes it incumbent upon developed countries to communicate every two years, in advance, “indicative quantitative and qualitative information” on the money they would provide to the developing countries. It also makes it mandatory to provide “transparent and consistent information” every two years on money finally delivered.
Poor track record
The track record of the developed countries in fulfilling their finance commitments has been disappointing. They have often been accused by developing countries of double-counting, inflating claims, re-packaging existing aid money as climate finance, and ignoring the requirements of adaptation activities. Developing countries insist that climate finance must be “new and additional” and must be provided for mitigation as well as adaptation efforts as mentioned in the Paris Agreement.
Developed countries have at various times made optimistic claims about the money that has already started to flow in. A report by the Organisation for Economic Co-operation and Development (OECD) claimed in 2015 that nearly $62 billion in climate finance had flown in until the previous year. In response, India had put out a discussion paper saying a more credible figure was just $2.2 billion.
Another OECD report, which came out last month, said money flowing from developed to developing countries, just from government sources, had increased from $37.9 billion in 2013 to $54.5 billion in 2017 — 44% over five years. However, the UNFCCC’s Standing Committee on Finance has said in a recent report that the total climate finance — not just from government sources — was $33 billion in 2015 and $38 billion in 2016, and that the rate of year-on-year increase had actually declined from 24% in 2015 to 14% in 2016. The report did not provide figures for 2017.
Money flows through multilateral institutions like the Green Climate Fund have also stagnated. Even the initial offer of $10 billion has not been fulfilled because of the decision of the US to walk out of the Paris Agreement. The promised replenishments are still to materialise. A recent discussion paper by the Indian government noted that only about 12% of the total pledges to multilateral climate funds had actually materialised into disbursements.
Scaling up
While even the promised money is not coming through, developing countries have been pointing out that the $100 billion amount was woefully inadequate to meet climate challenges, and have been asking that this be increased significantly. The $100 billion figure was not reached as a result of any careful analysis of requirements. It came in the form of an ad hoc announcement from then US Secretary of State Hillary Clinton, and seemed intended more to infuse confidence in the system after the near-collapse of the negotiations in Copenhagen in 2009.
Several estimates after that have variously assessed the requirements to be in the range of hundreds of billions of dollars to trillions of dollars per year. The recent Indian discussion paper notes that just adding up the requirements of countries, as mentioned in their climate action plans submitted to the UN climate body, came to around $4.4 trillion. “… This goal of USD 100 billion is a meagre amount in size in contrast to the actual needs assessed for developing countries in trillions of dollars,” the Indian discussion paper says.
What is more, the term “mobilise” means that developed countries actually have to provide only a fraction of the $100 billion from their own resources. Every dollar that they actually provide “mobilises” some money, often more than a dollar, from the host country, either in the form of government collaboration or as private investment. But the entire money is said to have been “mobilised” by the developed countries.
New At The Climate Summit: Katowice Commitment
Five Europe-based multinational banks Tuesday pledged to employ cash lying with them to nudge clients away from polluting businesses. The banks, led by Amsterdam-based ING, issued a statement on The Katowice Commitment on the sidelines of the COP24 summit. “We, five international banks with a combined loan book of over €2.4 trillion, believe banks have an important role to play in scaling and accelerating the transition toward a climate-resilient world. From Amsterdam to Abu Dhabi we commit to measure the climate alignment of our lending portfolio, and to explore ways to progressively steer financial flows through our core lending towards the goals of the Paris Agreement,” said an ‘Open letter from global banks to world leaders, heads of government and the international community at COP24’.
“We support the aim of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”, which is article 2.1c of the Paris Agreement,” the statement said. “…We commit to developing open-source methods and tools for measuring the alignment of lending portfolios with the goals of the Paris Agreement… We aspire to then lead the implementation of these methodologies and tools to actually align our lending portfolios with these climate goals. This is about more than de-risking. It’s about making a positive impact… Because it’s not where our clients are today, but where they are heading tomorrow.”
The Katowice Commitment is “Co-created”, “Impact-driven”, “Engagement-focused”, “Sector-specific”, “Forward-looking”, and “Science-based”. Besides ING, the Commitment was made by the Spanish group BBVA, French groups Societe Generale and BNP Paribas, and London-headquartered Standard Chartered.
New At The Climate Summit: Electromobility partnership
Recognising that the transport sector is already responsible for 14% of global greenhouse gas emissions, and in view of the projected challenges from rapid urbanisation around the world, progressive globalisation, and increased movement of people and freight, the Polish presidency of COP24 on Wednesday proposed a policy push towards electromobility and zero-emission transport.
Poland and the UK jointly presented Driving Change Together — Katowice Partnership for Electromobility, “one of the concrete dimensions of implementation of the Paris Agreement and fulfilment of the Global Climate Action objectives”. The Declaration has been signed by 40 countries including, besides Poland and the UK, China, Japan, Indonesia, Mexico, France, and Germany. India is not among the signatory countries. Thirteen international and nongovernmental organisations, including the World Bank and The Climate Group, are also among the signatories. The Partnership was established in the main Plenary Hall.
The Declaration endorsed several steps to accelerate the transition to low emission vehicles, including “driving demand through consumer initiatives” and “collaborating internationally to promote the deployment of ZEVs (zero-emission vehicles) on a global scale”, and to enable the growth of the market by “building a smart infrastructure network, planning for the cities of the future today, embedding zero-emission infrastructure into the fabric of our urban and rural communities”, and “driving up air quality standards in our towns and cities”. It underlined support to “zero-emission R&D, investing to improve and develop new zero emission technologies”, and the promotion of a “sustainable, circular economy to drive down emissions over the long term”.
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