Climate finance

Johanna Sandahl

March 26 2012

The South’s dilemma

Baer, P., Athanasiou, T., Kartha, S., 2009

HDI and energy access

Global effects of climate change

(IPCC FAR 2007)

Risks worse than expected

(IPCC TAR 2001, Smith et al 2009)

+ Increased CO2, higher temperature, longer seasons, increased precipitation sounds good

Food production and climate change

Potential yield increase of wheat, rice, maize and soybean

But.....

A number of negative effects likely to occur

Not only a ”South’s dilemma”

Landslide at Enafors, E 14 between Åre and Storlien, 2006

Political reaction is slow

(Sårbarhetsutredningen, 2006)

Mitigation and adaptation will cost!

How much?

Globally: trillions of USD investments

South: several hundred billions per year

... but peanuts compared to the costs in the future if we don’t pay now!

WHO SHOULD PAY?

Common but differentiated responsibilities (CBDR)

UNFCCC, art 4, §3:

• The developed country Parties /…/ shall provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties /…/ . They shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures that are covered by paragraph 1 [adaptation, mitigation etc] /…/ The implementation of these commitments shall take into account the need for adequacy and predictability in the flow of funds and the importance of appropriate burden sharing among the developed country Parties.

What about China?!

What about China?

What about China?

• IMF: China is still a developing country (2010: GDP/capita USD 4,382). No 91 of the world's 184 countries (USA no 12)

• 6 African counties higher (Equatorial Guinea, Gabon, Botswana, Mauritius, South Africa, Namibia), less than a tenth of that of the United States (USD 46,860).

• No 101 in HDI (USA no 9)• No 84 in per capita CO2 emissions (USA no 5)

CBDR -> Bali Action Plan

Bali Action Plan calls for improved access to finance that is:

• Adequate

• Predictable

• Sustainble

• New and additional

Additionality?

• UNFCCC: no further definition

• AGF (the Secretary-General’s High-level Advisory Group on Climate Change Financing): “refers to the extent to which new resources add to the existing level of resources /…/ politically and analytically very difficult /…/a potential perspective is to treat the newness of a source as a useful, if partial, proxy for additionality”

Innovative sources

Air/maritime transport: carbon market auctioning/levy

Financial Transactions Tax

Fossil fuel subsidies ~700 bn USD/year

And there is more...

• Auctioning of carbon credits (2-10%)

• CDM

• Global carbon tax

• ....

Key issues• Political will!

• Carbon market price (emission reduction commitments)

• Share devoted to international climate financing

• Earmarking (conflict other national needs)

Institutional arrangements:north vs south

• Donor control• Well developed systems to:

– ensure funds used for intened purposes

– measure and manage impacts

EU

Canada

Australia USA

Japan

China

LDC

AOSIS

G77

• New institutions needed:– Lack of trust– Lack of influence

NGO/south: key principles

• Legitimacy: under the authority of the UNFCCC

• Democracy, transparency

• Capacity, effectiveness, direct access

• Grants, not loans

• National ownership

Green Climate Fund

• support projects, programmes, policies and other activities in developing country Parties

• a board of 24 members comprising an equal number of members from developing and developed country Parties

• World Bank trustee

• Lessons to be learnt from Adaptation Fund

Why not the World Bank?

• Founded in 1944• Mission:

– economic growth, development, poverty reduction

– long term support

• 184 member countries• Board of 24 Executive Directors• President: Robert B. Zoellick (always

american)

World Bank: power structures

• Size of shareholding = voting power

• USA veto-power• G8 almost 50% of

voting power

USA*

Japan*

Germ any*

France*

UK*

Canada

Italy

Russ ia*

Thailand/Indones ia

Australia

Spain/Venez/Mex

Brazil

NetherlandsNordic

Saudi Arabia*

Pakis tan/MoroccoKuwait/Egypt

China*

Switzerland

India

Austria/Belgium

Uganda/Nigeria

Argentina/Chile

Guinea Bissau/Equatorial

Guinea

Poor track record- legitimacy, effectiveness

• Voice: undemocratic governance structures

• Conditionality

• Bypass principles of country ownership

Poor track record: climate and environment

• Fossil fuel projects dominant role in energy portfolio

• 2007-2009: 22% increase

• No methodology to assess GHG emissions from projects

World Bank supports Eskom coal fire plant

• April 2010: World Bank approves USD 3,75 bn loan

• 26 mill tonnes CO2/year

• Sweden in favor• UK, US, Netherlands

etc abstain from voting

31

Global Marshall PlanFeed-in tariffs

100-150 bn USD/year over 10-15 years may solve problem

Websites

www.naturskyddsforeningen.sewww.climnet.org (Climate Action Network) www.twnside.org.sg (Third World Network) www.eurodad.orgwww.brettonwoodsproject.org

www.worldbank.orgwww.unfccc.int

World Bank: Climate Investment Funds

• Cynics’ response: ”it was all very well planned”

• ”sunset clause”

• Clean Technology Fund: – USD 6 bn pledged– what is ”clean”?

Coming up: COP 16 Cancún

• Sources of innovative finance

• Establishment of Copenhagen Green Climate Fund / New Global Climate Fund / ?

• Operational?

”The climate negotiations are back on track - Cancún a step forward towards what is needed” Andreas Carlgren, Minister for the Environment

”Stop playing russian roulette with the climate!”

Swedish Church Aid/Diakonia

”…we express our outrage and disgust at the agreements that have emerged from the COP16 talks…” Climate Justice Now

Climate agreements

1992 UN Framework Convention on Climate Change (UNFCCC)

1997 Kyoto Protocol

2007 Bali Action Plan

2009 Copenhagen Accord

2010 COP 16 Cancún, Mexico

2011 COP 17 South Africa- new agreement?

2012 Rio +20??

Find it, build it, spend it

• Find it – innovative sources

• Build it – legitimate institutions

• Spend it – using scarce resources effectively

Climate finance vs ODA?

1. Above existing levels?

2. Above UN pledges 0,7%/GNI?

3. Above pledged levels? (Sweden 1%/GNI)

4. Other?