27 February 2013

Africa: Can Climate Finance Be Directed Where It's Needed Most?

Perhaps, instead of flying thousands of climate negotiators to U.N. meetings in different parts of the world each year, international climate change policy could be hammered out in a series of live online discussions? Low-cost, low-emitting and possibly just as productive.

This somewhat pie-in-the-sky idea occurred to me after the public debate AlertNet Climate and the Climate and Development Knowledge Network (CDKN) hosted this week on climate finance. We only had an hour or so with our panel of experts, but via Twitter and a live blogging platform, the chat generated a wealth of information, proposals, constructive criticism and - not surprisingly - plenty of tough questions.

Not least about how to mobilise the tens of billions of dollars needed each year by the poorest and most vulnerable countries to adapt to climate change and develop in a clean way. More than $30 billion in "fast start funding" was delivered by rich nations between 2010 and 2012, but it's yet to be decided how the world is going to generate $100 billion a year by 2020, as promised back in Copenhagen.

"So are we all agreed? US $20bn from next year, cemented at Warsaw?!" wrote Simon Maxwell, a development economist and executive chair of CDKN, proposing an annual target to be set at this year's U.N. climate conference - a suggestion that gained some support.

A sobering reminder came from J. Timmons Roberts, a professor at Brown University, that climate finance needs to increase by an additional $11 billion each year to reach the 2020 goal - but the world is way off track on that.

"The lack of ambition at Doha (the 2012 U.N. climate conference) was stunning, with only $7 billion in commitments, and those only for 2013. No one came in with mid-term targets," he pointed out.

Mohamed Nasr, climate finance specialist for the Africa Group of Negotiators in the U.N. climate process, said a demand for an interim finance target made by poorer nations at last year's talks in Qatar had been a way of ensuring that "everything is working and to provide assurances to developing countries". But richer nations refused to put a collective commitment on the table.

"Not agreeing to it and not agreeing to simple language of scaling up is damaging the trust in the process ... and again might negatively affect 2015," Nasr blogged, referring to the new global climate deal due to be agreed on by 2015 and to come into force in 2020.

Another sticking point, he warned, could be lack of progress on the U.N. Green Climate Fund (GCF), which is still working out how it will operate. The AlertNet Climate/CDKN debate grappled with the issue of the amounts of money likely to be channelled through this fund, with some predicting it could be much less than expected.

Roberts said $10 billion a year in public funds for the GCF "would be an important contribution" but added: "Contributor countries are much more comfortable funding through bilateral channels, and through World Bank trust funds and regional banks."

Nasr rang the alarm bell loud and clear about foot-dragging on the GCF: "...If it is not functioning by then (2015) with considerable and predictable resources, I think the 2015 agreement would be very difficult if at all possible," he wrote.

PROSPECTS FOR 2013

In terms of what to expect from this year's U.N. climate conference on finance (albeit still nine months away), Daisy Streatfeild, senior policy manager for international climate finance at Britain's Department of Energy and Climate Change, said the UK is looking for other countries that have not yet done so to set out what climate finance they will provide in the near future, as well as information on their strategies and approaches for mobilising finance towards the $100 billion goal.

Britain plans to give around £1.8bn for the 2013-2015 period, she noted. Some other European countries have also pledged amounts for this year and next, but the United States and Japan have not. "It will be important that all countries contribute their fair share," Streatfeild added.

Tim Gore, a climate finance specialist with Oxfam, said the international development charity is still working on its "asks" for the 2013 climate summit, "but commitment to (a) timeline for capitalisation and full operationalisation of the GCF and commitment to 50 percent of climate finance for adaptation from public sources wouldn't be a bad start", he said.

There was a great deal of concern in our debate about the low levels of both public and private finance directed to activities to help poor communities adjust to more extreme weather and rising seas linked with climate change.

Researchers, including Roberts, say the proportion of fast-start funding that has gone to adaptation is only around one fifth. This is at odds with the balanced allocation outlined in the 2009 Copenhagen accord.

On Tuesday, Streatfeild said Britain is aiming to use half its 2013-2015 climate finance for adaptation, "focused on the poorest and most vulnerable countries" - a comment that was welcomed by Oxfam and others.

PRIVATE-SECTOR HOLY GRAIL

But even if donor governments do make a big effort to increase the adaptation share of their finance, there's widespread recognition it still won't be enough. The holy grail is getting the private sector to invest more into this side of the climate change coin.

So far, business has been far keener on putting money into clean energy ventures, with only a tiny proportion of private money going to adaptation. Niclas Svenningsen, who works on market mechanisms for the United Nations Framework Convention on Climate Change (UNFCCC), noted estimates that at least half of the $100 billion goal will have to come from the private sector.

At the same, carbon markets are failing to deliver the hoped-for revenues for both mitigation and adaption in developing countries because the low level of global ambition on cutting greenhouse gas emissions has sent carbon prices down to rock-bottom, Svenningsen commented.

Ongoing public-sector support will be required to encourage more business investment in climate change remedies, as well as improved metrics to demonstrate the results, especially for adaptation measures, participants said.

There's "no question" that the private sector should think about investing in adaptation, Oxfam's Gore blogged. "We think there's often a business case for them doing so, but also that they have responsibilities towards vulnerable communities in their supply chains to help them adapt. But that doesn't mean governments can offload adaptation financing entirely on to the private sector," he added.

Bangladeshi climate negotiator Quamrul Chowdhury agreed, stressing that "public finance is of paramount important for the developing countries", with the private sector "still shying away from major climate investment across the globe".

The wider debate around who should pay for what and how within the climate change arena is set to grind on for some time yet. But our discussion suggested there's significant support for the view that not enough climate finance is reaching the poorest people, and that governments will struggle to help them without private support.

Now all we need is for negotiators, politicians and corporations to agree on putting this right.

A summary of the online debate is available here; or you can read through the full debate here.

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