Wednesday, April 23, 2014

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COP18: Negotiating the Green Climate Fund or the Green Corporate Fund?

At the upcoming COP18 talks in Qatar, the battle for the heart and soul of climate finance could determine the fate of those most vulnerable to climate change.
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An installation erected in protest against pollution near the site of the COP15 United Nations Climate Change conference in Copenhagen, Denmark. Photograph by Neil Palmer (CIAT).

In a matter of days, hordes of negotiators, fossil fuel industry representatives, activists and journalists will descend upon oil-rich Qatar. The 18th Conference of the Parties (COP18) – an annual meeting held since 1995 between the nations present at 1992’s Earth Summit to assess progress in dealing with climate change – is almost upon us. It promises to be filled with its usual dose of developed countries, many trying to ignore, distort, dilute or squirm out of the principles which were supposed to bring them together under the UN Framework Convention on Climate Change (UNFCCC).

Historically, one of the UNFCCC’s primary purposes has been to establish the responsibility of developed nations to developing states most vulnerable to the effects of climate change. But unfortunately, as the battle for the heart and soul of climate finance rages, the developing world looks set to lose out to the old adage: money makes the world go round.

The shifting goals of the UNFCCC

The world is entering a new rather undefined era of climate finance. Previously conferences were dominated by the Fast Start Finance period, promising $30 billion in additional climate finance from 2010-2012. This stage will be left behind – despite the fact that the promises behind it have arguably not yet been met.

The agreed goal ahead of us is now $100 billion per year by 2020 – a number which seems to have been picked because it is round, sexy-sounding and in the fairly distant future, thus allowing for inaction in the present. However, this number does not seem to match the needs of countries predicted to be affected by climate change. For instance, $100-$400 billion is the estimated range of climate adaptation needs for developing countries alone, a number which does not even include mitigation considerations. Adaptation and mitigation costs have been estimated to be jointly as high as $1.5 trillion per year.

With commitments in the period until 2020 yet to be written in UNFCCC stone, many are concerned by the large gap between where we are now and the 2020 goal. In response, the Climate Action Network and Christian Aid, among others, are calling for a doubling of the fast start financing levels. Calls have also been made for the commitment to the capitalisation of the Green Climate Fund (GCF) – the UNFCCC’s primary mechanism for transferring climate financing from the developed to the developing world.

Concerns from the Green Climate Fund

Disconcertingly, news from the GCF is a mixed bag. On one hand, the GCF has found its home in South Korea, and will shortly be granted its own legal personality. This will ensure its independence from the likes of the World Bank – an advancement which should put many minds at ease.

Elsewhere there remains cause for concern. Firstly, the fund has not yet even pulled together the money it needs for its own administration (which weighs in at a far from negligible $7 million until the end of 2013). This is all the more worrying considering the GCF’s much more ambitious financial mobilisation goals.

Secondly, far from being a model of transparency and accountability, thus far the Green Climate Fund Board has operated in a much more closed manner than predecessor UN funds, such as the Adaptation Fund. Although these might be teething issues, the proceedings of the meetings are not being readily published, and observer participation is being neglected. Some civil society observers have accused the co-chairs of the GCF Board of operating on an assumption of exclusion and confidentiality.

Privatisation of the GCF

Compounding the above worries is the battle around the privatisation of the GCF and the role of the private sector. There exist two major competing visions of the GCF. The first vision favoured by most developing countries sees the GCF as housed firmly under the COP, ensuring that it draws mostly on public funds from developed countries. This would fulfil the principles of equity and Common but Differentiated Responsibility (CBDR) by ensuring the transfer of funds from historic emitters in the developed world to those least responsible and most likely to be affected by climate change.

The second competing vision is favoured by developed countries such as the US and UK. This vision aims for a GCF more divorced from the UNFCCC and its principles and sees public finance as playing a limited role in order to leverage more private financing. Arguably what the privatisation of the fund allows for is developed countries to avoid their responsibilities under the principles of equity and CBDR by allowing private finance to fill the void of their unfulfilled promises.

While it would be foolish to bar the private sector from involvement in climate finance, as Kathy Sierra (formerly of the World Bank) points out, this should not interfere with the responsibilities that developed countries have to developing countries under the UNFCCC – responsibilities which the GCF was arguably set up to safeguard in the first place. While private sector financing can be leveraged through other channels, the GCF was intended for another purpose: to fulfil international climate justice.

Unfortunately, this raison d’être is seemingly being overridden by other interests (lamentably a far from unusual occurrence within the COPs). Indeed, this particular battle is reflective of a larger negotiated struggle to divorce the global climate regime from the principles of equity and CBDR that underpin the ideals of climate justice enshrined in the UNFCCC framework. This is reflected by the battle led by India for the inclusion of ‘equity’ in the Durban Platform, and the numerous attempts (most notably by the US) to break down the firewall between developing and developed countries with regards to mitigation obligations, as defined by CBDR.

In response, as the Times of India reports, an unusual coalition called the ‘Like Minded Developing Countries on Climate Change’ is emerging, consisting of China, India, Saudi Arabia, Sudan, Egypt, Thailand, Malaysia, Argentina and about three dozen other developing countries. Their stated aim is to fight for equity and CBDR’s central role in climate negotiations. As the above indicates, the Green Climate Fund will be one of many places where their work will be cut out for them.

The potentially worrying involvement of the private sector in the GCF does not end there. Many from developed countries are pushing for private sector companies to have access to the GCF. As Janet Redman of the Institute for Policy Studies has phrased it, if such a proposal goes ahead “Shell and Exxon could get access to [the fund to] build a massive wind farm in Mexico that powers Walmart”. This is a worrying trend for developing countries who may have wanted to use the fund to bolster national attempts to respond to climate change.

Balancing adaptation and mitigation

But what is considerably more worrying are the consequences of this elementary struggle within the GCF for adaptation funding. While the mitigation of the effects of climate change in the future is clearly important, arguably the more pressing area of investment is for the adaptation of countries whose people are presently suffering from the reality of a shifting climate.

As well as the privatisation of the fund, some are calling for the fund to be structured and operated similarly to the Climate Investment Funds (CIF) under the World Bank. This could have dismal results for the supposed balance of the GCF between interests in adaptation and mitigation regarding climate change.

If we look to the CIF, we can see that from 2006-2011 only 2.4% of its funds went to medium or small sized companies, only some of which operate in the adaptation sphere. The majority of the remainder went to large scale mitigation projects which, although important, do not do much to promote climate resilient development and thus fulfil the adaptation side of the equation.

The governing instrument of the GCF states that the fund should be balanced between needs for mitigation and adaptation. However, the definition of ‘balance’ is unhelpfully ambiguous and will most likely be hotly contested – as most ambiguities are within UN spaces. Based on previous climate finance, the balance is certainly not an equal one, with as little as 15% of overall climate financing going to adaptation in the past. So, does the term ‘balance’ entail continuing this ratio? Would it mean a 50-50 share? Alternatively, would balance even entail redressing the historically unequal ratio between adaptation and mitigation funding?

Most importantly, if the private sector is allowed to take the helm of the GCF from the COP, as some are proposing, that balance may not be defined through moral principles and the weighing of the interests of future and current generations. Rather the balance may be established through the interests of private companies according to what serves their interests. And frankly, adaptation is just not very sexy or profitable for private interests. Indeed a report by the Climate Policy Initiative reveals that just 5% of private climate finance goes to adaptation.

Furthermore, if the GCF becomes a mitigation-heavy fund, it is in danger of merely becoming a vehicle through which much of the developed world farms out their responsibility to mitigate greenhouse gas emissions to the developing world. This will likely result in not addressing the current and potential harm caused by the emissions that they have emitted and, for the large part, will continue to emit.

Current predictions for bleak future

Yet mitigation undeniably remains significant. Forebodingly, the UN Environment Programme (UNEP) Emissions Gap Report illustrates that as things stand we are also failing rather dismally on the mitigation side. Even if current pledges are upheld, we remain on track for a global temperature rise of 2.5°C to 5°C by 2100. But against these obligations towards mitigation, we must not forget the obligations to those being directly affected by climate harms now and in the near future.

According to the Global Humanitarian Forum, headed by former UN Secretary-General Kofi Annan, climate change is responsible for 300,000 deaths a year and affects 300 million people annually. By 2030, the annual death toll related to climate change is expected to rise to 500,000 and the economic cost to rocket to $600 billion. And for those most vulnerable to the effects (and, sadly, often least responsible for the causes) of climate change, adaptation is a priority – whether our international political regime recognises it or not.

Of the two visions for the future of the GCF discussed above, Omar El-Arini from Egypt has been one of the sole GCF board figures fighting for the more noble course of action. Let us hope that more join him on the frontlines of that battle. Regrettably, however, we can be sure that the support for the presently convenient and arguably less noble vision will remain substantial.

For too long we have allowed corporate power and the interests of a global elite to dictate the direction of climate negotiations and to set the very boundaries of what is possible to achieve in response to the burning issues of climate change. It will be a sad day indeed if we allow them to dictate the future of climate finance. This would overlook both the responsibilities of those historically responsible for climate change, as well as the real and violent impacts that climate change is having and is set to have upon the most vulnerable people across the globe.

Let us hope that this year the air-conditioned halls of yet another COP will not allow us to forget about those for whom the effects of climate change shape their ability to enjoy basic human rights, to survive and to lead a decent human life.

Many thanks to the Heinrich Boll Foundation for organising a visiting tour to Washington DC around the players, procedures and politics around climate finance for adaptation action. Many of the insights from this article come from that tour. 

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Just a thought which was brought about by the recent conflict in Gaza. The realities of climate change essentially lead to less access to basic and essential resources like food, water, shelter, even education for the poorest people who are affected by the effects of climate change.  And, although they are not really responsible by the climate change they are definitely very far from deriving any benefits from it.  This means that the affected people have to fight and struggle for these essential resources which very have often ended in horrible wars killing and crippling millions.  And, who are the ones manufacturing and benefitting from selling the weapons in order to fuel (no pun intended) these wars?  Once again it is the same people who are responsible for the climate change.  Therefore, some people are getting a double whammy from the effects of climate change, So why should they care and change their ways and how can the GCF, the UNFCCC and/or the UNEP do to address the obvious conflicts of interests and/or the entrenched greed which will be strongly amplified by the slowing economies of the developed countries who are also supposedly "funding" projects to redress and/or suppress the effects of climate change at the core?