A Pledge That Didn't Meet Its Potential
A pledge that could be worth $100 billion each year to developing countries was one of the few concrete outcomes of aUnited Nations climate summit meeting two years ago in Copenhagen that was otherwise seen as a fiasco
By JAMES KANTER | The New York Times | November 27, 2011
The Green Climate Fund would be one of the main ways for the industrialized world — responsible the bulk of warming gases emitted over the past centuries — to help poor and vulnerable countries adapt to fiercer storms and rising seas and help them to make the transition to clean energy systems.
Ban Ki-moon, secretary general of the United Nations, has called the pledge a “big step” in the long and tortuous history of global efforts on climate protection. Kumi Naidoo, executive director of Greenpeace, has said the pledge shows that wealthy countries are taking responsibility for helping poor countries with the least responsibility for climate change.
Yet from its inception, the fund has been hamstrung by a lack of practical details of where the money should come from, and by competing visions for how it should achieve its aims.
“The $100 billion fund is a climate change Rorschach test,” said David G. Victor, an energy expert at the University of California, San Diego, referring to a psychological test in which patients give various interpretations of inkblot patterns.
“For people focused on the lack of progress in the diplomatic talks, the $100 billion was the great hope for bringing countries together and making a deal,” Mr. Victor added. “For people keen on fixing the world’s economic ills, the $100 billion was supposed to help jump-start a green economy,” while “for people who want to re-allocate the world’s wealth, the $100 billion was a new way to move money from North to South.”
This year, a so-called Transitional Committee comprising 25 delegates from developing countries and 15 delegates from industrialized countries met four times to design a fund so it becomes the main channel for delivering as much as $100 billion annually, starting in 2020.
The committee completed its draft in October, but Saudi Arabia and the United States refused to approve the document, potentially delaying establishment of the fund.
Environmental groups have accused Saudi Arabia of obstructing climate talks for years, while the administration of President Barack Obama has come under pressure from prominent Republicans and others to limit financing for U.N. climate protection initiatives.
The draft is a mishmash of demands by industrialized countries and developing countries, setting the scene for more wrangling at the next U.N. climate conference in Durban, South Africa.
The draft would give developing countries “direct access” to funds, including funds from public sources. It also would limit the role of the World Bank, which is distrusted by many leaders in poor countries, to that of an “interim trustee” for a term of three years.
At the same time, the draft offers donor nations assurances of “payment for verified results,” potentially putting a brake on spending. The draft also gives the private sector a prominent role in the way the money is spent.
Despite the jumble of policies still under discussion, Christiana Figueres, the world’s top climate official as executive secretary of the U.N. Framework Convention on Climate Change, said countries still could reach a deal next month in South Africa.
The plans represent “a balanced position and will actually be able to be approved” in Durban, Ms. Figueres said this month in Brussels.
Ms. Figueres acknowledged that finding enough money to fill the fund’s coffers was “a conversation that has not started yet” but that she expected delegates in Durban “at minimum” to start identifying “sources and the different financial instruments.”
Some money has already begun flowing into a smaller “fast-start” fund also agreed to in Copenhagen and that should deliver $30 billion from 2010 through 2012.
Some countries are meeting their targets for that fund, but much of this money represents recast resources that would have been spent anyway on clean energy, forestry and development activities, according to Clifford Polycarp, a senior associate at the World Resources Institute, an environmental research institution based in Washington.
Poverty reduction groups like ActionAid have warned that the much larger Green Climate Fund risks being an “empty vault” unless it receives reliable and predictable public financing from sources including taxes on the financial sector and on the shipping and airlines.
Mr. Victor, of the University of California, said creating new assistance totaling $100 billion annually would be a huge challenge, especially at a time when industrialized countries were already struggling to maintain payments for overseas aid totaling about $130 billion each year amid a worsening sovereign debt crisis in Europe, high unemployment in the United States and continued economic stagnation in Japan.
“What’s impossible is a big new program funded mainly by public budgets,” Mr. Victor said. That would be “completely implausible in the current fiscal climate,” he said. “If you want to design a system that works then it must engage the private sector.”
Seeing an opportunity to expand financing for clean energy, bankers and financiers are clamoring to help with the design of the Green Climate Fund.
Ben Caldecott, head of European policy at Climate Change Capital, an investment firm based in London, said the overall amount fund would be less important than an effective structure that allows for private-sector involvement.
Mr. Caldecott has backed proposals for the fund to deliver emissions reductions through public or private contractors in projects like building solar energy systems in Sub-Saharan Africa or maintaining forests in Southeast Asia. Contractors would receive payments from the fund once emissions were reduced.
Mr. Caldecott also has been backing low-interest loans for host governments for similar projects, but where some earnings would go back to the community that was host to the project.
Such a design could be an effective way of overcoming “cynicism in developing countries” about international lenders, he said.
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