Tag Archives: finance

This Is [Not] The End

The diplomats who run UNFCCC climate negotiations are fond of doing what they call a “stock take” every once in a while. As we wait and wait for the final COP25 plenary to begin, a day into overtime, let’s do the same.

We came to Madrid with the situation in Chile in our minds and hearts. We have tried to echo the demands of the streets in the halls of power, as have many others.

At every opportunity we told the COP25 Presidency that we stand in solidarity with the movements in Chile. We supported their demand that Chile stop all repression of peaceful protestors, and take responsibility for human rights violations committed. We also supported calls for the government to establish a constituent assembly.

Chilean movements are clear in their opposition to an economic system which creates and perpetuates inequality. The same system is pouring fuel on the flames of the climate crisis – all around the world.

Image

COP cazeloraso

We marched with 500,000 others against such a system.

https://twitter.com/pragmactivist/status/1203060968030457864?s=20

And we took the anger of the streets into the halls of power. Because as climate justice movements we are for the many, not the few.

For this the UN security ripped our banners away, shouted at us and kettled us. Over 300 of us were pushed outside, into the cold, before finally being taken outside the venue, to a militarised police escort, before being split up and made to wait.

This all happened a matter of hours after Greta Thunberg gave a powerful speech to the conference, in which she said:

In just three weeks we will enter a new decade. This coming decade will define our future. Right now we are desperate for any sign of hope. Well I am telling you there is hope. I have seen it. But it does not come from governments or corporations. It comes from the people.

Of course this wasn’t the first or last action that we took.

https://twitter.com/ethanbuckner/status/1202619310545481729?s=20

No Ambition

Arriving in Madrid we knew that time is running out. A new decade is weeks away. We lamented the loss of the previous decade to inaction and distraction.

We hoped that when countries took stock of their climate actions prior to 2020 they would see the shocking gulf between what they’ve done what what they needed to have done. And then *do* something about it. But just like in 2014, 2016, and 2018, we sat through yet another pointless talk-shop. Neither the COP President nor the UNFCCC offered a process for this ‘stock take’ to lead to anything concrete.

Developing countries proposed to set up a work programme to properly examine the actions taken during pre-2020 period and bridge the “implementation gap.”

It’s good to see a few more people here than at the technical pre-2020 stocktake. Tellingly the room is a lot less crowded that the plenary with Greta this morning. Priorities, right?

In that plenary we heard for the umpteenth time that we have an extremely limited amount of time in which to completely transform our economy and societies.

We’ve already glimpsed the horrors that await us if we don’t – a world on fire and battered by storms. An even less equitable world, less able to react properly to this emergency.

What we haven’t seen is any serious response. Developed countries were supposed to lead but have done next to nothing since 1990. UNEP talks about a lost decade; we should actually talk about 3 lost decades.

It is very hard to build trust with broken promises. I said it at the last plenary: it is a joke that 7 years after it was agreed, Parties have still not ratified the Doha Amendment. The Paris Agreement was ratified in under a year.

We enter the Paris Agreement carrying the failings of the recent past and present. Both mitigation and finance has been wholly inadequate in pre-2020, and sets us up for post-2020 action which will be more challenging, and less fair. 

So here’s a question: How can we expect anything from the Paris Agreement if pre-2020 agreements have been cast aside? 

Here’s another: what’s the point of distant, loophole-ridden, false-zero 2050 targets such as the UK’s, when pre-2020 action has been forgotten? Today’s leaders won’t be alive, let alone in power in 2050. We know your 2050 pledges are just more lies.

For these reasons, we echo the proposal by LMDC, supported by Africa Group, Arab group, and others, for COP25 to mandate a work programme on closing the pre-2020 implementation gaps on mitigation, adaptation, finance, technology, and capacity building and to close those gaps. We need more ideas like this.

We don’t need any more conversations or reflections. Do your fair share.

No Accountability

We have another potentially useful tool to assess and hold northern countries accountable for the climate action they have or haven’t taken before 2020. It’s called the 2nd Periodic Review. The last report of this kind produced language about 1.5 and 2 degrees goals which eventually made its way into the Paris Agreement.

But developed countries were aware of this and made proposals which would make the 2nd Review yet another meaningless talk-shop. The US proposed to cancel the review, and when that was not a viable option proposed to narrow the scope to just science. The EU tried to remove the words “assess” and “adequacy” from the text.

Instead the text includes a very watered down phase, “aggregate effect,” which could mean individual country’s commitments can’t be singled out. So there’s no way to hold polluters to account.

“Article 6”

The main course for the past 2 weeks, leaving us all with indigestion, was a re-heated dish called “Article 6.” Or, as it has come to be known, “how to pollute more and get away with it” (for background, read above).

Article 6 emerged from negotiations on how countries could work together to reduce emissions. But many polluting countries have fixated on carbon trading and offsetting. Which is frustrating, as these approaches have failed to reduce carbon emissions, and have detrimentally impacted human rights while simultaneously commodifying nature.

These discussions are highly contentious and highly complex. This issue nearly scuppered the COP24 last year in Poland and could potentially do so for real this time. Under pressure to reach any agreement, countries risk landing on a bad agreement. In such a case we think that no deal is better.

Some of the main issues of contention, still unresolved at 4am on Sunday 15 December, are:

  • whether or not to include language about respecting human rights, indigenous rights, and gender safeguards
  • whether or not to carry over carbon credits from a previous trading scheme
  • whether or not to allow for carried credits to be sold or used by the country that generated them
  • how to conduct “corresponding adjustments” to countries emissions’ data after a trade, in order to avoid “double counting” of emissions reductions
  • whether or not to include metrics other than reductions in greenhouse gases in the mechanism
  • whether or not to allow for all forms of greenhouse gas removal, rather than merely “removals by sinks”
  • how to take the conversation forward on “non-market approaches” to collaboration
  • whether or not some “share of proceeds” from profit generated by the new mechanism would go towards the Adaptation Fund
  • whether or not some of the emission reductions generated through the mechanism remain unused by any entity to compensate other emissions, to achieve “overall reduction in global emissions.”

On Friday night the “landing zone” for these questions resembled a sort of crash-site. Human rights are probably in, but in an annex. We think that either carry overs or double counting will make it in. But the countries basically do not agree at all and everyone is saying they won’t back down.

Loss and damage refers to how we deal with the impacts of climate breakdown that are already happening and cannot be avoided. Sudden disasters and slow onset events like droughts lead to loss of lives and livelihoods, but also loss and heritage and culture.

Negotiators disappeared behind closed doors early on and stayed there. Developing countries were very active and put forward their ideas in writing. This directed discussions more towards concrete implementation than ever before. Many civil society groups also advanced the idea of setting up a loss and damage finance facility.

However, rich countries repeatedly blocked loss and damage finance. The US in particular played a lead role in wrecking this lifeline plan for the world’s poor. They proposed to insert a no liability or compensation clause into the Paris Agreement. This would give historical polluters blanket protection against any liability and compensation claims.

The proposal was too hot to leave to technical negotiators and so went to the COP25 Presidency to sort out at a higher level.

The small islands made a rather weak proposal which didn’t include a finance facility. Instead they asked for a ‘window’ under the Green Climate Fund (one of the UNFCCC’s multilateral funding mechanisms). Other proposals watered down demands for “new and additional” finance from the historic polluter countries – seemingly in exchange for getting sort term relief on the ground.

Eventually they produced a draft text that would:

  • Establish a long-overdue “Expert Group” by 2020
  • Establish a “Santiago Network” to catalyse technical assistance
  • Contain no language on new and additional finance
  • “Urge” developed nations to “scale up” finance
  • Refer to available finance rather than generating new and additional finance
  • Ask for loss and damage finance to come from the Green Climate Fund (GCF)

This last point is a problem because it “cuts the same cake into more pieces”. Diverting money from the GCF also means eating into adaptation finance and ultimately exposing more people to climate disasters.

Developed countries persisted in opposing the need to have a discussion on long-term finance. As far as they are concerned it ends in 2020 even though the Paris Agreement extends it to 2025. Developing countries made a big stink towards the end of COP and made frequent mention of finance in the plenaries.

Total Breakdown

All of the above issues were unresolved by the scheduled end time. The talks rolled on to Saturday amid a subdued atmosphere. No glimpse of an agreement was on the horizon. Scheduled closing plenaries disappeared from screens. The Presidency announced a final stock taking session for Saturday morning. Then Saturday evening, then midnight, then 3.30am Sunday. None of them were followed by a closing plenary.

https://twitter.com/wirereporter/status/1205826374952538113?s=20

The mood turned sour and those civil society who were left issued ever more alarming soundbites to the even fewer remaining journalists.

The blame is clear.

We held a space to represent the views of the people of the world. Not the governments.

At the time of writing (4am Sunday morning) the negotiations are still ongoing. Countries are hell bent on avoiding a no-deal. None of them want to deal with the fallout. Copenhagen has traumatised them as it traumatised us.

But the agreements are hard to come by. Finance, loss and damage, article 6, and the COP decision itself are all stuck. The Presidency keeps drafting new texts based on inputs but when the inputs are contradictory, trust is at an all-time low and the diplomacy skills are weak, what chance is there of success?

We will present the final decisions, if indeed Parties arrive at any, and explain what they mean as soon as we can.

WTF: Where’s The Finance?

A measly $100 billion

In 2009, rich countries agreed to deliver $100 billion per year by 2020. They did so in recognition of their undeniable and overwhelming share of historical pollution. Hillary Clinton plucked the $100 billion figure from thin air, presumably because she thought it sounded like a lot. In fact $100 billion pales in comparison to the real needs which developing countries have to cope with climate change while developing sustainably. 

To deliver their conditional pledges of the Paris Agreement, poor nations would require $4 trillion in funding from rich countries. And, as we know, the Paris Agreement represents the baseline of ambition rather than the extent. 

Every COP since 2009 has reiterated the $100 billion goal, but over time the language has been watered down. Developed countries have changed the wording from “deliver” to “mobilise” and then “leverage.” These words sound synonymous but are not. The subtle differences in wording mean a huge difference in policy. What percentage of climate finance will be grant-based vs. loans? Using “leverage” is a less serious commitment as you are not promising to stump up the cash yourself. 

Academics have contested the methodology used by rich countries to demonstrate their progress towards this goal. And developing countries have long stressing that their finance needs are far from being met from any source. With things as they stand, they cannot implement their climate actions. 

Where is the finance?

So to build trust at COP25, rich countries must show developing countries that they will scale up life saving funds. It’s not looking good in that regard. The Green Climate Fund, set up to support developing countries in their climate actions including adaptation, was recently promised $9.7 billion for its second replenishment. This falls short of the pledge of $10.7 billion that the GCF secured in its initial phase. Trump has not only withdrawn the US from the Paris Agreement; he has withdrawn $2 billion that Obama pledged. Australia has also refused to contribute. 

The loss of this $2 billion undermines the agreement made at last year’s COP24. In Katowice countries agreed that developed countries will “continue their efforts to channel a substantial share of public climate funds to adaptation activities and to strive to achieve a greater balance between finance for mitigation and adaptation.”

Stumping up the cash is not a nice thing that rich countries do. It is their moral and, perhaps more importantly, their legal obligation. They are trying to escape this responsibility by changing the language and blurring the lines between themselves and developing countries. Rich countries do not want to be identified as rich. They would like to hide the fact that they are rich because of centuries of plunder and pollution. And they would like for poor countries to pay for the climate crisis despite not causing it. 

A New Goal

In Madrid, developing countries will be fighting for new and adequate finance in several fora. One critical battleground is on long-term finance. The Paris Agreement extended the $100 billion/year by 2020 goal to 2025. But countries have not agreed on a future goal beyond that. Last year in Poland they agreed to begin a process to set a new collective goal over $100 billion. In June they discussed the matter in a workshop and will now consider the report from that workshop. In another they’ll discuss the “effectiveness” and “provision” of finance – how much money is flowing and what good it’s doing. 

Developed countries are, as expected, against talking about long-term finance. They are resisting any move to assess their finance contributions. At the same time, they will try to restrict certain developing countries from accessing funds. The US has already tried to block Iran, China and Palestine from accessing finance from the GCF and GEF. 

The Great Escape

Now the developed countries also want to change the membership of the Adaptation Fund Board. The Adaptation Fund is for developing countries to directly access funding for adaptation. It was created under the Kyoto Protocol and is much beloved of developing countries despite being chronically underfunded. 

The Fund gets its resources via a “share of proceeds” from the Clean Development Mechanism. Countries agreed last year that the Fund would now serve the Paris Agreement exclusively, and any country which is a Party to the Agreement is eligible to sit on the Board. A consequence of serving the Paris Agreement is that the Fund will depend on a share of proceeds from the new Sustainable Development Mechanism, once in operation. 

As part of their Great Escape agenda, developed countries want to re-write the composition of the Board. They want more developed country representation for starters. But they also want to remove the reference to “Annex I” and “non-Annex I” countries. These terms refer to developed and developing countries respectively and signal the differentiated responsibility each set of countries has. 

Finance is always a fiercely fought topic wherever it appears in the agenda. COP25 is no different and we may see fireworks later in week 2 when the stakes are raised. 

Lost and Damaged

Rich countries have utterly failed to limit their pollution despite knowing for decades the negative effects it causes. They have also failed to support poor countries in developing cleanly instead of with fossil fuels.

As a result, we live in a world that is already 1C warmer than a couple of hundred years ago. That might not seem like a lot, but all the climate change disasters we are witnessing show that even 1 degree warming represents unsafe territory for many millions of people. 

Hurricane Maria Damages Dominica's Main Hospital, Leaves ...
Dominica in the wake of Hurricane Maria

Because rich countries have also failed to help countries and people on the frontline of climate change to adapt, we must now face up to the economic, social and cultural impacts from climate change to which we can’t adapt. This is what policy-makers and experts refer to as “loss and damage”. Small island nations first raised the alarm back in 1992, but were fobbed off with insurance schemes. Nowadays, though, insurance providers won’t cover for many of the effects of climate change as they have become too common.

Warsaw International Mechanism

At COP19 in Warsaw, poor countries won their fight to create an international mechanism for loss and damage. At the time Filipino negotiator Yeb Saño was on hunger strike as Supertyphoon Haiyan battered his country, killing over 5000 people

COP19: NGO delegates walk out of Warsaw climate talks in ...
Yeb Saño supported by climate justice groups

This year Parties are due to review the loss and damage mechanism, so COP25 has become the moment to make it fit for purpose. Since being set up, the Warsaw International Mechanism (WIM) has made decent progress in terms of knowledge generation and coordination on loss and damage, particularly on climate-induced displacement. 

However, it has made zero progress on the critical and issue of facilitating financial support to poor countries so that they can avert, minimise, and address loss and damage. 

Fear of finance

Rich countries are very reluctant to even talk about this topic. The United States made sure to insert a “liability clause” at COP21 to absolve themselves from any responsibility for climate damages. Even though they are the biggest polluters of all time

Frontline communities around the world need resources to be able to cope with a rapidly warming world. In the negotiations, developing countries want to set up a comprehensive finance facility. This facility would funnel large sums of mostly public funds towards dealing with loss and damage. They also hope to set up an expert group on action and support for loss and damage, and to conduct a needs assessment for loss and damage in developing countries.

Poor countries like Dominica, Mozambique, and the Philippines are already facing huge amounts of loss and damage. In the case of Dominica, the country suffered damages worth 224% of its GDP in one hurricane. Therefore, they argue, the finance must be up to scratch. 

Rich countries could contribute directly from their national budgets. Supplementary funds can come from new and innovative sources such as air and maritime levies, a Climate Damages Tax on oil, gas and coal extraction, and a “Robin Hood” Financial Transaction Tax. Together these sources can generate badly needed additional funds. 

Though it is hard to estimate the total costs, a coalition of civil society groups have called for at least USD $50 billion per year by 2022, rising to USD$150 billion by 2025 and USD$300 billion by 2030. The coalition have calculated that the fair share of the US alone is 30-40% of the global effort to address loss and damage. 

COP25 should recommend other measures such as immediate relief on all debt due to be paid by developing countries who face the current climate emergency. This could take the form of an interest-free moratorium on debt payments, which would open up resources currently earmarked for debt repayments to immediate emergency relief and reconstruction.

A question of governance

The Warsaw International Mechanism was set up under the COP, but loss and damage is also an issue in the 2015 Paris Agreement (Article 8) which has its own governing body known as the CMA. (Shorthand for the absurd “Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement”). 

The “scope” of Article 8 of the Paris Agreement is narrower than how loss and damage has been defined under the COP. Because of this, developed countries are keen for the review to conclude that the Warsaw Mechanism should be governed exclusively by the CMA. Developing countries insist that the COP and CMA jointly govern the WIM. What seems like a technical quibble is actually a highly political battle.

Many observers have touted COP25 as the loss and damage COP. But with the Chilean Presidency and many developed countries’ attention focused more on the market mechanisms of Article 6, and with rich countries refusal to accept their responsibility, vulnerable countries will have to fight tooth and nail to make sure COP adopts decisions that take loss and damage seriously.

https://twitter.com/pragmactivist/status/1202206833844338688?s=20

The Group of 77 + China (a negotiating bloc of 134 developing countries) have submitted a proposal to the COP. In it, they outline their ideas for what COP25 should decide regarding loss and damage. With the moral high ground, they should be successful. But the vested interests against them are strong. Keep checking our coverage to see how to debate unfolds.