‘Don’t leave this to your children’: could climate finance unlock a deal on Climate Change?

Just back from the Doha climate talks, Oxfam’s Campaigns and Policy Director Phil Bloomer discusses the tensions and relative climate change records of rich and poor country governments.

The UN summit on climate change in Doha this week is entering the end game, amidst increasing frustration from all sides at the glacial pace of negotiations (and this glacier shows no signs of melting).

Amidst the rancour, Professor Nick Stern, perhaps the leading thinker on climate action and negotiations, has thrown a huge challenge into the talks, by explaining the ‘brutal arithmetic’ of our greenhouse gas emissions. To stay below an average global temperature rise of 2C, “stronger action will be required from developing countries, even if developed countries reduce their emissions to zero by 2030”. Stern goes on to say that in the interests both of fairness and getting results, developing countries’ efforts will have to be supported by rich countries’ know-how, technology, and finance.

This really matters: equity (let’s just call it fairness) is not a barrier to ambition in the talks, but rather its enabler. Rich countries’ willingness to support developing countries’ shift to low carbon development, and their adaptation to the climate change that already threatens poor people’s lives and livelihoods, is key to unlocking higher ambition from all countries. Ambition for emission cuts and equity are two sides of the same coin. The failure to grasp this at the talks in Copenhagen in 2009, led to that failure. We cannot let it destroy Doha too.

But the Doha talks look dangerously mired on this. Developing countries are facing their own financial cliff this month, when three years of $30 billion in ‘Fast-Start Financing’ for emissions reduction and adaptation come to an end. This was mostly not ‘new and additional’ money (as was the promise), but mainly diverted from aid funds to ‘climate finance’. But at least it was reasonably predictable. Developing countries now find that rich countries are refusing to recommit to scaling up this funding, preferring broad assurances that bilateral climate finance will ‘continue’ (not necessarily ‘increase’). The UK is an honourable exception to this, pledging £1.8bn over the next two years. This reluctance may be understandable in a recession, but there are innovative sources of finance like the financial transaction tax, a tax on aviation and shipping, or closing tax loopholes and havens, which could raise billions, were they to be implemented.

Despite this lack of finance, developing countries are not standing around waiting for our cash before acting: the Stockholm Environment Institute calculates that the developing countries’ pledges to reduce greenhouse gas emissions are already larger in absolute terms than rich countries’ promises. This extraordinary disparity looks set to be reinforced at Doha as the rich countries refuse to join an extended climate change agreement (USA, Canada, Russia, New Zealand and Japan), or improve on their lowly targets for reducing emissions (the US has said no further action should be expected before 2020) or only promise reductions they have effectively already achieved, partly through the economic recession (EU).

Meanwhile the least developed countries’ main concern is supporting their vulnerable citizens to adapt to climate change that is already wreaking havoc through increased droughts, floods and temperature extremes. This needs finance. As Yvette Abrahams, an Oxfam partner from South Africa, said to rich country negotiators in Doha: “My family is meeting this Christmas to discuss moving (from our ancestral land). We cannot stay, as the heat has stopped the grass growing, and there will be nothing to feed our livestock. So the very little we have managed to preserve through slavery, colonialism and apartheid, we are about to lose to climate change. That is why we do not understand why climate finance is so difficult to deal with (in these talks). What I have paid is all I have. Whatever it is your ancestors have done, I appeal to you to not leave this to your children.”

Stern calls for the principle of ‘equitable access to sustainable development’ to replace the vested interests, zero sum games, and redlines that currently paralyse the negotiations. Every country, and especially the high emitters, will have to take on higher targets if we are to avoid runaway climate change. The question is whether that will be done fairly or not. This is a collective action challenge like no other and we need collective and fair action. We need to hang together or, assuredly, we will hang apart.

World Bank pronounces on climate change: WDR 2010, published today

This year’s World Bank flagship publication, the World Development Report 2010, is on climate change – a significant departure from the tradition of devoting turn of the decade WDRs to an overview of poverty. It’s an unabashed bit of climate change advocacy, remorselessly upbeat and optimistic (even when the story it tells suggests rather more gloom is in order) and much like the UN report I blogged on last week, it seeks to square the development – climate change circle: how can we ensure the global response to climate change strengthens, rather than undermines, development?

It has the usual World Bank strengths and weaknesses – strong on analysis, killer facts, regional impacts, the science of climate change and policy solutions; flimsy on politics and ‘drivers of change’ – e.g. who’s blocking progress, why and what to do about it.

Some highlights:

‘Climate change policy is not a simple choice between a high-growth, high-carbon world and a low-growth, low-carbon world—a simple question of whether to grow or to preserve the planet. Plenty of inefficiencies drive today’s high-carbon intensity…. For example, existing technologies and best practices could reduce energy consumption in industry and the power sector by 20–30 percent, shrinking carbon footprints without sacrificing growth. In Africa, mitigation opportunities are linked to more sustainable land and forest management, to cleaner energy (such as geothermal or hydro power), and to the creation of sustainable urban transport systems. So the mitigation agenda in Africa is likely to be compatible with furthering development. Nor do greater wealth and prosperity inherently produce more greenhouse gases, even if they have gone hand in hand in the past.’

All true, but I have a problem with this exclusive focus on ‘win wins’, which verges on the Panglossian at times. Sure, there are plenty of cases where you can save money and save carbon, but suggesting that this can all be pain-free may get you a hearing in terms of advocacy, but is surely not preparing the ground for difficult discussions on limits to growth (where? How much?) that I increasingly think will have to form part of the response.

The most interesting aspect of the report is the way it frames the challenge in terms of ‘inertia’ -‘Inertia is the defining characteristic of the climate challenge—the reason we need to act now.’ It sees inertia at all levels:

in the science of climate change: a series of lag effects means that temperatures and sea levels rise long after (i.e. for centuries) carbon emissions start to come down

in investment: once countries invest in eg coal-fired power plants, it’s very hard for them to decide to mothball them until their useful life has expired – several decades

in research and development: ‘New energy sources have historically taken about 50 years to reach half their potential’ in the behaviour of individuals and organizations

But when it comes to suggesting how you overcome that inertia, the report (in common with most discussions on climate change, to be fair) is pretty thin. The Bank calls for ‘new pressures, new instruments, and new resources’. On pressures it argues that ‘in the absence of a global enforcement mechanism, the incentives for meeting global commitments are domestic.’ – i.e. public pressure and good leadership at national and city level (big plug for the role of sub-national governments in the US and elsewhere).

On instruments it calls for an equitable global deal (who could disagree with that?) and learning from the mistakes of the aid system (more on that in Oxfam’s report ‘Beyond Aid’ due out tomorrow). It intriguingly also calls for ‘A long-term goal of per capita emissions converging to a band could ensure that no country is locked into an unequal share of the atmospheric commons.’

But then it heads rapidly for the Bank’s comfort zone of technological and policy solutions: ‘known technologies and practices can buy time—if they can be scaled up. For that to happen, appropriate energy pricing is absolutely essential. [eg cutting subsidies and increasing fuel taxes] … Prices help explain why European emissions per capita (10 tons of CO2e) are less than half those in the United States (23 tons). Global energy subsidies in developing countries were estimated at $310 billion in 2007, disproportionately benefiting higher-income populations. Rationalizing energy subsidies to target the poor and encourage sustainable energy and transport could reduce global CO2 emissions and provide a host of other benefits. But pricing is only one tool for advancing the energy-efficiency agenda, which suffers from market failures, high transaction costs, and financing constraints. Norms, regulatory reform, and financial incentives [eg feed in tariffs] are also needed.’[sorry, free market fundamentalists, the Bank (at least its climate change part) is now a lost cause]

[but current technology isn’t enough] ‘every energy model reviewed for this Report concludes that it is impossible to get onto the 2°C trajectory with only energy efficiency and the diffusion of existing technologies. New or emerging technologies, such as carbon capture and storage, second-generation biofuels, and solar photovoltaics, are also critical.’

[And feeding a world population peaking mid century at 9 billion will be hard:] ‘Producing more and protecting better in a harsher climate while reducing greenhouse gas emissions is a tall order…. agricultural productivity will have to increase, perhaps by as much as 1.8 percent a year compared to 1 percent a year without climate change… This must be done in a harsher climate with more storms, droughts, and floods. And it has to incorporate agriculture in the mitigation agenda—because agriculture drives about half the deforestation every year and directly contributes 14 percent to overall emissions.’

Other useful stats:

‘developing countries will bear most of the costs of the damages—some 75–80 percent.’

‘Mitigation finance needed in developing countries could be around $400 billion a year by 2030. Current flows of mitigation finance averaging some $8 billion a year to 2012 pale in comparison. And the estimated $75 billion that could be needed annually for adaptation in developing countries dwarfs the less than $1 billion a year now available.

[$400bn] is equivalent to 0.2 percent of projected world GDP in 2030, or 3 percent of today’s global investment spending.’

How the economic meltdown and climate change are hitting Asia – new reports

The Asian Development Bank produces a remarkable amount of frequently high quality analysis. Here are two recent examples on climate change and the impact of the economic meltdown.

On the meltdown, a recent ADB Economic Working Paper uses the latest national projections for growth and past poverty performance to refine the predicts that poverty across the whole of Asia will rise by 62m people in 2009 and 100m in 2010. Read More …

Building a Low Carbon Economy: How much will it cost? Where do we start?

Leaders like Obama and (increasingly) Gordon Brown seem to be gravitating towards the ‘green new deal’ argument that massive international spending in response to the financial crisis must also shift economies onto a ‘low carbon recovery’ path. Looking at the science, there’s little argument – we have to massively reduce the carbon intensity of production if we are to keep below two degrees of global warming. In terms of politics, maybe the attraction is that it’s one of the few positive (rather than punitive or defensive) messages that makes sense right now.

But how do we make sure that warm words turn into action? I’ve previously argued that a carbon audit of existing stimulus plans might help, preferably independent, credible and public. But what should those plans consist of in the first place? Now McKinsey has helpfully updated its ‘Global Greenhouse Gas Abatement Cost Curve’. The bar chart below sums up their findings: the height of the bar corresponds to the cost of the measure per tonne of CO2 equivalent, with bars below zero meaning that you actually save money by doing things like insulating property or managing croplands better. The width represents the total potential of that measure to reduce emissions. Read More …

What happens if the climate change talks fail? Botswana bakes, Shanghai submerges etc

For a chilling view of what is at stake in the climate change talks that culminate at Copenhagen this December, read a new report from the UK Institution of Mechanical Engineers (thanks to Cat Pettengell for pointing it out). (A similar doomsday tone is conveyed in the latest New Scientist cover story on what the world would look like with a 4 degrees temperature rise.)

The IME report’s rather defeatist point of departure is that we are unlikely to be far more successful at curbing our CO2 emissions in the near future than we have been over the past decade or so. What would this mean?

· Average global temperature rises of about 5 degrees Celsius by the start of the next century, rising to 8 degrees by the middle of the 23rd century (see chart)
· Sea level rises of 0.5m by the end of the 21st century and of 1.5m by the end of the 22nd and then further rises Read More …

What needs to happen in the climate change talks in Poznan?

Two new Oxfam papers set the scene for the climate change talks getting under way in Poznan this week. ‘Climate, Poverty and Justice’gives an overview, while ‘Turning Carbon into Gold’ crunches some numbers on how to raise the kinds of amounts needed to finance adaptation to climate change in developing countries. Read More …