IATP’s Steve Suppan attended the United Nations Framework Convention on Climate Change (UNFCCC) negotiations, May 14-25, in Bonn, Germany. This is his second blog from the negotiations.
In back hall of the Hotel Maritim, where the UNFCCC negotiations took place in Bonn, there is a door marked DS. For all Least Developed Country and many other developing country delegates, picking up their Daily Stipend is a reminder of how unequal the Parties to the Convention are in terms of financial resources for negotiating. As the negotiations come to an exhausted pause, a pending question is whether the UNFCCC Secretariat will receive “voluntary” funds (funds not from regular UN dues) to hold negotiations August 30 to September 5 at the UN center in Bangkok, Thailand.
Most developing country Parties want the Bangkok meeting to continue the work of the Ad Hoc Working Group on Long-Term Cooperation Action (LCA) and of the Ad Hoc Working Group on the Kyoto Protocol (KP). Most developed country Parties want to do as little as possible under the KP and LCA mandates. Instead developed countries prefer to work under the mandate of the Ad Hoc Working Group of the Durban Platform for Enhanced Action on Climate Change (ADP). The Durban Platform, would become legally binding starting in 2020 and be “applicable to all Parties.”Under LCA and KP, there is a distinction between Annex I (developed countries) and non-Annex I (developing countries), with the obligations of the latter to be carried out on the condition that they are financed by Annex I countries.
The United States, in a submission for the Bonn meeting, contended the distinction is “not sustainable,” and indicated that under its interpretation of the ADP, developing countries would have to fund much of the climate change work. At a meeting to set the ADP agenda, the U.S. head of delegation Jonathan Pershing said, “If a country can afford airplanes, it can afford to curb emissions.” Pershing declared that a new principle of “future responsibility” should replace the Convention’s principle of historical responsibility, according to which the Annex I Parties responsible for most GHG emissions should pay for projects to reduce them and pay for the adaptation of non-Annex I Parties to the effects of climate change.
The ADP was negotiated by a handful of Parties and “agreed” by the Parties remaining 36 hours after the scheduled end of Durban negotiations, when many developing country Parties had left, perhaps because they were not invited to the decisive negotiations, perhaps because their DS had run out. Mandates are crucial in diplomatic negotiations, since they define the purposes and terms of reference for future negotiations and the implementation of their agreements. Given the World Trade Organization style Green Room tactics used to “agree” the ADP, it is not surprising that Parties differ sharply over the extent to which climate change governance is, in the words of the Durban Decision, still “under the Convention”. China and India have said on more than one occasion that the ADP has no mandate to renegotiate the UNFCCC, or to “modernize” it, to use the U.S. euphemism.
If the KP is abandoned, developed countries will no longer be subject to binding legal commitments to cut Greenhouse Gases (GHGs) sufficiently to avoid catastrophic effects of global warming. (The United States, which generally does not ratify UN treaties, is allowed to negotiate as an Observer State, enabling it to change the terms of the UNFCCC without being bound by any of its provisions.)
There is little doubt that the effects will be catastrophic. As the UNFCCC waits for the 5th Assessment of its scientific advisor, the International Panel on Climate Change (IPCC), a journal of the American Meteorological Society reported in December that a 2.5 degree Centigrade increase in average temperature would result in permanent and severe drought as early as 2050 in most of Mexico, and in much of the southwestern and Midwestern United States, according to a study summarizing 19 computer climate model simulations.
The Philippines noted that the $100 billion figure, first announced at the Copenhagen CoP of 2009, as money for developing countries to reduce GHGs and adapt to climate change is not a developed country commitment. The $100 billion is, rather, a goal whose realization is contingent upon many factors, including developing country agreement to assume emissions reduction obligations that are currently voluntary and dependent on developed country finance. Furthermore, the $100 billion does not represent a direct public finance investment in climate change. Achieving the goal depends to a large degree on the purported “leveraging” of private investment by public policy guarantees and investments, above all, those of carbon emissions trading markets.
Tanzania and Bangladesh were among the developing Parties to agree with IATP’s position that carbon emissions markets had failed to reduce emissions despite, in the case of the European Union, more than $100 billion in subsidies to major polluters to reduce their emissions. Like most developing countries Parties, Tanzania strongly prefers public finance as a more reliable and direct way to meet the challenges of climate change, including, for adaptation, in which the private sector scarcely invests. Although the United States, Canada and the European Union stated how much progress Parties had made on agreeing on the general terms of reference for adaptation programs, the Philippines pointed out that it was important not to confuse progress on adaptation negotiations with progress in investing to adapt. Philippines noted that the Adaptation Fund, already pitifully small, depends exclusively on revenues from carbon emissions trading, which have fallen drastically during the past two years.
Beyond the ADP agenda, the question of climate change finance will continue to be dominated by two factors. First, developed countries will continue to claim that the Great Recession, which was triggered by the financial services industry, prevents them from contributing more public finance. It has often been noted that the U.S. and EU have been quick and generous in using public funds to bailout their banks and hedge funds. But in December, a Levy Economics Institute study reported which firms and government banks were recipients of U.S. Federal Reserve bank emergency loans at the lowest Fed interest rate from 2007-2010. For purposes of this analysis what was striking about the bailout was not just its size, more than $29 trillion, but that $10 trillion went to government banks, $8 trillion to the European Central Bank alone. Most of those loans and asset purchases were easily repaid due to the gift-like, less than one percent interest rates, whereas the majority of climate finance loans are offered at full market rates, according to a Climate Policy Initiative study. The money is there, much more than the $100 billion Copenhagen political number, if there is political will to prioritize climate change investment by treating climate change as an emergency at least on par with the financial services crisis.
The second post-Bonn factor is the relentlessly grim news coming from climate science, including presentations by the IPCC and the UN Environmental Program’s chief scientists at the Bonn meeting. Save for in the United States Congress, there is no debate about climate science: the debate has moved to how much will it cost to fix and who will pay for it. We are surprised that Annex I governments do not view the increasingly grim news coming from climate science with the same degree of alarm as do developing countries, particularly Small Island Developing States. The U.S. and diplomatic strategy has its sights set on a post-2020 climate governance regime during which, they claim, carbon emissions markets will finally fulfill the promises made for them by Vice President Al Gore at the Kyoto negotiations in 1997.
One question on many minds is whether by 2020, under current Business As Usual, it will be too late to adapt to climate change and hugely more expensive to cut GHGs.
In the meantime, apart from the acuity of several climate diplomats, we could find cause for hope in just two aspects of the Bonn meeting. First, as in Durban, the Youth NGOs were very active and creative in staging nearly daily actions and releasing press statement to draw attention to the failings of their elders. Second, the process for implementing the Technology Mechanism to advise developing countries on the most appropriate and cost-effective technologies for adaptation and mitigation of GHGs, is progressing rapidly. The Technology Mechanism does not pay for the transfer of technologies to developing country Parties, as is required under the Convention.
But perhaps Annex I countries will loosen their purse strings as the estimated $8 trillion of corporate assets exposed to climate related risk begin to experience the ravages of climate change. Corporations, including those in developing countries, will likely demand public-private partnerships, with public investment and “policy certainty,” to reduce their risks. In the best of all possible worlds, Annex I countries would finance Technology Mechanism projects according to priorities defined by developing country Parties. But in the current world, we shall be fortunate to see Annex I governments contribute to reducing the climate risks of their corporations.
