Finding the money to pay for climate solutions

ROAD to COPENHAGEN, The Jakarta Post, Fitrian Ardiansyah | Tue, 29 September 2009 | Environment

This week, another round of UNFCCC (UN Framework Convention on Climate Change) talks commences in Bangkok, where various parties will lay the groundwork for faster progress on the very last sessions: Barcelona in November, Copenhagen in December.

Prior to the Bangkok Climate Change Talks, a series of high-level political meetings including the UN Climate Summit in New York and the G20 Summit in Pittsburgh discussed climate change, with specific focuses on the needs for having targets and actions to reduce greenhouse gas (GHG) emissions and on climate finance.

Adequate, sufficient and sustainable financing is required to address the disastrous impacts of climate change and to significantly reduce GHG emissions. A global financial architecture for climate change is also needed to shift public and private finance and investment flows toward decoupling economic growth from increasing emissions to a low-carbon and climate-resilient future (including both adaptation and compensation), particularly in developing countries.

In July 2009 at the Major Economies Forum, in addition to agreeing on the climate science and the need for urgent action this year, heads of state agreed that finance ministers should “work through the G20 to recommend in advance of the Copenhagen conference the best ways to mobilize necessary financing”.

The UNFCCC secretariat’s Investment and Financial Flows report from 2007 estimates that US$133 billion a year in additional investment in developing countries will be needed in 2030 to increase climate resilience and contribute to their low carbon economic development.

The latest survey carried out by the UN Department of Economic and Social Affairs, this year, recommends the need for additional investments amounting more than $500 billion per year, 1 percent of GDP, to help developing countries pay for climate change mitigation and adaptation.

To answer this challenge, all countries, except the least developed, should contribute to financing the fight against climate change on the basis of common but differentiated responsibilities and their respective capacities.

Nevertheless, although emissions, including from deforestation, are rising in some developing countries, industrialized countries have a higher historical responsibility for accumulated emissions and higher economic capacity to deal with this challenge. Therefore, any actions taken by developing countries are based upon actions by developed countries to reduce their own emissions and provision of resources.

The G20 leaders in Pittsburgh, unfortunately, failed to make any specific decisions on financing for climate change. Heads of the world’s 20 largest economies acknowledged the urgent need for a deal in Copenhagen that sets us on a path to a clean energy economy and addresses the devastating impacts of climate change, but very few concrete measures were taken by the group.

They only called on their finance ministers to continue their work and report back at their November meeting in Scotland with a range of options for climate change financing to be considered at the UNFCCC negotiations in Copenhagen.

Within this very limited time, the Bangkok Climate Change Talks should seriously begin exploring adequate, predictable, new and additional options needed to have “make or break” decisions on climate finance in Copenhagen.

These options should start from specifically identifying the means by which the industrialized countries can further mobilize public resources, over and above Overseas Development Assistance (ODA), and channeled through an institution identified by the UNFCCC Conference of the Parties (COP).

Public finance is critical for mobilizing and shifting the estimated $1.5 trillion in annual private sector investment needed to spur the clean energy economy, according to the International Energy Agency (IEA). If the private sector is encouraged and subsequently acts, there are likely to be significant new and additional investments in renewable energy, energy efficiency, tackling deforestation and new climate-friendly technologies.

In addition to this, public finance is important for supporting actions and measures on adaptation in developing countries, and preventing the much higher costs of inaction on climate change.

At the G20 Summit, leaders made a commitment to gradually phase out fossil fuel subsidies. This commitment would strengthen public finance for climate change and has the potential to generate hundreds of billions of dollars for clean energy development and access to clean energy for the poor.

Another conceivable option to drive the necessary global transformation in combating climate change would be the involvement of global carbon markets.

The precondition for this is to have ambitious targets by industrialized countries that are sufficiently stringent to deliver the overall global emission reductions. With this, there will be sufficient demand for credits in carbon markets and the markets can play a role to deliver abatement wherever it appears more cost effective.

Other options that need to be explored include auctioning of Assigned Amount Units (AAU) – finance would be raised by holding back and auctioning a small portion of developed country emissions allowances; revenues collected from trading schemes and fuel levies in international aviation and shipping sectors; and levies on credits from carbon market mechanism.

The Bangkok Climate Change Talks will provide a key opportunity for developing countries, including Indonesia, and industrialized nations to kick off real negotiations for climate financing. Now, negotiators need to take up the mandate from their leaders and make real progress.

The writer is program director of climate & energy at WWF-Indonesia. He can be reached at This weekly column features articles related to developments in the lead up to the UN Climate Change Conference in Copenhagen, Denmark.

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Finding the `middle ground’

The Jakarta Post, ROAD TO COPENHAGEN COLUMN, page 23, Wed, 23 September 2009  |  Lifestyle

Copenhagen is fast approaching. The road to achieving a global climate treaty, nevertheless, will be a thorny one.

One of the potential deadlocks will be the negotiations on shared vision – a vision that needs to have the right level of ambition to bring about reductions in emissions that are high enough to ensure the survival of the most vulnerable nations, communities and ecosystems.

A credible scientific body, the Intergovernmental Panel on Climate Change (IPCC), provides the lowest mitigation scenario category, which stabilizes greenhouse gas concentrations in the range of 445-490 ppm CO2 equivalent, leading to temperatures of 2 to 2.4 degrees Celsius higher than pre-industrial levels in the long term. To achieve this, emission reductions for industrialized countries have to be at the high end of the IPCC – 25 to 40 percent reduction.

Prior to the Copenhagen COP (Conference of Parties)-15 of the UN Framework Conventions on Climate Change (UNFCCC) this December, different individual countries and major blocks of countries have stated their targets. However, the current proposed emission targets rather befit temperature rises of 3 to 4 degrees Celsius, an inconsistency that threatens the survival of entire nations and precious ecosystems around the world.

For instance, EU member states committed themselves to cutting the EU’s greenhouse gas emissions by 20 percent by 2020, compared with 1990 levels, with a promise to move to 30 percent if other industrialized countries follow suit.

The new Japanese government has recently moved its target from an 8 percent reduction in emissions by 2020 on 1990 levels to a 25 percent reduction, provided that the upcoming international agreement includes big developing countries like China and India.

Other industrialized countries, including the US, have yet to come up with stronger targets. As the only Annex I country that is not a signatory to the Kyoto Protocol, leadership from the US is needed. The country must join a strong new international agreement in Copenhagen by adopting an economy-wide quantified emission reduction commitment, reflecting its history as the largest emitter of greenhouse gases.

Based on the overall compilation of national data, industrialized nations are planning average cuts in greenhouse gas emissions of between 10 and 14 percent below 1990 levels by 2020 as part of a new UN climate pact. This falls sharply short of what the science has suggested.

As mentioned by Japan and echoed by many industrialized countries, there is significant pressure on newly industrialized countries such as South Korea and Saudi Arabia to take quantified emissions limitation and reduction commitments and on key developing countries (e.g., China, India, Brazil, South Africa and increasingly Indonesia) to also reduce their emissions to less than business as usual by 2020.

This is not an easy subject to negotiate. On the one hand, it is recognized that to achieve the goal of keeping global temperature rises well below 2 degrees Celsius, involvement and contribution of developing countries are key. On the other hand, developing countries have less historical responsibility and capability to act, and hence they require adequate finance, technology and capacity-building support from industrialized countries.

To have this sort of trade-off, developing countries can put forward Nationally Appropriate Mitigation Actions (NAMAs). Developing countries’ actions, as a group, should aim to achieve the emission reductions required, while at the same time leading to the poverty eradication, meeting the Millennium Development Goals and ensuring the right to overall sustainable development.

The group of developing countries has the potential to reduce their actual emissions substantially reaching to 30 percent of deviation below a business as usual (BAU) pathway by 2020, including REDD (reducing emissions from deforestation and forest degradation), provided they receive relevant support from industrialized countries.

The plans to reduce emissions in developing countries should be based on their respective capacities, targeting the heaviest polluters in the country including power generation, deforestation, transport and the built environment. Building from the bottom up, these plans and actions are likely to include policies, measures and perhaps sectoral agreements.

These plans and actions should not be perceived as burdens but as an opportunity for job creation and a healthy society, setting the world on a development path that can be sustained over a long period.

Industrialized countries, therefore, should commit considerable funds to cover the costs of preparing these immediately.

Industrialized and developing countries can all be change agents, but key countries from both sides need to be more proactive and get beyond the finger pointing. Both sides need to understand better each other’s key objectives, concerns, aspirations and responsibilities.

More than ever, there is a need for game-changing interventions.

The statement from the British prime minister arguing for the need to offer finance – US$100 billion a year by 2020 – to poorer countries to enable them to begin the transition to low-carbon development and adaptation, for example, is a good starting point, signaling “willingness” by industrialized countries to support developing countries.

The plan by Chinese President Hu, at the United Nations and G20 summits next week, to voice a position on climate change, in particular calling for stronger international efforts on climate change, and to introduce the new measures that China is taking, could well be seen as the “willingness” from developing countries to contribute to climate change solutions.

If other industrialized and key developing countries, including Indonesia, follow these moves and go beyond rhetoric – and putting trust in the joint understanding that all parties will do their fair share to deal with this crisis – we may achieve a desired global climate agreement in Copenhagen. Climate change now really depends on “good” politics from all parties involved.

– Fitrian Ardiansyah

The writer is program director of climate and energy at WWF-Indonesia. He can be reached at

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