With only four-and-half months to go for the climate summit at Doha, a recent UN workshop on climate finance gave negotiators a glimpse of what to expect during the deliberations on this topic at the next Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). The workshop, held at Bonn in Germany from July 9 to 11, was the first of the two that the UNFCCC plans to hold this year on climate finance, prior to the Doha meet. The workshop helped to bring clarity to a number of issues relating to climate finance, but the old North-South divide was very much visible in the deliberations.
The purpose of the workshop was to facilitate discussions on how to increase mobilisation of climate finance in 2012. The importance of this was underscored by UNFCCC executive secretary Christina Figueres. “It is clear that we cannot continue to tackle climate change with old solutions, and no one single source is going to be appropriate or sufficient to mobilise climate finance at a speed and scale that would allow people in developing countries to build their own climate-resilient futures,” she said.
The workshop, comprising five sessions spread out over three days, was attended by 140 participants, including government officials, public and private finance representatives, members of civil society and academia. Issues under discussion included the present status of climate finance, sources for climate finance, options for mobilising climate finance, understanding how much funding developing countries would need and the experience of countries involved in the soon-to-be-concluded fast-start finance system.
Troubles with fast-start finance
The fast-start finance system was put in place at COP 15 held in Copenhagen and consisted of US $30 billion provided by the developed countries to developing countries; the amount and was to last for three years until the adoption of the Green Climate Fund at Doha. Delegates at the workshop listed the many organisational bottle-necks that existed in the programme. An example of this was how despite donor countries having sent funds across, recipients in the developing countries were unaware that they had even received it. Lack of logistical coordination between donor and receiving country departments was considered a major hurdle to the successful implementation of the climate finance mechanism.
A key aspect of the workshop’s deliberations was who would pay for climate finance. This question was discussed not only with regard to the sources of climate finance, but also in debates about how much money the developing world actually needed. In his presentation, Manuel Montes from the South Centre, an intergovernmental policy think tank, gave a summary of the various estimates about how much the developing countries would actually need over the years. The estimates for the mitigation and adaptation needs varied between US $600 billion to $1.5 trillion. Montes along with others delegates underlined the need to develop better measuring systems in developing countries, in order to get a more accurate assessment of the investment needs of developing countries.
The most intense discussions during the workshop, however, were on the question of sources of finance. A recurring point during these discussions was the removal of fossil fuel subsidies. In their presentations, Mattia Romani, economist with Global Green Growth Institute and Jane Ebinger from World Bank argued that developed countries could raise a significant amount of public funds for climate finance by either reforming or removing fossil fuel subsidies. Ebinger’s presentation also touched upon the issue of taxes on sources of transportation, particularly aviation, which she said had the potential to generate $40 billion, half of which could be used for climate finance. However, keeping in view opposition from India and China to the EU’s aviation levy, developing countries were extremely sceptical of the idea of imposing carbon tax on sources of transportation.
Despite these differences delegates at the workshop agreed that there was an urgent need for countries to act and begin the process of funding at once and not wait until all the details were finalised. Though the workshop did hint at the possibility of the Green Climate Fund not being finalised at Doha, all the same it helped delegates move the process forward. “This event has allowed all stakeholders to think outside the box, to explore options in highly creative ways, and to pave the way for stronger climate action,” Figueres said.