Countries, Environmental Groups at Odds Over Green Fund's Role in $100B Pledge

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By Dean Scott

Dec. 10 — More than 190 nations at international climate talks in Lima, Peru, continued Dec. 10 to work on overcoming a serious rift over the aid richer nations are to give to developing nations under a 2015 global climate deal.

Delegates hadn't even agreed on a basic definition of what is or isn't climate finance.

But the major issues were much broader, centering on what assurances the U.S. and other rich nations can give to demonstrate they are ramping up climate aid to the $100 billion-a-year amount they promised beginning in 2020 and whether individual countries should have to provide more detail on any climate aid they are considering when they prepare formal emissions-reduction pledges that will anchor the global climate accord to be signed a year from now in Paris.

Industrial nations first pledged the $100 billion-a-year aid at the 2009 Copenhagen climate summit and soon after set up a new Green Climate Fund. Pledges to the GCF hit what many heralded as a significant $10 billion threshold during the United Nations negotiations in the Peruvian capital, with pledges announced Dec. 9 from Belgium ($60 million) and Australia ($165 million). 

Environmental groups see the $10 billion GCF total—an amount pledged over four years and thus really a total $2 billion to $3 billion a year commitment—as paltry. But lead U.S. negotiator Todd Stern stressed even before the Lima talks that the GCF “is not the $100 billion-a-year fund” but “a new entrant to the field” meant to get developed nations part of the way to fulfilling their broader pledge.

The U.S. special envoy for climate change told reporters at a State Department briefing held on the first day of the Dec. 1-12 Lima talks that the GCF and the $100 billion pledge “are two completely different things,” with the GCF just one funding stream. The overall $100 billion commitment made in Copenhagen is to come “from all sources of funding, public and private,” he said.

The 2015 deal to be finalized in Paris would commit developed and developing nations alike to actions to address greenhouse gas emissions beginning in 2020.

Tallying Total Global Finance

Stern said total global climate finance could include World Bank and other multilateral institutions, as well as other entities that back or leverage private lending, such as the U.S.-backed Overseas Private Investment Corp. and Germany's KfW development bank.

But many developing nations argue that what the U.S. and other countries pledged in 2009 was to provide $100 billion in additional funding beyond what was already in the pipeline. That would ensure, for example, that donor nations didn't simply take funds away from foreign aid now going to improve public health and then simply re-label it as climate aid.

“One of the big issues they [negotiators] have to resolve between now and Paris, if they can, is to get broad consensus on what constitutes climate finance and should be counted toward that $100 billion,” said Alden Meyer, who tracks the climate talks for the Union of Concerned Scientists.

“For the component that would come from public finance, new and additional is going to be an important criteria, because there was a concern by developing countries that you not rob Peter to pay Paul—that you don't take funding away” from other foreign aid to fund climate aid, said Meyer, UCS's director of strategy and policy.

‘Lot of Confusion' Seen

“But there is a lot of confusion certainly in some of the media and some of the NGOs [nongovernmental organizations] about the numbers,” he said. “The fact is the Green Climate Fund was never designed to be the entire funding vehicle for all climate finance.”

“The GCF was designed to meet the need for developing countries to have a financial vehicle that was more responsive to them and there could be direct access to finance,” Meyer said, as an alternative to more donor-driven institutions such as the World Bank.

The underlying rationale for providing the climate aid is that developing nations are far more likely to take on actions and sign on to the global climate deal if industrialized nations help them prepare for rising sea levels and other climate impacts caused largely by the emissions of developed nations.

The late-2015 Paris accord, if agreed to, would be the first truly global climate accord to cut greenhouse gas emissions and slow the rise in global temperatures.

Funding Seen Between $10 Billion, $100 Billion

Stern acknowledged that the annual amount of global climate funding is still likely well below the $100 billion-by-2020 level. But he said it is also likely well above the $10 billion now pledged to the Green Climate Fund, which developing nations as well as environmental groups see as only a starting point.

“When you look at all the public sources—this is just public money—we are probably in the range of mid 30s or low 40s in billions [of dollars] right now,” the U.S. negotiator said Dec. 1. “So when I see somebody say the initial capitalization is $10 billion and they say, ‘Wow, that's $90 billion short of $100 [billion]’—well, you're mixing apples and oranges.”

Many countries argue that Stern's view essentially would allow developing nations to provide little additional government funding, given that part of the $100 billion—perhaps even half, by some estimates—could come from private sources.

But there are other disputes over climate finance, including whether only the U.S., the European Union, and other industrialized economies should be ponying up such funds given that many rapidly developing nations are now major emitters.

Developing Nations Now Contributing

China, which overtook the U.S. years ago as the world's top emitter, has been silent on offering a contribution to GCF even as a number of smaller developing nations have come forward to make pledges, albeit relatively modest sums.

For example, Peru, the host country of this year's talks, has announced a $6 million pledge, but even smaller nations that face still-significant climate threats have offered help.

Mongolia, which was ranked 140th in the world in gross domestic product last year, pledged $50,000 to the Green Climate Fund in the run-up to the Lima talks, in what its environment minister said Dec. 9 was a “small contribution” meant to emphasize the urgent need to make the GCF fully operational.

“For many developing countries like Mongolia, which are usually more vulnerable to climate change, it is crucial” to get a clearer signal “about the level of sustainable financial support that will be provided by the developed country parties and financial institutions” for climate finance, Oyun Sanjaasuren, Mongolia's minister of environment, said at the Dec. 9 high-level ministerial dialogue on climate finance.

‘Stop Holding Climate Finance Hostage.'

Environmental groups, meanwhile, say they have seen little progress on the climate finance issue at the talks that are to end Dec. 12 in Lima, aside from some additional pledges that put funding for the GCF over the $10 billion mark.

Kelly Dent, of Oxfam Australia, accused the U.S. and other developed nations of pushing negotiators to drop any language formally committing them to climate finance before or after 2020 when the climate deal would enter into force.

“So what's happening here is most developed countries are putting a blindfold on developing countries and saying, ‘Trust us,' ” Dent said. “It's time to stop holding climate finance hostage and stop using it as a bargaining chip. Without a deal on finance, Paris will be over before it's even begun.”

To contact the reporter on this story: Dean Scott in Lima, Peru, at dscott@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com