Tag: Finance

Adaptation Finance: Final Stretch

It is no surprise that finance has been pushed to what ECO hopes is actually the last day of COP22. Until last night, an agreement to give the Adaptation Fund a future life under the Paris Agreement had not been found. ECO is well aware of the question marks many developed countries have about whether (or how) the Adaptation Fund should serve the Paris Agreement. Well, that can be sorted. Just decide to work it out. When? Next year.

ECO finds it unwise to leave COP22 without a clear political decision that the Adaptation Fund will serve the Paris Agreement. This would be seen as a blow to the spirit of cooperation and solidarity, which were so eagerly celebrated with the announcement of the Marrakesh Action Proclamation. Also the Fund holds significant importance to many, given the successful delivery of adaptation support.

As if this wasn’t enough for the final finance stretch of COP22, the long-term finance decision is also still in limbo. While developing countries are asking for increased adaptation finance, developed countries want to see their roadmap welcomed, even if that implies accepting their accounting methodology, which has considerable gaps. The delivery of the roadmap could be recognised as a contribution to enhance transparency in how developed countries intend to meet their US$100 billion goal.

That is, if Parties settle on wording that does not prejudge the outcome on the accounting modalities. Such recognition should conclude that planned increases in adaptation finance are obviously welcome, though balance between mitigation and adaptation finance have yet to be achieved. Developed countries must enhance their efforts to achieve that balance. Job done. What are you waiting for?  

0.1% 

This week, ECO saw some developed countries and regions finally making pledges to the Adaptation Fund. This unique instrument has served an important niche function in the landscape of financing for climate adaptation efforts in vulnerable countries. In the context of some Parties hemming and hawing about whether the Adaptation Fund should be continued, these pledges confirm what ECO and others have known all along: the Adaptation Fund is relevant and necessary. So ECO extends kudos to Germany, Sweden, Italy, and the Walloon and Flemish Regions of Belgium.

While cheering the $80 million committed to the Adaptation Fund this week–reaching the Fund’s  fundraising goal for COP22 –it’s important not to lose track of the broader perspective. There is a growing gap between pledged adaptation finance and science-based estimates of adaptation finance needs. The recent United Nations Environmental Program Adaptation Finance Gap Report estimates that $56-73 billion are needed for adaptation in developing countries annually now, rising to $140-300 billion in just 13 years.

ECO reminds Parties here on the last day of the “Africa COP” that current pledges to the Adaptation Fund–although most welcome–will contribute to plugging a mere 0.1% of the adaptation finance gap. ECO urges developed country Parties to mind this gap by stepping up with pledges closer to the scale of the problem when planning future budgets for adaptation support.

Where’s Al the Finance Gone? Straight to Fossil Fuels 

In Marrakech, adaptation finance has remained a sticking point between Parties. When it comes to adaptation finance, wealthier countries have continued their common refrains: “There’s just not enough public money”;“Our cupboards are bare”;“It’s complicated”. The Africa Adaptation Initiative has yet to find any developed country willing to support it, a state of affairs made even sadder by the fact that Marrakech is an African COP.

According to Parties’ own biennial reporting, G7 governments plus Australia are providing roughly $3.4 billion per year in public finance for adaptation activities in developing countries. In contrast, these same governments are providing nearly $67 billion per year in subsidies and public finance to support oil, gas, and coal production, both domestically and abroad.

Yes, you read that right – the G7 plus Australia are giving nearly 20 TIMES as much public money to fossil fuel companies as they are to support adaptation in developing countries. ECO wonders why are these countries are buying more flamethrowers when the world is already burning.

This hypocrisy is not going unnoticed at COP – see Japan’sFossil of the Day for its high levels of fossil fuel finance. As indicated in the UNEP Adaptation Finance Gap report, there’s no shortage of need for investment in climate-resilient, low-emission infrastructure. If governments want to be seen by their peers as taking the Paris Agreement seriously, they need to stop funding fossils and start funding climate solutions.

On the positive side, this means that as governments continue to line up with the Paris Agreement, shifting money away from fossil fuels and aligning financial flows with low-emission development, tens of billions of dollars in public money will be freed up and will need a new home.

 

Full Steam Ahead on Loss and Damage Finance in 2017 

Delegates, ECO can’t help but notice that you’ve had a somewhat relaxed COP. It almost seemed like you were skating on the wins in the Paris Agreement, and using that excuse not to move too far ahead here in Marrakech. Luckily, you’ve got the opportunity to do some deep thinking over the holiday break about how to move loss and damage finance forward in a decisive fashion–with the deadline for submissions coming up on 27 February. Let’s smash that “placeholder” with a clear set of tasks, timelines and outcomes for the mandated strategic priority of loss and damage finance, as well as the other key elements of the 5-year work plan.

One strategic outcome that you will no doubt want to include in your submissions is the goal of increasing financing over and above adaptation finance for those most vulnerable to climate change, from a nice predictable source. Say, from the fossil fuel and aviation industries that have helped get us into the climate mess that we’re in? That’s something for you to think about over the “break”.

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Fossil of the Day 

The first Fossil of the Day award goes to…take a deep breath…Turkey, Russia, Australia, New Zealand, France, Japan and Indonesia for duplicity at the UN climate negotiations. While representatives from climate vulnerable countries, cities, businesses, and civil society organisations are fighting to keep dirty fossil fuels in the ground, as well as preventing the expansion of polluting airports (hat-tip to France), these countries still aim to increase their domestic fossil fuel extraction. By doing so, they are quite literally drilling under everyone’s efforts to keep global warming below the critical threshold of 1.5°C. These countries helped forge the Paris Agreement which is now in force, committing them to halt climate change, so they really need to get the left hand and the right hand talking to each other. Put your money where your mouth is, please!

The second Fossil of the Day award goes to Japan for its dodgy stance on coal. Japan has a crazy number (48!) of new coal power projects in the pipeline and is funding a massive 10 GW worth of new coal in Indonesia. On a near-daily basis Indonesian locals have been protesting against proposed coal operations in the Cirebon region, concerned about the impact on public health and water supplies. Unfortunately, the Japanese government and the Japan Bank for International Cooperation have been blind to these protests. Time to wake up and smell the smog, Japan!

The third Fossil of the Day award goes to Russia for promoting nuclear power as a feasible solution to climate change. We all know that this outdated and risky technology is too slow and expensive to contribute to climate efforts – and if deployed will steal away resources needed to develop renewables. Not to mention the fact that nuclear is not even a zero-emissions technology – it produces massive amounts of greenhouse gases during the uranium enrichment. Then, of course, there is the question of safety. The Russian government really needs to take a look at the long-term, widespread consequences of the Fukushima and Chernobyl catastrophes.

Dear Ministers, with Adapt-Love from Marrakech…

The charming, narrow streets of Marrakech’s Medina teach you to share and co-exist. Perhaps the COP’s large open venue has had the opposite effect on Parties. Yesterday the High Level Ministerials twice passed over or delayed the opportunity to listen to civil society, doubling down the exclusion of civil society from most of this COP.

In the spirit of co-existence, multiple civil society constituencies—youth, women, farmers and environmental NGOs—brought together their diverse perspectives to convey their priorities on adaptation finance in just a few minutes, though to no avail. So ECO steps forward to provide space to voice their concerns.

Adaptation, a pillar of Paris Agreement, needs urgent, ambitious, and transformative public climate finance for vulnerable and impacted communities. The recently released US$100 billion roadmap shows that adaptation finance flows by 2020 will double the current levels. Yet that will still fall far short of the parity with mitigation finance that the Paris Agreement asks for. That gap cannot be filled by profit-seeking private finance, which favours mitigation activities. As well, that will favour richer developing countries, because they are more capable of absorbing private investment. That’s why developed countries should prioritise adaptation to help protect development gains in developing countries.

The methodologies applied by developed countries have consistently exaggerated the climate-relevance of actual funding. Also, instruments such as loans, equity or guarantees may be counted at face value instead of the underlying net assistance. The roadmap should only be seen as an input to the discussion but not as a blueprint, as it would bypass ongoing discussions on finance accounting under the SBSTA.

Adaptation finance requires a robust institutional set-up. The Adaptation Fund is already operational. It has delivered innovative financing approaches on the ground and has a well-developed project pipeline that needs funding to serve urgent needs of vulnerable communities. For this reason, we call for the Adaptation Fund to serve the Paris Agreement in co-existence with Green Climate Fund, as already enshrined in the Paris Agreement. ECO acknowledges and applauds the pledges from Germany and Sweden to replenish the fund.

Of course, climate finance should be counted as new and additional to existing commitments on Official Development Assistance, such as the commitment to dedicating 0.7% of GNI to ODA.

Lastly, developed countries should also fully support that addressing loss and damage has become the third pillar of climate action and is critical to co-existence on the planet. Loss and damage finance needs to be truly additional, over and above what has been pledged for adaptation and mitigation.

Addressing the adaptation finance gap and ensuring that finance gets directed to those who need it most must be the next chapter in the global fight against climate change, and it needs to be written down here and now, in Marrakech.

$23 Million for the CTCN… and Counting

It’s always nice to have money in your pocket, so the Climate Technology Centre and Network (CTCN) must be feeling cheerful. In a long anticipated announcement that was sprung as a surprise in Marrakech, the CTCN received the grand sum of… US$23 million!

While not as much money as expected, these voluntary contributions provide welcome assurance for the survival of the CTCN and its ability to deliver technical assistance to developing countries. Presented in an undramatic fashion, Canada, the EU, Korea, Switzerland, and the US hope to set an example for supporting ‘technology sharing’. These founding contributors hope to reemphasise the importance of the CTCN as a core mechanism for delivering technology for climate action.

To be clear, this is desperately needed. CTCN staff have spent an extraordinary amount of time securing funding. Of course, their time is better spent on delivering technology support—not having to carry a begging bowl to the capitals. A reliance on voluntary contributions impairs the sustainability and predictability of the CTCN budget and erodes its effectiveness and its mandate. Parties need to support a more regular process for replenishing CTCN funding, especially in the new Technology Framework.

ECO hopes the example set by these donor countries galvanises others to contribute and support developing countries in effectively developing and deploying technology to address mitigation and adaptation.

Adaptation Fund

ECO is concerned about the survival of the Adaptation Fund. Created in the old times of the Kyoto Protocol, it was given the chance for a new life through the Paris Agreement. However, the way developed countries are “revisiting” its existence has us really worried about all those issues we thought we had clarified in Paris.  

“We fully support adaptation finance”, they say. “But we don’t see how the Adaptation Fund itself is ‘technically and legally’ ready to serve the Paris Agreement. The Fund was created to be supported by Clean Development Mechanism (CDM) revenues. Since that has failed, we will have to rethink the Fund itself”.

Readers, can ECO remind our dear negotiators to re-read some old decisions they took right here in Marrakech back in 2001 when the Fund was established? 

Let’s remind each other that 15 years ago we decided to establish the Adaptation Fund, period! We also agreed that the CDM would fund it, along with other sources, including finance provided by Annex I Parties (developed nations).

We truly hope that these rhetorical battles will end soon and Parties acknowledge once and for all the importance of the Adaptation Fund serving the Paris Agreement. 

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