Tag: Finance

Financing Adaptation, the Struggle is Real! 

On Monday, while we were busy following the negotiations, the World Meteorological Organisation (WMO) announced that preliminary data shows that 2016’s global temperatures are approximately 1.2° Celsius above pre-industrial levels. They warned that 2016 will very likely be the hottest year on record, with global temperatures even higher than the record-breaking temperatures of 2015.  

Many parts of the world are becoming less habitable due to the effects of a warming climate. As developing countries face the wrath of climate change at their doors, the need for adaptation finance to help people cope with floods, droughts, sea level rise and other climate extremes is urgent and growing.  This year’s El Niño has opened our eyes to the kinds of impacts that extreme weather events can have on vulnerable populations, leaving over 400 million people affected. El Nino has led to record droughts in a year that has also seen record levels of CO2 and the highest temperatures ever. In Africa alone, an additional 40 million people face hunger because of climate change and El Niño. The struggle to adapt is real, and financing solutions to build resilience and adapt is fundamental and urgent – and a lifeline for many of the world’s poorest countries and communities.

At today’s Adaptation Finance Ministerial, ECO urges all developing country Ministers to be strong, loud and clear in demanding an increase in allocation of adaptation finance from developed countries. 

The recently published Finance Roadmap to $100 Billion, a proposal to double adaptation finance from developed countries, is simply not enough. If this proposal becomes a reality, adaptation finance will only amount to 20% of the $100 billion by 2020. This is a long way from the objective of Article 9.4 of the Paris Agreement, namely that allocation of adaptation and mitigation finance would be “balanced”. 

A number of developed countries and institutions have yet to follow through on their commitments to provide finance for adaptation–and in actuality could go beyond their adaptation finance commitments. These include major donors such as Japan, the European Commission Institutions and Norway, amongst others. ECO urges all developed countries to LISTEN to the adaptation financing needs of developing countries and ACT. 

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Ministers Wanted

The Facilitative Dialogue on ambition and support will be held on Wednesday at 10am. ECO knows this should be obvious to all, but we would like to emphasise that the whole point of a high level “ministerial deliberations” is the presence of Ministers. This is particularly important when the topic is how to muster the political will needed to significantly ramp up Parties’ ambition and support!

ECO reminds Ministers that the planet is already suffering from a climate-induced high fever. Unless Ministers are able to present a note from their personal physicians justifying their absence, their countries will stand an excellent chance of receiving a Fossil of the Day.

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Capacity Building Takes Off

ECO welcomes the capacity building decisions adopted yesterday.

Given the increased expectations that have been placed on developing countries by the Paris Agreement, capacity building—as well as other means of implementation—will be crucial to enable these Parties to successfully implement their commitments. This is especially true for those Parties with the least capacity, and for those most vulnerable to climate impacts.

Cooperation on matters related to capacity building represents, perhaps, one of the most promising avenues for accelerating implementation of the Paris Agreement. Working together can enable Parties to develop collective ambition, while simultaneously providing important benefits for participating countries. The adoption of the Paris Committee’s terms of reference will enable the Committee to become operational as early as next year, and to rapidly initiate its work.

The decisions adopted yesterday also invite the Paris Committee to take into consideration cross-cutting issues such as gender responsiveness, human rights and indigenous peoples’ knowledge. ECO welcomes this important mandate. It will enable the Committee to support Parties as they implement climate actions in a manner that is coherent with existing human rights obligations and related international principles, such as the Sustainable Development Goals.

ECO hopes this commitment to consider cross-cutting principles in climate action, as reiterated in Paris, will also be reflected in the negotiations under the APA more broadly. For instance, future Nationally Determined Contributions should reflect this approach and highlight synergies with other related international norms, such as human rights, the rights of indigenous peoples, gender equality, just transition and food security. Parties should not shy away from making the universal attainment of human rights a reality through coherent implementation of the Paris Agreement: we now know that the Paris Committee will be supporting them along the way.

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“Loss and Damage” from Concept to Action

ECO was thrilled to be able to participate in the informal session of the loss and damage discussion beyond the first contact group. But this excitement was watered down when a Party proposed to delete the paragraph that allowed relevant organisations to express their views and provide input on the possible activities in the work stream of the Warsaw International Mechanism for Loss and Damage (WIM), before the first meeting of the Executive Committee in 2017.

Input from observers helps to enrich the discussion, provide experiences and lessons learned from around the world and identify the possible activities that the WIM should take into account to fulfil its objectives.

Additionally, the concept of a “placeholder” on loss and damage finance, instead of more defined work activities, is disturbing. It almost seems like developed countries are procrastinating on the subject. ECO is confident you’ve got it in you to agree to write a submission on enhancing mobilisation of financial support before March.

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Next Steps to Get to $100 Billion

Finally, the juicy discussion on long-term finance under COP agenda item 10a is getting off the ground. It’s not surprising that virtually every developed country that spoke yesterday celebrated their roadmap towards the $100-billion-a-year promise. And of course they highlighted their projection that public adaptation finance may double by 2020. Maybe developed countries even think they are off the hook when looking at those projections. Yet, with a closer look, a few additional things come to mind that may require COP action.

Let’s start with a key fact. Doubling adaptation finance by 2020 would mean only a fifth of the $100bn would be public finance for adaptation. While a welcome increase, a gross imbalance is still projected between mitigation and adaptation, and Parties may wish to address this in any COP22 decision on long-term finance. They could do so by urging developed countries to increase adaptation finance way beyond the roadmap’s projections. Quadrupling instead of doubling would be a fair start, in ECO’s view. After all, adaptation needs are set to soar dramatically in the near future, especially given the lack of ambition in countries’ NDCs.

ECO was delighted to hear Bangladesh questioning the inclusion of market-rate loans as climate finance. Right on! Commercial loans do not constitute assistance to cover the ‘incremental cost’ of action as referred to in Article 4.3 of the UNFCCC. That’s where grants and the grant equivalents of concessional loans come in. Logically, the grant equivalents of such loans, not their face-value, are a better measure for progress towards the UNFCCC obligations that developed countries have committed to under the Paris Agreement’s Article 9.

And here’s another one — we’ve noticed that not all developed countries have made pledges or announcements on how they intend to increase their individual levels of climate finance by 2020. In some cases, the 2020 announcements do not constitute an increase over current levels. ECO suggests developed countries may want to clarify that when they next take the floor on this agenda item, and a COP decision may be needed to urge them to do so.

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Donald Trump’s election as the next U.S. president was a [unexpected][climatic][shocking] ending to a turbulent campaign that tapped into the anxiety felt by many American voters over globalisation, immigration, stagnating incomes and shrinking economic opportunities. The election revealed a deeply divided electorate: while Hillary Clinton received the most votes nationally, overwhelmingly won the youth, women and people of colour, Donald Trump won in enough states to prevail in the electoral college, thereby securing the presidency.

Understandably, delegates and reporters have questions about the implications of a Trump administration for domestic emissions reductions. ECO is confident that the rapidly expanding deployment of clean energy solutions by states, cities, and businesses across the country is enough to continue the drive to decarbonise the US energy economy, regardless of the actions that a President Trump takes—or doesn’t take. But a cut back on federal policy leadership, will no doubt impair the US meeting its 2025 emissions commitments.

President-elect Trump emphasised his campaign promise to create millions of new jobs for American workers. The most effective way to do this is by embracing the renewable energy revolution. While there are divisions between Democrats and Republicans on climate policy, there has been bipartisan support for investments in clean energy as well as in climate resilience. Trump’s infrastructure investment initiatives could provide a vehicle to address both of these needs.

ECO is also concerned about prospects for continued US finance and technology support for developing country mitigation and adaptation actions under a Trump administration. But what gives ECO hope is the coalition of US development, faith, environmental, and business groups has been actively engaging with both Democrats Republicans in Congress, educating them on how this assistance is not charity or a hand-out, but rather a smart investment with economic, environmental, and security benefits to Americans. This coalition will now work to make sure that Trump and his team understand this reality.

It’s clear that countries will continue to move ahead with the commitments they made under the Paris Agreement no matter what Trump does, as these commitments are in their own national interest. An increasing number of governments understand that decisive climate action helps reduce the impacts of climate change on their people and brings many public health and economic co-benefits.

But if President Trump decides not to honour America’s commitments under the Paris Agreement, he will quickly learn that this negatively impacts his ability to get support from other countries’ leaders on trade, terrorism, and other issues important to him. Climate change has become a geopolitical issue of the top order, and any country perceived as not doing its fair share to confront the climate threat will suffer consequences for its standing in the world.  Tuesday’s US elections did nothing to change these fundamental realities.

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Addressing the (Im)balance

It’s impossible not to notice that developed countries are very pleased with themselves for publishing their “Roadmap to the US$100 billion” this past October. This is even more apparent from yesterday’s joint statement on the roadmap.

ECO too is pleased to have the roadmap, don’t get us wrong. It enhances transparency on how developed countries plan to reach the collective target of US$100 billion per year by 2020. But ECO also expects further progress on patchy areas where more clarity is needed: mobilised private finance is one example that comes to mind.

The joint statement reiterates developed countries’ commitment to “significantly increase finance for adaptation”. ECO is not one to dismiss such a commitment, but by our calculations, the projected doubling of adaptation finance will leave public finance for adaptation at only 20% of the total $100 billion in 2020—not quite the agreed “balance” between mitigation and adaptation by anyone’s standards, surely.

Looking more closely, it seems a few developed countries are—how shall we put it?—dragging down the average. Some of these countries currently provide only around 10% of their climate finance for adaptation and have made insufficient or even no commitments on how this will change by 2020. Not naming any names, but those that come to mind include a country where they love baguettes, another that boasts sushi as a national dish, one where they feast on tapas, and yet another with particular challenges as of yesterday.

ECO has suggestions: Maybe the COP decision on long-term finance needs to urge developed countries to increase their adaptation funding? And perhaps those developed countries that are serious about “significantly increasing” it may want to put a little pressure on their peers who are hampering their attempts? ECO certainly will be.


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That is Not the Question

Do delegates remember when the Adaptation Fund was created in Marrakech back in 2001? Do you know much about the Fund at all? ECO thinks perhaps not, at least if judged from what various Parties said at the informal APA meeting. They claimed they did not know enough about the Fund and thus would need much more time before taking a decision on whether the Fund should continue its work under the Paris Agreement.

If it is simply a lack of knowledge, ECO can help: the Adaptation Fund covers an important part of climate finance needs, often neglected by others: small scale adaptation projects focussing on the most vulnerable people and communities, often directly implemented by developing countries who can get direct access to the Fund’s resources without passing through intermediaries. Since its creation, the Adaptation Fund has proven that it can deliver results, increasing resilience in a concrete manner. As a well-functioning, fully operational fund the Adaptation Fund brings a clear benefit by helping developing countries enhance their adaptation efforts also contributing to the fulfilment of the objectives of the Paris Agreement.

If this is what you have been needing to know about the Adaptation Fund well, you’re welcome. ECO is always more than happy to help. Now with this knowledge, you should be able to make a bold decision and not waste time on technical issues. It should be a no-brainer that the Adaptation Fund should serve the Paris Agreement. And this can be agreed here, as one of the deliverables of COP22. Rather than dillydallying on the if, Parties should focus on finding a systematic way to support the Fund in the future.

Different options are possible ranging from the Adaptation Fund becoming an Operating Entity of the Financial Mechanism, specific arrangements with the GCF or tapping new sources of income. The Adaptation Fund has the experience to administer innovative sources of finance with the share of proceeds from the Kyoto Protocol’s Clean Development Mechanism. Similar Paris-era instruments could supply the Adaptation Fund. These options need to be explored and the technical details sorted.

And before you thought you got away easily, developed country delegates: ECO is confident you came prepared to respond to the Adaptation Fund’s fundraising target of US$80 million at COP22. No excuses!

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First Rule of Holes: When You’re in One, Stop Digging

Now that the Paris Agreement has been signed by 193 parties and ratified by over 100, one message is very clear: the era of fossil fuels is over. But it seems that not everyone has gotten the message. In many countries, the coal lobby stubbornly believes it can delay the inevitable.

Let’s take Brazil as an example. Brazil likes to boast about being a climate champion. But its Congress just approved a billion-dollar subsidy to the coal industry. Equally problematic, this comes at a time when coal represents less than 5% of electricity generation in Brazil, but over 20% of emissions. Has anyone in the Brazilian Congress done the maths?

The coal industry spends a fortune on lobbying. But President Temer now has the chance to veto this subsidy, as tens of thousands of Brazilians have urged him to do. The world is watching closely, and expects meaningful action from a country that could otherwise be one of the first to reach 100% renewables.

But it’s not only Brazil where coal still dreams of a future. Forbes Magazine recently described Japan as having a “renewed love affair with coal”, with over 40 new plants being built, planned or proposed before 2020. If implemented, this would be a nightmare for the climate.

Perhaps even worse, Tokyo’s renewed love for coal isn’t confined to home. As the world’s biggest contributor of public financing for coal projects, Japan invested over $22 billion overseas from 2007 to 2015, including funding for several proposed coal projects in–wait for it–Brazil. It’s high time for Japan to stop sleepwalking, catch up with the times and stop funding the dirty fossils of the past, both at home and abroad.

Turkey’s situation is nearly as sickening. The country won COP22’s inaugural Fossil of the Day award yesterday, in part for its absurd plans to build 70 new coal power plants that would add over 70 GW of dirty energy capacity. Just writing that sentence makes ECO nauseous. No matter how you cut it, this blatant denial of physics is bad, bad medicine for an ailing climate. If Turkey wants to be taken seriously, it needs to take some remedial lessons and get back on track for renewables. The coal financiers investing there and in the Balkan region are big players: largely Chinese money channelled through different development banks.

All around the world, the coal industry is desperately attempting to defy the laws of physics. It wants us to believe that when you’re in a hole, if you keep digging you just might get out. Thankfully, ECO had an excellent physics professor and has sounder advice: when you’re in a hole, stop digging. One thing is certain–if we are to deliver on the promise of the Paris Agreement, every country must show more ambition when it comes to emission reductions. Getting rid of dirty coal would be a great place to start.

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Four Conclusions on BA2016

 Now that the Standing Committee on Climate Finance (SCF) has presented its 2016 Biennial Assessment (BA2016) of climate finance, the report’s key findings and recommendations are meant to guide negotiators through the next two weeks’ worth of climate finance agenda items. ECO finds four items to be particularly noteworthy:

First, the SCF had the interesting recommendation (probably inspired by studying the chaotic jungle of past Biennial Reports) that Parties should be enabled to provide additional information on, you guessed it, how they have identified finance as being “climate-specific”. ECO reads this as a finely-worded, slightly ironic critique of what’s plain for everyone to see: the current, very lenient reporting system creates the temptation to overstate the climate-relevance of provided funds. Of course, ECO is quite sure this would never happen because anyone would seek to inflate their numbers. But to many it seems like a lot of work to track down what portion of funds was aiming specifically at climate action. That’s especially for flows where climate is one of many objectives. Clearly, tightening these reporting guidelines should be addressed in the SBSTA negotiations on accounting modalities.

Second, the BA2016 confirms what every other climate finance report has said: the continued existence of an ugly imbalance between adaptation and mitigation in climate finance (with the notable exception of the UNFCCC funds). The recent $100 billion roadmap released by developed countries highlighted that, in 2020, a mere one-fifth of the total is projected to target adaptation. The BA2016 confirms that observation. Parties should address this when negotiating their COP22 decision on long-term finance. Or perhaps developed countries have some announcement up their sleeves for next week to do away with that imbalance?

Thirdly, as ECO hears the SCF present its executive summary, ECO wonders how much the BA2016 will say about finance for loss and damage. The Biennial Assessment’s next iteration should study such flows, based on conclusions from the WIM and the SCF’s work on accounting for loss and damage separately from adaptation. This should be combined with a proper work plan of at least two years for the WIM, to understand–and scale up–loss and damage finance further.

Fourthly, ECO was pleased that yesterday’s panel discussing the BA2016 also mentioned the role of future iterations of the Biennial Assessment in understanding progress toward implementing Article 2 c) of the Paris Agreement: to make all flows–whether public or private–consistent with low-emissions, climate-resilient development.

After noting these points of direction, ECO wonders: why not reserve one chapter of the BA2018 to study fossil fuel subsidies, including an evaluation on actions taken by countries to remove them? Consider this something to chew on for those seriously planning to implement the Paris Agreement.

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