Tag: Finance

Year of the Turkey

Everyone loves a good COP — so much so that even though delegates are roaming around a half-finished conference centre. And although we don’t know where the 2017, 2018 or 2019 COPs will be hosted, we do know one thing: 2020 could be Year of the Turkey.

The Government of Turkey’s bid for the 2020 COP has caught the eye of some who happened to find themselves wandering around the colourful pavilions in Area D. It cannot overshadow the awarding of the Fossil of the Day award for most ironic agenda item request. Despite having not yet even ratified the Paris Agreement (like the hundred odd countries that have), yesterday Turkey had the nerve to ask for an agenda item on financial support under the Paris Agreement and the Green Climate Fund. Brave, courageous, audacious—or simply ludicrously out of touch?

Unfortunately, it is possibly the latter, given Turkey’s plans to support the opening of new coal plants and increase its greenhouse gas emissions in the near term. Instead of pretending to access financial support under the Agreement, Turkey should do the simple 1, 2, 3: ratify, increase ambition in its national climate action plan and move towards 100% renewable energy.

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Marrakech: Going Beyond Shoulder Patting to Action

The past year was tremendous for climate action. The Paris Agreement entered into force on Friday. HFCs are finally on their way out., The international shipping and aviation industries have started to reduce their emissions. With this success echoing through the COP halls, there couldn’t be a better time for a pep rally for COP22.

But, we are up against our greatest rival, and cannot afford time-outs. 2016 is set to be the hottest year on record, with a disastrous El Niño and massive coral bleaching in tropical seas. Carbon dioxide concentration in the atmosphere passed the dangerous 400ppm threshold and continues to rise.

While the NDCs that were pledged in 2015 bend emissions into a downward trajectory, we’re still not on a safe path. UNEP’s Emissions Gap Report shows that our climate curve remains on a pathway towards 3.4°C warming by 2100. It confirms that global emissions in 2030 will still be 25% higher than they should be for a 2°C pathway.

In ECO’s view, Marrakech should be the start of the process to strengthen countries’ ambition, in line with 1.5ºC and national long-term strategies.

The facilitative dialogues in 2016 and 2018, and the first global stocktake in 2023, are built-in mechanisms to assess progress and scale up ambition. They are the action points. COP22 should get the ball rolling on these by successfully concluding the 2016 facilitative dialogue and setting up a process to define modalities for the 2018 dialogue. This is a team strategy, and one that is set to win.

While we work on improving the NDCs, time is running out to keep warming to 1.5ºC. Additional action pre-2020 is critical. We need all hands on deck to deliver additional efforts under the Global Action Agenda and through a revised TEP process.

Other key issues that require significant progress include long-term adaptation finance goals and improving rules for accounting for climate finance, in the context of the US$100 billion roadmap. The need for real balance between mitigation and adaptation expenditures—as well as finding ways to finance loss and damage—are essential to move the finance agenda forward.

Indeed, the Warsaw International Mechanism for loss and damage will be evaluated for the first time here, and gives Parties an opportunity to take steps to strengthen it and give it financial muscle.

Finally, due to the unanticipated speed of entry into force, Parties still need time to finalise most of the decisions. To actually benefit from early entry into force, most of the rules to start implementation need to be finalised by 2018.

COP 22 must capitalise on the achievements of 2015 by delivering an ambitious agenda on NDC ambition, the pre-2020 process, and the WIM, to deliver a 1.5ºC future.

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WIM: The Next Generation

Loss and damage (L&D) has earned its place in the climate change playbook, alongside adaptation and mitigation. With its own stand-alone article (8!), as well as a commitment that there will be international support for loss and damage, COP22 can boldly go where no COP has gone before.

And bold steps are sorely needed. Despite having “action and support” in its mandate since 2013, the Warsaw International Mechanism for Loss and Damage (WIM) has not yet even come close to  delivering bold actions to protect vulnerable people. The WIM framework for a 5-year plan is a good starting point, but needs political rocket-fuel to deliver real benefits in the near term. ECO applauds the WIM ExCom for listing finance as their top priority. However, we wonder how finance for L&D will be scaled up if the WIM’s current framework only contains a “placeholder” for finance. Loss and damage will need significant finance separate from adaptation finance. The first logical step would be for the WIM and the SCF to work out how much finance is required, and to put an appropriate strategy in place to raise the necessary funds. This plan has to also consider innovative sources. Levies from aviation and fossil fuel sales could provide a significant, predictable source of finance that need not come from taxpayer contributions.

In order for the WIM ExCom to deliver on their mandate, they will require additional resources. ECO suggests that the WIM should receive increased resources to roll out institutions. A world without loss and damage: make it so!

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Unpaved Roadmap

After much anticipation, a few weeks ago the long-awaited “Roadmap to US$100 billion”  was finally released by 21 developed countries. The plain white cover of the report led ECO to hope the report’s authors were saving money on design to meet their commitments made back in Copenhagen and Cancun!

ECO’s hopes were only half met by what was inside the drab exterior. Last year’s OECD/CPI report claimed that these countries had delivered $62 billion in climate finance in 2014. The “Roadmap” that has been tabled this year is a bit more carefully worded, but still fails to give sufficient direction and impetus to spur further discussion on climate finance.

ECO has some suggestions for what a climate finance roadmap should look like to secure an outcome that would give all Parties clarity and confidence. At COP22 Parties need to work together to clarify:

  • An adequate scale-up of adaptation finance
  • Which portion of counted climate finance will be grants or grant equivalent
  • How the most vulnerable countries are being prioritised
  • Climate finance that will be provided by 2020 (for those countries that have not submitted any INDCs)
  • The role developed nations foresee for private capital
  • Work on how to provide loss and damage finance, over and above $100bn

Country parties should use the current negotiations about modalities of climate finance accounting under the SBSTA to agree on a common, clear methodology that would ensure transparency and accountability.

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Q&A for the Ministerial Pre-COP meeting

The countdown to COP22 will intensify at the Ministers meeting on 17 October intended to clarify key issues before the conference. The incoming Moroccan presidency and outgoing French presidency have prepared a handy Q&A for Ministers to come prepared to the meeting. ECO has answered the most relevant questions for you exclusively in this issue of ECO.

Mobilisation of means of implementation 

1) What to expect for the roadmap towards the USD 100 billion? 

Like all good financial tools and plans, the roadmap needs to have clarity and predictability. It needs to provide an accurate and detailed forward-looking account of how the US$100 billion will be mobilised in addition to the existing efforts being made. This should include the types of instruments, sources, channels, etc. as well as public-private leverage ratios. ECO has said it dozens of times: greater clarity on financial support to mitigation and adaptation will generate confidence in developing country Parties. It will also showcase the amount of finance flowing in the coming years by 2020 which will help developing countries integrate NDCs into their planning and implementation. Of particular note would be building on the OECD’s 2015 report on progress towards the $100 billion goal. This means grants should be reported at face value and present net positive flows into developing countries.

2) What are Parties’ intended announcements/initiatives at the COP that would show support, action and momentum?

COP22 should assess and highlight pre-2020 ambition. That’s right, we never forget about what needs to happen now — in particular, means of implementation, the pledges made by countries within CP2 of the Kyoto Protocol, countries’ Cancun pledges, the NAMA registry, REDD+ and plenty of others. This assessment would show support, ambition and momentum in the context of the facilitative dialogue technical track. Ideally, this would be in the form of roundtable discussions amongst experts, facilitated by the High-Level Champions with representation of technical experts from UNFCCC institutions. The discussions from the technical track should be reflected in the form of a policymaker’s summary.

Strengthening action

3) How can the facilitative dialogue on action and implementation help Parties identify options to increase ambition through the implementation of existing decisions?

Why take one track when we can take two? This year’s facilitative dialogue should follow a two-track approach: first, a technical track to take stock of progress and identify implementation gaps.

The high level track overseen by the presidency should then provide the opportunity to discuss how the recommendations from the technical track should be taken forward. It should also provide the ministers with a platform to make announcements and pledges towards greater action as well as strengthening their own commitments. These discussions should then be reflected in a chair’s summary to be forwarded to the COP for its consideration. Said summary could be noted by the COP and its intent reflected within decisions from COP22 too. Overall, the two tracks make for a nice package to increase ambition.
4) How can the Global Climate Action Agenda and the work of the Champions be strengthened?
All mitigation initiatives associated with the UNFCCC should adhere to a set of strong, guiding criteria to ensure positive impact and avoid greenwashing. Giving the UN stamp of approval to greenwashers will undermine the UNFCCC’s credibility and make the goal of limiting global warming to 1.5°C more difficult to achieve. The process to develop criteria should be announced at COP22, and be facilitated by the Champions.

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Show Us the Money

 

As nations consider whether to introduce a new, improved technology framework in advance of COP22, ECO has a plaintive question for delegates: Is this the year when you plan to show us the money?

COP veterans can trace debate over the technology framework back to COP7 in Marrakesh. ECO has heard about the fundamental dissatisfaction with the current tech framework and its limited utility in meeting the Paris goals. ECO has also seen developing countries driven into successive rounds of technology needs assessments (TNAs), project registries and bilateral/multilateral funding mechanisms. At every turn, precious time has been spent developing funding methodologies and accountability tools, so that projects could roll out.

It’s been a long and tortuous enough process to leave ECO counting the grey hairs on its head.

They’re much more plentiful than they were the last time we were in Marrakesh!

With the momentum and ambition that nations worked so hard to build into the Paris Agreement, COP22 must set the stage to turn TNAs into fundable projects. We need institutions that can move with lightning speed to mobilise funds, build capacity and introduce structures that make it easier for countries to adapt and adopt the technologies that pretty much every nation wants.

A successful mechanism will also require institutional architecture that enables developing countries to set their own technology priorities. That will mean transferring the “software” as well as the “hardware”. Solar panels, grid-scale batteries and soil remediation technologies will help developing countries to function as full participants in the Paris implementation. But they’ll also need the information, analysis and know-how to put those systems to use.

Countries started the technology dialogue the last time the COP was in Marrakesh. Let’s close the loop and get the right solutions in place when we go back this year.

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A Roadmap in the Making

 

August may be a month of vacation of many, but ECO is thrilled that developed countries are spending these months working on their roadmap, instead of their tans. It’s great that Parties want to show how they will fulfil their $100-billion-a-year-from-2020 promise.

An obvious starting point is to provide projections as to how levels of public and private finance will increase. Given that there will be a temptation to just extrapolate some shiny figures derived through questionable accounting methods, ECO suggests that, in both cases, public finance and mobilised private finance, should be accounted for through robust annual plans on how these levels will be reached. Don’t even think of simply applying some random leverage factors or anything of that sort from old trick tool box.

The roadmap should spell out scenarios for different sources, instruments and channels to back up the projections. It could also be an opportunity to show how it is possible to overcome existing barriers to achieve such scenarios, for example through massive support for capacity building and readiness measures, and accelerating implementation of direct access models for accessing finance.

For ECO, and more importantly all those severely affected countries in urgent need of adaptation, it would be a real downer if the roadmap were not to include a projection on how adaptation finance will increase significantly over the next couple of years, following the call from Paris. The roadmap should include a target level for the amount of annual adaptation finance to be reached by 2020.

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CAN Submission: Elaborating Modalities of Accounting for Climate Finance, July 2016

~CAN welcomes the opportunity to present its views on the modalities for the accounting of
financial resources provided and mobilized through public interventions in accordance with
Article 9, paragraph 7, of the Paris Agreement in this submission.

For climate finance provided towards meeting obligations under Article 9.1 of the Paris
Agreement (PA) to be politically sustainable, transparent and mutually-agreed systems for
accounting and tracking flows are fundamental, inter alia, to assess progress towards meeting
obligations but also to allow learning from experiences in the provision, mobilisation and usage
of climate finance, to enhance effectiveness and efficiency of such finance and its role in
keeping warming below 1.5°C by supporting low-carbon and climate-resilient development in
developing countries.

Current reporting systems (e.g. the Biennial Reporting provisions) lack completeness,
consistency and detail that in our view is required to meet those objectives. Some developed
countries are including many types of projects and financial instruments that recipient nations
and civil society observers do not consider appropriate. Levels reported may be inflated or
overestimated, financial instruments that do not constitute actual support are included, and the
climate-relevance of finance is often questionable. The current accounting systems do not
reflect on finance flowing back to developed countries (e.g. as part of repaying loans, or return
on private investments). Lack of detail, especially where countries do not report on a projectlevel
basis, does not allow comprehensive and consistent monitoring, verification and
evaluation, hampering potential to learn from, and advance, climate finance.

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