The world’s poorest and most vulnerable nations–who have done the least to cause climate change–are already mobilising resources to cope with the brunt of climate-related harm. When these countries call for finance to address loss and damage, it’s just another reminder that the burden has to be shared much more fairly. It should be paid for by the historical and big polluters – both corporations and states. However, some seem to lack an understanding of what we need L&D finance for.
Climate risk insurance, which allows vulnerable nations and people to transfer risk to bodies with more stable financial bases, is only one aspect of the L&D response. Financial commitments to these risk insurance pools are certainly welcome, but one-time donations are not enough. Developed countries can and must do more to support insurance schemes. They can’t be used as a way of shifting the responsibility and cost from polluters to the vulnerable. Contributions must be sustained, predictable, support the premiums of those who cannot afford them, and increase steadily as climate damage intensifies.
Insurance is not the be-all and end-all of an effective L&D response. By definition, non-economic losses and damages, like loss of life, culture and livelihoods, not to mention land, cannot easily be compensated by payouts. Insurance schemes can’t help those without much property to insure. Remember, it’s just a start.
Vulnerable nations require a source of new and additional L&D funding that can be used for responses to slow-onset disasters, such as the relocation costs that will inevitably accompany sea level rise and desertification. Funds are also needed to provide social protection as well as post-disaster support to the world’s poorest and most vulnerable, regardless of whether their national government has purchased insurance.
It’s also essential that funds for L&D response not simply be diverted from other important and underfunded needs, such as adaptation. In addition to budgetary provisions, many compelling financial mechanisms have been suggested, including levies on international air travel, bunker fuels, carbon emissions and fossil fuel extraction. It is crucial to look closely at L&D finance needs and to proactively set out a course for funding this year. This should start with the SCF [including] [recognising] loss and damage in its definition of climate finance.
ECO welcomes the G7 environment ministers’ commitment to develop and communicate their long-term low-GHG emission development strategies “as soon as possible” and before 2020. The G7 should also show leadership by using good long-term planning to bid our carbon-based economies a rapid retirement. Here are six key steps they should take:
1. Take action now
Financial planning 101 is easy: you can’t wait until you’re old to start preparing for retirement! The G7 needs to commit to developing their long-term low-GHG emissions strategies this year, and call for the other G20 members to do the same by 2018. By respecting this timeline, the collective impact of the decarbonisation strategies are an important step towards the 2018 facilitative dialogue. This provides the basis for assessing the revised NDCs being put forward no later than 2020, on the basis of equity and the latest science.
2. Plan consistently with your objectives
If Parties are truly committed to keeping temperature increases well below 1.5ºC, then immediate action in all sectors and long-term development trajectories need to be consistent with this goal.
3. Maximise co-benefits
Long-term decarbonisation strategies are key in achieving the goals of the Paris Agreement, and come with the added bonus of co-benefits. This includes improved public health, energy security, access and reduced fuel costs, to name a few.
4. Increase synergies
A little bit of foresight and planning will go a long way by enabling greater alignment between domestic and global short- and long-term goals. Countries can contribute to the achievement of the SDGs, while avoiding high-carbon infrastructure lock-in by incorporating appropriate policies into national and local plans.
5. Send strong signals to the private sector
By taking the lead in signalling the end of a global economy built upon fossil fuels, and creating a positive policy framework for low/no-carbon investments, forward-thinking countries will help build investor confidence in climate-smart expenditures. In turn, these ramped-up levels of green investment will further reduce the costs of achieving deep decarbonisation.
6. Make decarbonisation plans participatory
These development strategies will impact, and require the full ownership of, the entire public. If these strategies are to be effective, their preparation must include full involvement by all sectors of civil society.
Judging from conversations overheard in the corridors, developed countries may finally be getting excited about the idea of preparing a 2020 climate finance roadmap. After suggesting this for years, ECO is in an appreciative mood.
Given the mixed outcomes on finance in Paris, the unmistakable call for such a roadmap is an opportunity to get back on track.
The question now is what the roadmap should contain. Its purpose should be clear: to demonstrate how developed countries will deliver on the promise of US$100 billion a year.
ECO suggests that the roadmap should outline scenarios for the variety of instruments and channels to help deliver this pledge, as well as types and purposes of finance that play a role in the context of the commitment. This will also include identifying barriers and actions to make these scenarios possible. Countries will need to look at the range of available multilateral funds, such as the Green Climate Fund and the Least Developed Countries Fund, reflect on the role of the multilateral development banks to help developed countries deliver on their promises, draw scenarios for evolving bilateral assistance, and enhance direct access and country ownership.
To give the roadmap teeth, it should offer quantitative information too. The roadmap should include a clear projection for the annual level of financial assistance for adaptation to be reached by 2020. Sadly, adaptation remains the neglected child of climate finance, but luckily, paragraph 114 of the Paris COP decision specifically highlights the need to significantly increase adaptation finance. Developed countries cannot avoid this point. There is no doubt that adaptation finance needs to be a core component of the roadmap.
The icing on the roadmap cake would be if developed countries outline how they intend to deliver on their promise while not compromising finance to meet aid commitments. Instead, the roadmap is a prime opportunity to show how climate finance is truly new and additional. To that end, developed countries may want to intensify the search for innovative sources, such as revenues from financial transaction taxes, auctioning permits under emissions trading schemes, and a levy on fossil fuel extraction.
The roadmap can be a bridge-builder, and it should be prepared with input from developing countries. The remainder of this session is the ideal moment to seek out such input, as well as through the coming months – so we can all enjoy the roadmap by COP22.