EU’s Finance Figures Start Race to the Top
2 November 2009
After delaying the decision all year, last week’s summit of EU heads of state and government finally agreed on concrete numbers for the scale of public financing needed for adaptation and mitigation in
developing countries.
ECO of course recognises that the EU is the first Annex I Party to do so, but observes that much more will be needed to seal the fair, ambitious and binding deal we need in Copenhagen. And now is the time for other developed countries to come forward with more ambitious proposals, to push the EU further in the right direction and propel the world towards success at COP 15.
By now, nobody should doubt that the scale of new and additional public money provided by developed countries for climate action in developing countries is one of handful of top issues that will make or break the Copenhagen deal. In our assessment, at least EURO 110 billion in new and additional public finance is required.
The EU starts by heralding a figure of EURO 100 billion which they say will be devoted to the total investments needed for climate action in developing countries. But looking more closely, this is not entirely public money or even largely so; it includes a public finance estimate of EURO 22-50 billion, plus money that will flow through carbon markets for the purchase of offset credits, and even beyond that, contributions to be made by developing countries themselves.
A public finance share of EURO 22-50 billion must be considered inadequate for three reasons.
1. The public share is simply not enough. There are serious concerns on the ability of the carbon markets to finance reductions beyond the tonnes sold for offsets. So much reliance on non-public sources will reduce assurance for delivery of the overall finance required. And further, even the underlying European Commission calculations noted that low Annex I targets would mean dramatically higher public financing needs. A quick look at the current aggregate Annex I mitigation targets suggests a rapid upward reappraisal of these financing estimates is needed.
2. It is not clear the EU thinks this money must be “new.” All public financing contributions under a Copenhagen agreement must be additional to the 0.7% of GDP that developed countries promised long ago to developing countries for development assistance. In addition, we know that the EU by itself will get new and additional annual revenue of around EURO 30 billion by 2013 within the EU Emission Trading Scheme, a perfect opportunity to allocate some of these new public revenues to meet international adaptation and mitigation needs.
3. This money needs to come from developed countries. The EU is clear that it prefers that developing countries (except LDCs) also contribute alongside developed countries, on the basis of their GDP and — most importantly — their emissions. ECO would like to remind the EU that under the Convention it is the rich countries who have financing obligations. Developing countries are already paying the costs of climate change daily in the impacts on the lives and livelihoods of their citizens.
So the EU has broken away from other developed countries and raised the flag on concrete financing discussions — with real numbers attached, numbers that these international talks have been starved for all year. But this is an opening bid, a starting point for constructive discussions on financing this week.
The spotlight will now unavoidahly shift to the US and other rich countries, and they should start talking real numbers too. The race that the EU has started must be continued towards the top. EURO 110 billion in new and additional public finance from developed countries marks the finishing line for a fair and safe outcome in Copenhagen.