Finance: What to put (back) into the text
9 February 2015
Negotiations will shift to the finance section of the elements text today, and there are several key items still missing—partly due to the weak outcomes in Lima—on climate finance. Here are a few examples of areas where the text must be strengthened.
The idea of global collective targets for finance appears here and there in the text, but nowhere is it captured in a sufficiently comprehensive and clear manner. A durable agreement has to set collective targets for the provision of financial support to developing countries, one for mitigation, and one for adaptation – and regularly review and adjust these targets as part of the agreement cycles. In particular, a collective target for public finance for adaptation is key in light of the large gap between what is required and what is currently offered on that front.
The agreement must include regular cycles of finance commitments by developed countries (and countries with similar responsibility and capability) to contribute to the fulfilment of the two targets mentioned above. So far, developed countries have completely rejected this concept – ahem! No commitments? Isn’t this what treaties are about? What you do and what I do (and what we do collectively)?
To better understand where the gaps are, the Paris agreement should establish a process or mechanism that enables developing countries to iteratively identify the support they require for ambitious action, beyond what they can do without that support.
New sources of finance is another item that makes an unsatisfactory appearance here and there in the text. To proceed in a more organised manner, ECO suggests a proper process to develop alternative sources of finance should be initiated to secure additional finance for the Adaptation Fund, the GCF and the Warsaw International Mechanism for Loss and Damage. There are lots of potential sources out there to explore—revenues from the EU emission trading scheme or the forthcoming financial transaction tax, a global levy on fossil fuel extraction, and so forth. The point is that none of these will be unlocked if Parties doesn’t just get on with it.
Phasing out fossil subsidies is also mentioned in the text, but only as a source of finance, even though it s a great tool to shift investments away from the dirty stuff. There is also no clear indication that finance will be shifted towards renewable energy and energy efficiency.
ECO also suggests the inclusion of text that would lead to a code of conduct for responsible investments (for both public and private actors). This will help direct investment away from unsustainable fossil fuels and put in place social and environmental safeguards, including the do-no harm principle, as well as free, prior and informed consent for people affected by climate-related investments and for all actions with impact on people.