Climate Finance –
Justice, Governance & Transparency
Soumya Dutta
Origin of Climate
Finance
Ordinarily, the ‘subjects’ of
climate & finance are from two different worlds. The understanding that “anthropogenic”, or
more specifically – certain types of economic & industrial pathway that
some countries & societies have followed over particularly the last 100
years, is causing unpredictable and harmful changes to the global climate
system, is the first connecting link.
The second major link is the unjust yet true tragedy that those
countries & societies are suffering most from these harmful climatic
aberrations, who have contributed almost nothing to the cause of the unfolding
climate change crisis. In that sense,
it’s not right to call the present crisis “anthropogenic”, as the IPCC
(Intergovernmental Panel on Climate Change) and almost all international
players are naming it. As this is a
result of a certain kind of Political-Economy, and has nothing to do with the
existence of the human species (the ‘anthropo’ part), a more appropriate
description would be “Industrial-capitalism induced” crisis. And this is in addition to the other major
environmental, economical & social crises the same system is generating.
Out of these two
primary linkages, through a process of
somewhat ‘coloured’ and unequal process of international negotiations, the
concept of – and one time near universal consensus on – climate finance
emerged and was codified in the Kyoto Protocol, and the subsequent Bali
Roadmap. The idea is that those who have
contributed maximum to create this CLIMATE change crisis, will
contribute FINANCIALLY towards
both the MITIGATION of the problem or crisis (depending upon who is
describing it), and also to help the non-contributing victims of this crisis
try & overcome – at least the worst impacts from these climatic
aberrations, or their ADAPTATION.
The financing is also supposed to help the poorer nations &
societies to transition to a less carbon intensive ‘development’ path,
as it was recognised that these societies need to get increased access to both
more energy & other material services, to reach a minimum dignified level
of existence. Thus, climate friendly technologies
for these poorer societies are to be part of the climate finance agenda, along
with the adaptation finance needs of the most impacted.
Climate Finance – Where
from, To whom, How much, Mechanisms
The initial concept of generating
climate finance was almost entirely from the 36 developed and richer countries
in the Annex 1 list, who have historically contributed maximum to create the
climate change crisis in the first place – by using overwhelmingly large shares
of fossil carbon fuels, by consuming disproportionately large shares of most
material productions and by accumulating, often at the expense of poorer
societies, all kinds of wealth through these uses. It was also agreed that the major part of the
envisaged climate finance will come through PUBLIC FUNDING by the rich
countries, where the unequal market conditions are not a determinant. This was the near-universal consensus after
Kyoto Protocol came into being and was being operationalised. Though under pressure from some developed
& rich countries, the concept of generating climate finance from marketable
CO2 emissions was also introduced in the formal design / mechanisms. These later became the primary ‘sources’, with
public funding commitments wavering and not materializing in significant
amounts.
It was also a near-consensus till
the early part of the first decade of 21st century, that these
financing will go to all the under-developed, under-consuming countries -- and
those who are / likely to suffer the most from these erratic climatic changes
-- to help them fight the impacts of climate change, to increase access &
delivery of basic minimum needs through less carbon-intensive development
pathways, and for the technologies & other means for this transition. There
are many studies / research showing which countries & societies will suffer
most from a range of climate catastrophes, and the following World Bank study /
grouping is one of these.
The above table shows the 12 most
vulnerable countries from a range of five (5) strong climate change impacts
which are already evident &/or most likely to intensify soon. The one striking feature of this is that all the
most vulnerable countries are low or middle income, those who have not
contributed to GHG-induced climate change to any significant degree. None of the richer countries, which caused
this problem, are in the high-vulnerability list! Bangladesh is one of the most vulnerable in
three of these categories, as is India.
It also has to be acknowledged
that the number of people being & to be affected by a variety of climate
risks have gone up sharply over the past 40 years or so, as shown by the figure
below. This is no of people per lakh of
population, and the figure has more than doubled in the last 40 years ! This also shows, that in spite of the Kyoto
Protocol and various claims of nations & multilateral bodies like the World
Bank, and their “market-driven climate solutions”, the problem has only
worsened over the last decades.
Obviously, these false-solutions are not working.
Also note the alarming percentage
of world population being / likely to be affected by extreme climate events.
Even this conservative estimate is
close to 4% of the global population now, or nearly 280 million people! A
number close to the current total US population. The number of people being affected to a
lesser degree is much higher.
Somewhere down the line, starting
midway in the last decade (2000-2009), several developed nations started
raising the bogey of ‘emerging economies’ bearing part of the
responsibility. This was clearly &
knowingly ignoring the fact that none of the emerging economies – including the
wealthiest & the largest emitter, China – has historical emissions anywhere
even comparable to the rich nations.
This was also a violation of the agreed Kyoto principle of “common but
differentiated responsibilities”, based on respective capabilities, and the
fact that the biggest of these emerging economies are still inhabited by a
disproportionately large percentage of very poor people, who are at the
front-line of climate impacts, as shown by the above figures.
The rich nations have stalled any
meaningful climate financing, taking cover under these new excuses – a clear
case of continuing shifting of the goal-posts after the game began under agreed
rules /norms. There is also increasing
talks and proposals in the last two years – starting from the UNFCCC -COP15 (15th
Conference Of the Parties to the United Nations Framework Convention on Climate
Change) at Copenhagen onwards, that a major part of any climate finance will
have to come from “market mechanisms”,
and not public funding. This clearly
neglects the fact that capitalist ‘free’ markets (strangely, free from
regulatory controls, but not from public financial support – as demonstrated
during and after the start of the present economic downturn from late
2007) operate primarily – not to take
care of the needs of the poor, but to make maximum profit from those who can
pay for the goods & services on offer, at levels & terms to maximise
the corporate profits.
The Cancun Agreement on Long-Term Cooperative
Action (Decision 1/COP.16) in Dec.2010 to some extent consolidated the climate
finance promises that were only vaguely given in the 2009 Dec. Copenhagen Accord
– in terms of the Fast-Start & Green Climate Funds. There are various
estimates, guesses, guestimates and calculations that have gone on to determine
what is the range of climate finance needed for various critical elements of
adaptation, transition etc. Starting
with the highly publicized 2003 Stern Review, to the latest (2010) World Bank
estimate, the amount of minimum climate finance needed has by now, some basis
other than random guesses. If the
figures circulated around 2004 were
about US $200 billion per year for a comprehensive response to climate change
crisis, it has come to a minimum of US $500 billion (US $1 billion roughly
equals Indian Rs.5,400 Crores) per year in the latest World Bank report.
In the early stages of climate finance negotiations,
the figure of about US $200 billion per year – to go to the poorer countries –
was being seriously discussed. It was also proposed that in view of the
problems of immediate generation of such large financial resources, a“fast-start”
finance will be more “appropriate”.
Somewhere before the Copenhagen climate summit (COP15), this fast-track
finance figure came down to the pathetic (remember, this finance is for the
whole world of climate change impacted people!) US $30 billion for the three
years of 2010-2012, or US $10 billion per year till 2012. This was to be followed by an amount of US
$100 billion per year from 2020! The
year 2012 is significant as the first commitment period (for actions agreed
under the Kyoto Protocol, including reduction of polluting Green House Gas
emission by the developed countries to the agreed level, and climate finance)
under KP ends in 2012. There is as yet
no certainty, no clear direction as to what happens to the international
climate treaty & and positioning of big-nation players after Dec.2012. Neither has it been fully agreed what the
second commitment period would be – with increased reduction commitments and
vastly increased climate finance needs & hopefully increased financing
commitments, though there are proposals that this be a short period of
2013-2017, as the climate system is running out of maneuvering space and is
dangerously close to increased number of catastrophic events.
Consider the fact that the rich
economies together just threw
‘life-lines’ to their biggest and
richest banks, financial institutions and corporations - amounting to over US
$3,000 billion of Public Funds in two years after the financial crisis hit them
(the ‘competition based free-market economy’, so sacrosanct till now, just
vanished in thin air, as the ‘free-market’ evangelists themselves got hit). Also consider the actual climate catastrophe
induced losses suffered by just a poor medium-sized nation – Pakistan – in just
one large climate change disaster -- the recent devastating floods --
conservatively estimated at US $30 billion, just in one year! How the estimate of US $200 billion/year in
2004 came down to US $10 billion in 2010 (the actual down-grading is more than
20 times, considering inflation), what will happen from 2013 to 2019, how much
US $100 billion will be worth in 2004 value then, what happens to the World
Bank estimate of a minimum of US $500 billion /year? None of these have any
clear answers from those playing the geo-political-economical climate
games. It is immeasurably bigger than
even all the Olympic Games put together!
This game not only involves vast amounts of money, it also involves huge
losses of human lives and livelihoods,
fast increasing species extinction, potential threat to the very existence of
the majority of the world’s poor. Thus,
it has far more adrenalin-pumping excitement for the big players than even the
now-rare big-game hunting!
|
Where will these climate funds
come from? The original consensus of a
large part of this being public funds, have many supporters and many mechanisms
have been suggested for that. Selling or
even auctioning of carbon dioxide emission permits within the developed
countries is one such proposal (note that presently, the emission permits are
distributed free to big-polluters, based on their present calculated emission
figures). Carbon tax on all products
& services which have large carbon footprints is another proposal (for
example, air travel is a highly carbon-intensive mode of travel, which causes a
large pollution contribution by fewer richer people, and a
carbon-emission tax on this can generate substantial and well justified
climate funds, in addition to braking the fast growth of this high-emission
activity). A Tobin-tax, or tax on large
financial transactions is another idea that is circulating for long. All are feasible, but none of these even
touches the original idea of a small part of the GDP of the rich nations being
committed as climate finance – as their moral, ethical & legal commitments
to those badly impacted by the consumption of these rich societies.
The two major climate finance
routes that the world’s governments have adopted are the funds transfer through
the so-called Clean Development Mechanism (CDM) – which is an approved
mechanism under the Kyoto Protocol, and the forest related Reduction of
Emission through Deforestation and forest Degradation (REDD) and the
addition to this with Enhancement of forest carbon, or the REDD+ scheme, which are yet to be formally adopted – though already operational
in other ways. The CDM allows entities
in the rich developed countries not to reduce their actual GHG pollution, and instead
buy Carbon Credits from poorer developing country’s activities which are
supposed to be less GHG emitting than they otherwise would be, and “offset”
their emissions with this saving of the developing country activity.
The very concept of CDM is flawed
and full of fraudulent actions. The only
beneficiaries are the rich corporations in these developing countries, as they
are the ones with the resources to go through the complicated international
process, and most of the CDM projects – Chinese & Indian corporates being
the largest beneficiaries – have only increased the sufferings of the poorer
communities around these project sites, who are supposed to be lead to a
“sustainable development path” by these CDM activities. This is apart from the fact that CDMs have
neither reduced the GHG emission of the buyer or seller countries, nor of the
world as a whole. And recently, the CDM
Executive Board has rejected several Chinese proposals of Wind Energy Farms – a
very clearly climate friendly pathway – on flimsy grounds of ‘additionality’,
while admitting the very polluting coal fired power plants application for CDM
money as they are using the so-called ‘super-critical steam’ technology. The wind energy farms will have hardly any
GHG pollution, while the super-critical steam coal power plants will add
multiple millions of tons of CO2 each, every year. These are the strange logics of today’s
climate finance mechanisms.
The other major climate finance
mechanism in operation today, REDD /REDD+ , is the concept that poorer
developing countries with substantial forest cover are cutting down their rich
forests for economic development, and need to be financially helped to preserve
& even enhance their forests. The
dependence on forests for economic growth need to be diverted with investments
on their basic survival needs being supplied from non-forest activities. This has the logic that forests are some of
the best carbon sinks, and soak up carbon dioxide at a far lower price
per ton of CO2 than many other emission
reduction activities, and thus with the same climate financing – you can get
more bang for the buck. This also
follows the ‘least-cost’ logic that increasing forests in the developed
countries is costlier – though these countries often have far lower population
densities and large tracts of land.
Hard cash talks much louder than
soft human lives – if they are poor, and that’s why there is hardly any considerations that a fairly large number of
the world’s poorest people live in or around the forests, that they are largely
dependent on forest resources for their livelihoods, that forests are also the
habitats of a very large part of the world’s bio-diversity, and any attempt to
look at forests through the lens of Forest Carbon-Stock, is most likely
to seriously impact all these humans and other lives. The considerations of various human rights of
people who live inside or in the periphery of forests, the multiple importance
of the diversity of plants & animals in a forest, rather than how much
carbon can be stored in a certain amount of tree-covered area etc are thorny
questions yet to be answered, and impacting this route of climate finance,
though these have not deterred either the rich-country entities or even the
poor-country governments from going full steam ahead with REDD / REDD +. Money talks louder than humans in these
games.
There are other ‘innovative’
proposals for climate finance, some of which have generated considerable
international interest. The Equadorian
governments proposal of not drilling for and extracting its huge petroleum (a
GHG emitting fossil fuel) reserve under the dense Amazonian forest of Yasuni
region, if the rich nations pay Equador the climate finance in exchange of this
non-extraction & burning of a polluting fuel -- has attracted several
countries. Some European countries, lead
by Germany, has committed substantial climate funds for this “Yasuni Green
Gold” proposal. There are other ideas,
but all are now being diluted in light of the dithering of the richer nations
in face of their economic turmoil and their clear reluctance to honour the
commitments.
Governance & Transparency Issues
The poor nations have waited and
waited for any kind of Climate Finance, facing one devastation after another,
and wondered about how the estimated (much much less is actually committed)
climate finance figures kept shrinking, without being actually privy to the
negotiating games. This was brought to
the fore, when in Dec.2009 at the COP15, a “selected” few nations (big emerging
economies were part of that coterie lead by the US & Denmark) sat together
behind closed doors – violating the UN negotiating principles of every country
as equal consulting partner – and came out with the atrocious “Copenhagen
Accord”, effectively throwing many accepted KP decisions to the garbage
bin. Several poor countries protested
this secrecy & unilaterilsm, but many folded up to the pressures of
coercion or little financial temptations.
Bolivia was the noted exception and stood up for all the marginalised
societies. In terms of compliance of
KP, the “Cancum Agreement” of the COP16
at Mexico in Dec.2010 only took this process of non-transparency and
de-collectivisation of governance and delegitimisation of signed treaty -- further
down the unethical might-is-right road.
Though Cancun also saw the creation of the “Green Climate Fund” now
being discussed and the Cancun LCA text also
included a decision to establish a Standing Committee on finance to assist the
COP on matters relating to financial mechanism, and to improve reporting by
developed countries on their provision of finance to developing countries. This was one right step towards accountable
governance.
When even official “Parties” –
the national governments – to the UNFCCC & KP are not always privy to
decision making and goal-post shifting, one can easily imagine the status of
the civil society which often is the only representative voice of the
marginalised. Apart from this, even the
decisions that our own national governments are taking, or their commitments to
international fora or secret chambers of powerful nations (like the G-20), are
hardly ever open to scrutiny to our own Parliaments. Within South-Asia, the Indian government
has drastically changed its position on mitigation, on climate finance etc –
without in any way taking its people, or even its own Parliament into
confidence. Bangladesh is one of the
most vulnerable countries in the world, from several continuing and expected
climate change impacts, and yet it failed to stand firm in Copenhagen &
Cancun on the principles of climate justice.
Nepal has a large percentage of its people deeply dependent on forest
resources, and yet it has initiated REDD+ projects in its territory, in return
of some money from a few European countries.
It is no surprise that the large number of poor people in India or in
Bangladesh or in Nepal, who are already suffering from clmate impacts, have no
information or knowledge of their own government’s stands or changes of positions, and that
their lives & livelihoods are up for
garage-sales.
Whatever climate finance is
actually committed and operationalised, it is facing and will continue to face
the big question of credibility as the
World Bank has been made the trustee of the fast-track finance for the first three
years till 2012, and the WB has no admirable record of looking after the poor
societies, rather the opposite. There is
the newly constituted “Green Climate Fund” with a governing board split numerically equally between
developed & developing countries, but who and how this fund will be governed,
is yet being negotiated. In the
meantime, big businesses are already establishing their stranglehold over many
of the processes – by floating many pressure groups on governments & by
floating BINGOs (Business and Industry NGO) to influence the little bit of
open-space that occasionallcomes up for civil society organizations and
people’s movements, during the
negotiations.
The
challenges are not only about which country or country grouping, which
institutions will be ultimately governing the climate finance and through what
mechanisms, but the bigger challenge is how to bring in the voices of the poor,
of those communities already paying the price of reckless fiddling with
nature’s climate system. How do we
ensure that the world’s Carbon-Keepers -- those who practice a low carbon
life-style, and protect forests or grow our foods through low-impact
agriculture – are given the benefit of these climate finance ? And these cannot be achieved by just giving a
little space for voicing their concerns (in any case, not many true
representatives of these communities are able to reach the high tables of the
negotiators & parties to the negotiations).
For true democratic governance and transparent operation of climate
finance, these communities have to be brought to the centre of the climate finance
decision making. The climate finance – however little and whatever little –
will finally flow to the developing country governments, but how or whether
they will reach the true climate impacted communities in real need based &
transparent manner, is not clear.
These are the many questions in
the vexed issue of climate finance. How
to resolve them in a just and equitable way?
That is the 500 billion dollar question.
|
The
Author Mr Soumya Dutta is currently Convenor at Energy
& climate change group at Beyond Copenhagen collective and also
works with Bharat Jan Vigyan Jatha, member of advisory board of this
journal and SADED in honorary Capacity.
This paper was originally written as a brief
background note for a SASF workshop in Dhaka, Nov.2011
·
No comments:
Post a Comment