The Great Climate Change Pay-Off

Road to Copenhagen / by Maywa Montenegro /

UK Prime Minister Gordon Brown has called on wealthy nations to cough up $100 billion for climate aid. But with no firm commitments, could money be the deal breaker in Copenhagen?

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With five months left to go before Copenhagen, international attention is fixed on coming to an agreement over emissions targets. The failure, at last week’s G8 summit, of the world’s 17 major polluters to agree to specific cuts in greenhouse gases by 2050 only sharpened this focus, as China and India rebuffed a firm commitment in part because industrialized nations have refused to agree to mid-term 2020 goals. But buried beneath the headlines was the other reason negotiations fell through, and the one that could turn out to be the deal breaker in December: cold, hard cash. In recent months, developing nations, with China at the helm, have grown increasingly insistent that wealthier nations should provide poorer ones with financial assistance to help them cope with climate change. This includes funding for so-called “mitigation” efforts that curb carbon emissions and for “adaptation”—the long-term adjustment to rising tides, higher temperatures, drought, and increased infection rates of a warming planet. Despite two long negotiating sessions held earlier this year, however, no country has yet started putting money on the table.

That changed on June 26, when in a speech at the London Zoo, UK Prime Minister Gordon Brown called on the world’s wealthy nations to contribute $100 billion per year to help poor nations curb emissions and adapt to the coming effects of climate change. “If we are to achieve an agreement in Copenhagen, I believe we must move the debate from a stand-off over hypothetical figures to active negotiation on real mitigation actions and real contributions,” Brown said. In the speech, a high profile event in which Brown unveiled his government’s manifesto for the upcoming Copenhagen talks, the prime minister called the 12-figure amount “a credible number” and expressed confidence in developed nations’ collective ability to raise “at least this sum.” Last week, he worked to win global support for the plan, as leaders from the largest developed and developing world economies convened at a special climate forum in L’Aquila, Italy, during the annual meeting of the G8.

Brown’s ambitious move appears motivated, at least in part, by slow progress from the European leadership. After being barricaded inside EU headquarters in March by Greenpeace protesters demanding a climate fund for poor countries, European finance ministers met in Luxembourg in early June, where they reportedly discussed a number of funding proposals, including one in which more affluent countries would offer $140 billion each year in assistance. The EU ministers, however, decided to postpone—for a second time—a final decision on financing, which may have prompted Brown to take the baton.

Under Brown’s plan—in which funding would begin in 2013 and rise to $100 billion per year by 2020—the money would come from levies on the carbon market, various types of public finance, and a limited amount of government development aid. The EU will be voting as a bloc in Copenhagen, so Brown’s proposal, or one of several plans being put forward by other European governments, will first have to gain approval in Brussels.

Significantly, Brown’s offer of fund-based assistance comes at a time when the EU is putting the brakes on its support for the Clean Development Mechanism, currently the world’s largest north-to-south stream of climate finance. The CDM, as it’s commonly called, allows nations with carbon caps under the Kyoto Protocol to meet a portion of their emissions targets by financing clean energy technologies in the developing world. If an industry—say, a German coal plant—exceeds its emissions quota, it can purchase offset credits on the carbon market. Those credits go to bankroll developing-world projects, like wind farms, hydropower plants, building retrofits, or biomass cookstoves, that curb carbon output in the host nation. From the standpoint of the planet, one ton of CO2 saved in Dresden is the same as one ton saved in Dakar, so CDM projects offer a cheaper way for the wealthy nations to meet their targets while at the same time helping poor nations grow their economies on greener trajectory.

But concern is growing, across Europe and among environmental analysts worldwide, that offsets may not be working as envisioned. Experts at Stanford’s Program on Energy and Sustainable Development, for example, have provided damning evidence that China likely increased its production of the potent greenhouse gas HFC-23, simply to earn carbon credits by capturing and destroying them. China has also received carbon offset credits for virtually all of its new investments in hydro, wind, and natural gas energy since 2005, claiming that none of those investments would occur without the subsidy of the CDM. Yet China’s current Five-Year Plan calls for major new investments in these renewable energies. In other words, it’s likely that many of these energy projects would have been built anyway, so the offset credits they earn represent no additional cut in global emissions. Atop these concerns, the EU is increasingly worried that the CDM is discouraging the more-advanced developing nations from introducing their own low-carbon policies, as well as stunting European innovation in renewable energy technologies.

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