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To date, Europe has been by far the biggest financier of CDM projects. But with misgivings about its efficacy mounting, EU regulators have planned to dramatically scale back Europe’s purchase of CDM offsets. And in a bid to pressure large developing nations—specifically China, India, Mexico, and Brazil—to agree to firm emissions targets, the EU is threatening to make those nations ineligible for CDM after 2012. Europe’s chilling towards the CDM, however, hasn’t been met well by developing countries, nearly all of which have expressed a desire to expand and improve the CDM for the post-Kyoto period. China’s stakes in the CDM are higher than most—in 2008, its projects accounted for roughly 84 percent of all credits sold on the $6.5 billion primary CDM market—and has given no indication that it will agree to any kind of treaty that ends its participation.
With tensions escalating around the future of the CDM—who should participate, whether it should even continue to exist—the EU’s new offers for direct climate funding could help buffer anticipated disputes about north-south compensation. Or, they could just complicate them, given that the CDM focuses solely on mitigation while the EU proposals bundle together mitigation and adaptation. No one yet knows what the price tag on adaptation will be, but considering that measures could feasibly include things like moving Mumbai a few miles inland, it is likely to consume a good chunk of any funding budget. With these uncertainties hanging, how China reacts to the EU’s direct-payment plans will in part depend on whether it is offered as “instead of” or “in addition to” ongoing CDM activities. In his London speech, Brown tread lightly on this terrain, acknowledging that the CDM would continue, but also urging a need “to go beyond the current clean development mechanism” by introducing the larger developing nations to sector-wide emissions targets and hence the incentives of carbon trading.
It remains unclear how Europe’s new funding schemes will affect the ongoing CDM debate, and consequently, whether Brown’s plan is likely to win broad-based international support. Last week’s G8 climate forum, however, revealed just how steep the road ahead could be. Prior to the much-anticipated event—which was organized by US President Barack Obama in an effort to inject top-level momentum into stalled climate negotiations—Gordon Brown had phoned Obama, Prime Minister Wen Jiabao of China, and French President Nicolas Sarkozy to build support for his $100 billion plan. Yet the draft declaration released late Thursday afternoon was bland at best. It says that aid to the poorest and most vulnerable countries is essential but contains no specifics on a formula for contributions to such a fund or how the money should be spent. The only commitment in the declaration is a smaller, immediate payment to the most vulnerable countries—low-lying nations threatened by rising seas, African nations subject to drought, and poor nations that rely on wood for cooking—in the sum of $400 million per year.
It is clear that success in Copenhagen will depend on how far developed nations are prepared to go with their cumulative climate-financing efforts. But the gulf is wide between what China and other developing nations view as fair and just and what the developed nations do. The G77, a loose coalition of developing countries, has suggested that rich nations contribute 1 percent of their GDP—more than $143 billion from the US alone. Brown remains firm in his call for a global contribution of $100 billion. But $400 million—China not included—is the only amount on paper at the moment.
The Chinese have a saying, 有錢能使鬼推磨: “If you have money you can make the devil push your grind stone.” A looser interpretation is “money talks.” Everyone with a seat at the Copenhagen table is well versed in this language. Come December, those with a planetary agenda would do well to pipe up.
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