Climate Finance Battle Shows Expectation Gap at UN Talks

Climate Rift Widens as Poor Nations Seek Clarity on Aid Pledges
Since the talks began last week, the two blocs have clashed over the historical responsibility for causing global warming and a demand by the developing world for compensation for the losses and damage they’re facing as a result -- a topic put in the spotlight by the devastation wrought in the Philippines by Typhoon Haiyan. Photographer: Odd Andersen/AFP via Getty Images

A debate over climate aid is widening the rift between richer and poorer nations at United Nations climate talks in Warsaw, creating another obstacle in the fight against global warming.

Industrial nations have pledged to boost aid to $100 billion a year by 2020 for developing countries seeking to reduce their own pollution and cope with more intense storms and higher sea levels that come with higher temperatures. Poorer countries are seeking a predictable funding schedule to help them plan, and the richer states aren’t providing that.

The difference between what the poorer nations want and the details provided by donor nations led by the U.S., Japan and European Union has become one of the top sources of friction in the UN talks, which involve about 190 nations. A three-year program of fast-start funding from rich nations finished in 2012 with $10 billion a year of payments. There’s no clear plan for how much more money will flow, and when.

“There is no other area where the expectation gap is so great” between rich and poor nations, Norwegian Chief Climate Negotiator Aslak Brun said in an interview. “It’s not likely that there will be a big increase in climate finance announced here in Warsaw.”

The gap in financing is a third issue to divide developing and industrialized countries in Warsaw. Since the talks began last week, the two blocs have clashed over the historical responsibility for causing global warming and a demand by the developing world for compensation for the losses and damage they’re facing as a result -- a topic put in the spotlight by the devastation wrought in the Philippines by Typhoon Haiyan.

‘Serious Concern’

UN Secretary-General Ban Ki-moon arrived at the talks yesterday saying that finance is “critical” to their success. “There are serious concerns about how to mobilize $100 billion,” Ban said.

To emphasize the importance of economic assistance, ministers today will hold a meeting described by the UN as a “High-level Ministerial Dialog on Climate Finance.”

“There should be a clear roadmap for the realization of these goals to make sure the funds provided from 2013 to 2015 will be no less than the fast start funds,” Xie Zhenhua, head of China’s delegation, told delegates in today’s dialog. “We should have a very clear system to measure and to verify the nature and use of the funds.”

Poorest Nations

The bloc of 48 Least Developed Countries is also seeking a roadmap, said Bangladeshi envoy Quamrul Chowdhury. “We’re yet to have a clear, predictable, adequate and progressive up-scaling. We want some light at the end of the tunnel.”

While the $100 billion won’t be divided up here, developed countries should be able to “go home and come back with projections of what they think they can contribute,” said Liz Gallagher, senior adviser to the policy analyst E3G.

The bind for poorer nations is three-way. The fast-start finance ended last year, and while donors are still paying out, there’s no firm pledge until 2020. The UN’s Adaptation Fund is running out of money because it’s replenished from the Clean Development Mechanism, a UN market that offsets pollution and has been suffering from waning demand. Meanwhile, the Green Climate Fund set up by the UN to channel some of the eventual $100 billion won’t be ready to raise capital until next year.

‘Very Difficult’

“It’s a chicken-and-egg situation,” said Ruth Davis, political adviser at the environmental campaign group Greenpeace. “It’s very difficult to plan ahead and make difficult choices about where to put your money in a developing country when you have no idea whether that cash is coming.”

The Green Climate Fund intends to raise between $6 billion and $30 billion in next year’s initial call for funds, said Manfred Konukiewitz, co-chairman of the organization.

Envoys are working to complete in 2015 a new climate-change agreement that’s supposed to bind all nations to reducing emissions from 2020. At the same time, the envoys are discussing how to increase emissions pledges between now and 2020, when the new deal takes effect.

Developing nations argue that without regular and predictable funding, they can’t plan to reduce emissions, pay for renewable-energy developments and adapt their infrastructure to the rising seas and the stronger storms that scientists say will result from ever-rising temperatures.

‘No Support’

“How can you ask a developing country to show high ambition of their actions if there is no support?,” said Tosi Mpanu-Mpanu, a Congolese diplomat who negotiates for the 54-member Africa Group. “If you don’t turn the key of the finance, the key of the mitigation won’t follow.”

The global financial crisis, which pushed a large part of the developed world into recession, hasn’t helped. U.S. Special Envoy on Climate Change Todd Stern said last month that “no step change in overall levels of public funding from developed countries is likely to come anytime soon.”

“I see countries who are deeply committed to climate action really wrestling with their domestic financial situation,” said Rachel Kyte, vice president for sustainable development at the World Bank. “It’s going to be difficult for them to put new money on the table.”

Even so, the aid hasn’t stopped. Japan has promised $16 billion over three years. Norway is committed to provide at least $500 million a year through 2020, Brun said. U.S. climate-related assistance may total $2.7 billion this year, more than in any of the three previous years, Stern told reporters. Norway, the U.K. and U.S. today announced $280 million of forestry funding.

The U.S. is “working with donor countries to focus on the challenge of mobilizing the $100 billion,” Stern said. “There’s a lot going on.”

‘Not Peanuts’

European Climate Commissioner Connie Hedegaard said EU funding for the three years through 2015 will be more than in the fast-start period. She said “dedicated” efforts are being made behind the scenes, citing talks between ministers, pension funds, other institutional investors and multilateral development banks. “It’s not peanuts.”

The U.K. is trying to convene a “global summit” on climate finance for the spring designed to “give confidence” to the process, said Climate Change Minister Greg Barker. Ban is inviting world leaders to a UN summit in September that’s aimed to boost ambitions for cutting greehouse gases.

Still, finance will probably remain a thorny issue through 2015, the deadline the envoys have set themselves to give birth to the new climate agreement in Paris. Christiana Figueres, who’s guiding the negotiations as executive secretary of the UN Framework Convention on Climate Change, said developing countries “at minimum” need to know the 2020 aid pledge is still on the table.

“We need significant investments in helping developing countries deal with the impacts of climate change and reduce emissions,” said Jake Schmidt of the New York-based Natural Resources Defense Council. “It will be a key stumbling block for Paris if it’s not resolved along the way.”

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