There is incredible optimism that the ongoing global climate talks in Paris will produce, finally, a strong climate agreement. That being said, there are still some serious barriers that need to be overcome, none more so than determining an equitable and transparent system for climate finance.
Why finance matters
Climate finance is, simply, figuring how how money will be distributed among countries around the world to ensure that we both mitigate emissions to achieve necessary greenhouse gas reduction, and also help poorer, more vulnerable nations adapt to the expected impacts of climate change.
Much rests on the ability of negotiators in Paris to figure climate finance. For example, no country may be more crucial to the success of the COP21 process than India. It is quickly becoming the next China, with a rapidly growing economy and rapidly growing emissions, currently ranked No. 5 in the world. India surprised many when it released its climate plan ahead of COP, with ambitious national goals including a goal of 40 percent non-fossil fuel energy by 2030. But this plan is contingent on a single factor: $2.5 trillion in global climate finance. Without international assistance, India will not embark on a cleaner path, and all the hopes of a global agreement coming out of COP21 will be doomed to failure.
India’s argument is quite clear – they, and many developing countries across Asia and Africa, did not cause this problem. Historically, they are responsible for just a tiny share of the greenhouse gases that are fueling global warming. Why should they have to pay to mitigate emissions when they still have hundreds of millions in poverty?
Thankfully, there is strong sentiment that industrialized countries using fossil fuels must put in sufficient funds to help emerging countries both adapt to climate impacts, and move technologically toward low-carbon growth. The problem is that the mechanism for ensuring that these funds are both sufficient and equitably-distributed is still lacking.
“Wealthier, developed countries are coming forward with finance – but the finance they have committed, especially finance for adaptation, is not enough. We need a concrete plan so they can fulfill this commitment they made,” said Samantha Smith, with the World Wildlife Federation’s Global Climate and Energy Program.
For example, at a previous COP meeting in Cancun, Mexico, industrialized countries including the United States agreed to set up a Green Climate Fund that would, annually, provide $100 billion to developing countries to meet the challenges of adapting, and expanding, renewable energies. Five years later, and it is still uncertain how we will meet that goal by 2020. One of the key key discussions in Paris will be ensuring that the fund reaches its goal.
Adaptation vs. mitigation
Another issue is determining how to distribute this fund between the two key facets of climate – mitigating emissions and adapting to the climate change that is both expected, and in many parts of the world, already being felt.
There is a disproportionate amount of global funding going to mitigation. Part of this is being driven by the market. The rapid drop in prices for renewables has increased private-sector investment in green energy around the world as it becomes more financially sound. It is something we talk about quite often at TriplePundit – business going green just makes financial sense.
But, on the flip side, adaptation is much more difficult to make a business case for. There is a huge upfront infrastructure cost, and returns are distributed and hard to quantify. Yet, for the millions living along vulnerable coastlines in Bangladesh, the Pacific Islands or even Miami, this is a real threat that needs urgent attention. Otherwise, the world could see a massive rise in climate refugees that would dwarf the current crisis in Europe.
“Less financially-developed countries will continue to need technical and financial support from both the public and private sectors to meet the significant challenges they face,” said Josh Sawislak, global director of resilience for AECOM, and a former member of the White House Council on Environmental Quality.
This will likely be the most contentious issue in Paris, one that could unravel the talks. It also makes it clear that COP21 will not be the end-all solution. It is a chance for the world to come together and set up a framework to finally begin tackling, head on, the greatest challenge of our generation. Key to that will be figuring out how to integrate climate finance into the next climate treaty.
Image credit: Wikimedia Commons