When someone rich promises his or her friend a thousand euros next year, some goodwill might normally be expected. But the transfer could easily turn sour if the money comes with strings attached, or even worse, is simply the same money that was promised last year but never actually delivered.
Add several zeros and these are just some of the anxieties swirling around the climate finance that developed countries have promised poor countries. In the chaotic final hours of the climate summit in Copenhagen last December, developed countries agreed that the developing world would need $100 billion (€72.4bn) each year by 2020 to adapt to the unavoidable consequences of climate change and develop green economies. As an immediate down-payment, the rich countries promised $30bn (€21.8bn) in 2010-12, of which €7.2bn (€2.4bn each year) would come from the European Union. But as countries get ready for the next round of climate talks in Cancún, Mexico (29 November to 10 December), the curiosity persists about whether this is simply old money in new envelopes.
With 2010 slipping away, developing countries are left wondering where the first tranche of money is and whether ‘fast-track finance’ is simply development aid with a new name. “For us, there is a lot of recycling of that money. And, worse, there is diversion from ODA [overseas development aid],” said Tosi Mpanu Mpanu, the chair of the African Group on Climate Change, which has official status in United Nations climate negotiations. He observes that money originally earmarked for health problems in Africa is now being diverted as climate finance.
Speaking to European Voice on his way to Brussels to meet Connie Hedegaard, the European commissioner for climate action, Mpanu Mpanu also said he was hearing mixed messages from EU member states. “Some countries say it will not be additional until 2012 and some say it will be additional [immediately],” he said. “The EU is one of the parties that we can trust, but regarding the finance issue they are not being forthcoming.”
The problem is that developed countries have not set any clear benchmark on how to count the money, which is meant to be “new and additional” to existing aid commitments. According to the International Institute for Environment and Development (IEED), a UK-based research organisation, there are eight possible ways to define “new and additional”. The EU’s 27 national governments may well find a few more. The IEED has argued that a global accounting framework for finance would “be essential” to make funds comparable and to avoid endless quibbling over the details and the consequent erosion of developing countries’ trust.
Negotiators hope that the Cancún talks will result in a new global fund to channel the fast-track finance, as well as the much larger sums after 2012. One of the aims of the summit is to reach a general agreement on the ground rules of this fund, to help pave the way for a comprehensive climate deal.
New and additional criteria
Farrukh Iqbal Khan, the chairman of the Adaptation Fund Board (set up under the Kyoto protocol), said that this means agreeing a definition of “new and additional”, as well as common criteria for allocating funds to projects. Failure to agree on climate finance in Cancún “would be something that would further undermine trust”, he added. But asked if the EU has the political will to push for these rules, he said simply: “No, I am not sure.”
Developing countries will also push for fast-start finance to be grants rather than loans. For the poorest countries – who have pointed out repeatedly that they did not create the climate problem – recourse to loans is deeply objectionable: “It is like you come and hit my car and then you loan me money to repair it,” said Mpanu Mpanu. An EU official estimated that 43% of the EU’s contribution could be loans, while Mpanu Mpanu thinks that the share from all developed countries is 40%-50%.
EU leaders meeting in Brussels today and tomorrow (28-29 October) are likely to issue a familiar-sounding communiqué on the international climate talks, which will restate the EU’s fast-track pledges and “welcome” any new ideas to promote transparency in counting climate finance. But behind these elegant conclusions, frantic efforts are being made to get the EU’s house in order.
Although nearly all member states had made spending pledges on fast-track finance by last May, the European Commission has been frustrated with delays by a few governments in coming up with precise figures and information about the projects they will support. France, Italy and Spain, which have been in the front line of the EU’s climate diplomacy, are among them.
This prompted Jos Delbeke, the director-general of the Commission’s climate action department, to write to all member states in recent days urging them to send the information. On the final day of Delbeke’s deadline (when European Voice went to press yesterday, 27 October), the Commission was still waiting for information from two member states.
But the Commission is not satisfied with the quality of information that it has received, as crucial details about projects are missing for a majority of member states. “What we regret is that we have got comprehensive information from [only] 11 states,” said a spokeswoman for Hedegaard.
The Commission knows that the EU’s credibility is on the line. But far more is at stake: failure to make progress would further damage the prospects of getting a global deal that would stop dangerous climate change. If the EU and other developed countries fail to deliver on their billion-euro promises, it will be a major diplomatic failure.
EUROPEAN UNION PLEDGES for 2010-12*Country Pledge (in millions)
European Commission €150
EU total €7,200
* Not comprehensive list; exchange rates current on 26 October 2010.
Source : www.faststartfinance.org