Thursday, June 4, 2015

Who Will Pay?

Two reports released in the last 2 days start to move beyond the rhetoric into the interesting details of global climate response. In short, the reports ask 'who will pay' for the massive investments needed to transform the world's energy sector and to mitigate the effects of climate changes that will happen in the meanwhile.

First, with regard to the Paris conference itself (COP21), here's how it works: each of the 195 nations involved is supposed to have submitted a national plan (INDC) for reducing greenhouse gas emissions by 2030. Most of these plans are overdue, but some 30-odd national plans are on file, including the EU and G7 countries that account for 30% of global emissions and 40% of global GDP. So it becomes possible to evaluate--as the UNFCCC plans to do officially in the fall, before the Paris conference--just how the plans will affect the global goal of holding temperature increases at 2 degrees C. How do they look at this moment? According to the report by Climate Action Tracker, a report signed by 4 of the UN's most senior IPCC climate scientists, not so good. Metrics are complicated, but one way is to estimate at what point carbon saturation will produce temperature increases at 2C--considered the red-flag level for dangerous and irreversible climate change. Status quo projections put that moment at 2036. INDCs from the G7+EU countries so far will push that date back ... 2 years, to 2038. 'Insufficient' pledges from Russia, Canada, and the US in particular--and India and China as well--would imply temperature increases of 3-4 degrees C, a level called "catastrophic" by many climate scientists.

But that's the point of the UNFCCC process: to persuade all countries to put their cards on the table, see what they add up to, and plan from there. Clearly this first draft is unacceptable. Will 'peer pressure'--or just common sense--cause nations to tighten their proposals in advance of Paris? Or will the realization that the 2C goal is not even close to being met lead to post-Paris, post-2020 planning? As the UK's Lord Stern suggested in response to the Climate Action report, we might decide to use the Paris agreements as a "floor of ambition" on which to construct more aggressive plans. Will negotiators arrive in Paris with this intention?

Or will the whole process need to give way to something more urgent? Another IPCC author, Reto Knutti, commented that "global carbon budgets" would be a much more effective way to achieve climate security, but called it a "hard-sell"--harder than setting a 2C goal that no one thinks can be achieved. Perhaps the best use of studies like Carbon Action Tracker's is to alert us all to how much more will need to be done, once the UNFCCC makes clear how little current governments are prepared to do.

The second report is more straightforward. At the Copenhagen conference in 2009, leaders of the wealthy nations made a pledge to increase climate aid to poorer countries, a Green Climate Fund that would reach the impressive level of $100 billion per year by 2020. That funding would allow developing countries to implement clean-energy policies as well as mitigate the effects of climate change: floods, storms, drought, and so forth. Many observers believe that developing countries will sign onto the Paris agreement only if this Green Climate Fund shows promise of being fully funded.

So is it? Not really, but yesterday's report from the World Resources Institute shows how it might be achievable. Governments of developed countries will need to ramp up their contributions (from $17 billion to $31 billion), and development banks like the World Bank will also need to double their funding level to $28 billion. The remaining billions--and here's the most controversial part--would need to come from the private sector, whether in the from of co-investment or loans leveraged from the national and development bank funding. Finer minds than mine seem to feel this combination could yield as much as $137 billion per year, according to the Guardian's estimates, but under what conditions? And isn't that development bank money another form of taxpayer contribution from nations whose ratepayers have already shown a lack of enthusiasm for paying for this problem?

Envisioning the solution is a first step, and the WRI has done us a service by issuing this report. Bringing the wealthy nations of the world, their legislatures and corporations and international organizations to pay for it--that will be the next step, and at least some of that struggle will take place at the Paris conference. Or in the preparations for it--right now!--as countries prepare their negotiating positions.

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