“Terrible sense of limbo”

At the UN climate summit in Copenhagen in 2009, rich-nation governments promised to make $ 30 billion available to developing countries for adaptation and mitigation purposes in the years 2010 to 2012. What has become of this money?
Well, donor governments have indeed committed around $ 30 billion, if you add up all the funding they earmarked for climate issues in developing countries. However, the idea was that spending for adaptation and mitigation would be balanced, and that is not the case. So far, only $ 3 billion have been directed towards adaptation. That is not enough. Another downside is that it is very hard to monitor the financial flows. The leaders of developing countries hoped that the money would be committed to specialised multilateral facilities such as the Adaptation Fund, the Least Developed Countries Fund or the Special Climate Fund, which all have a clear mandate and are quite transparent. Instead, the donors prefer bilateral and multilateral aid channels. As a consequence, climate finance has become blurred with official development assistance (ODA).

But wasn’t climate finance supposed to be “new and additional” in the context of the UN Framework Convention on Climate Change (UNFCCC)?
Yes, that’s right, and to developing country governments that always meant “over and above” existing ODA pledges. Leaders of rich nations, however, argue that any money they did not spend in the past is “additional and new”. In practice, there is a lot of double counting. Donor governments list expen­ditures both as ODA and climate finance. Their action is really hard to monitor, in particular when they use their own, long-established agencies like USAID, Germany’s GIZ and KfW or Britain’s DfID. Making matters worse, there are no multilateral standards for climate finance. The OECD, the Organisation for Economic Cooperation and Development, has clear rules on what counts as ODA, but there are no such rules for climate finance. Anyone who wishes to monitor these issues must rely on information donor governments publish. All in all, these governments are pretty much doing what they want.

In Copenhagen, rich-nation governments also pledged climate funding worth an annual $ 100 billion from 2020 on. Does that promise look credible?
Well, it is certainly credible in terms of rich nations’ ability to pay. But the political will increasingly seems to be lacking. Moreover, the governments of developing countries understood the pledge in terms of government spending, whereas those of indus­trialised countries want private-sector funding to count too. The most frustrating thing, however, is that it is still absolutely unclear what will happen in the next seven years, from 2013 to 2019. So far, there is no coherent multilateral commitment.

How much money do developing countries need to adapt to climate change?
That figure is very hard to calculate. Serious estimates range from tens of billions to hundreds of billions of dollars every year. However, speed matters even more than precise figures. Developing countries have to adapt to global warming immediately. They already feel the impacts, and the impacts are getting worse. The sense of limbo we are in is terrible. We need some kind of commitment from the donor countries. What will they do up to 2020? Nothing? Will they maintain the current spending level of about $ 10 billion per year? Or will they increase that level step by step to move up towards $ 100 billion? They must at least maintain the current level, because adaptation must start now.

Has the Clean Development Mechanism (CDM) served to facilitate technology transfer and channel private funds to developing countries for mitigation-related purposes? The idea was to allow investors from advanced economies to fulfil some of their obligations to reduce greenhouse gases through action in devel­­-oping countries.
Yes, the CDM has made a difference. But it is part of the Kyoto Protocol, and time is running out. Carbon markets are fizzling out because, from next year on, developed nations do not have any more binding commitments to reduce emissions. The Kyoto Protocol, as everyone knows, has not been terribly effective, because many countries did not fulfil their obligations, and the USA even shied from ratifying altogether. Nonetheless, the Protocol did provide benchmarks, it did contribute to reducing emissions, and it did lead to the establishment of carbon markets with a demand for carbon credits. The CDM will be dead soon, unless the countries that have signed up to Kyoto agree to a second commitment period. Unfortunately, that is unlikely.

Without some kind of cap-and-trade system, schemes to reduce emissions from deforestation and degradation of forests (REDD) are in trouble too. They are, after all, about paying countries for preventing greenhouse gases.
Yes, but they differ from the CDM. It is true that any kind of global REDD regime will depend on some kind of international carbon market. But at the moment, there is a lot of REDD activity at the bilateral level, and such activity does not depend on emission trading. The reason is that there are only few big, forest-rich countries, so it is relatively easy for donor governments to strike deals with them bilaterally.

Nonetheless, it seems as if much of the UNFCCC efforts to tackle climate change multilaterally are unravelling. What has become of the principle of “shared but differentiated responsibility”? That term was used at the Earth Summit in Rio in 1992 to spell out that while all nations are responsible for pro­tecting the climate, those that are wealthy and have contributed most to global warming must shoulder a larger burden than poor nations with a history of low emissions.
For the time being, this principle is being self-administered by national governments. They decide for themselves what they want to do. To donor governments, such discretion seems to be paramount. The governments of developing countries find that stance deeply frustrating for obvious reasons. The donors are actually undermining trust, and matters are compounded because they are struggling with the impacts of their own financial crises and look increasingly unwilling to commit to any kind of funding at all. The trouble is that there really must be binding rules on climate finance. Global warming is a global challenge. Humanity must rise to it in a cooperative, coherent and decisive manner. Instead, it seems as if we will only keep muddling through for years to come.

Will the Green Climate Fund make a difference? It is supposed to handle some of the $ 100 bil­­lion climate finance pledged from 2020 on.
Well, the formal process of establishing this Fund will take some time. Ultimately it will have to be part of a global climate treaty. The same treaty must define emission-reduction obligations for all parties and create scope for some kind of emissions trading. According to the UNFCCC agenda that was set in Durban last year, such an agreement is to be nego­tiated by 2015 and come into force by 2020. So the GCF will not be of much use in the near future, though it may certainly prove valuable in the long run. In the short run, however, the scenario is depressingly muddled. Action on climate change is absolutely urgent, but powerful governments just keep dragging their feet.