“Unless the G8 sign up to cut emissions by at least 40% by 2020, developing countries will not commit to emissions targets” – that’s the major point of discussion between developed and developing nations, which has (as was to be expected) paralysed the outcome of the Major Economies Forum (MEF). Following yesterday’s G8 declaration, the members of the Major Economies Forum (G8, G5, Australia, EU, the Republic of Korea, Indonesia and Denmark) may not have agreed on a specific target for emissions reductions by 2050 but at least agreed to allow no more than a 2 degrees rise in global temperatures. Reading through the communiqué that was just released in l’Aguila we don’t find many surprises, neither positive nor negative. A little bit on forests, a little bit on adaptation. No doors are closed but real commitment should sound different.

A definitely positive development from yesterday’s declaration is a stronger commitment to leverage financing. Where yesterday’s document related financing for adaptation and mitigation to existing development aid, today’s communiqué stresses that: “Financial resources for mitigation and adaptation will need to be scaled up urgently and substantially and should involve mobilizing resources to support developing countries (…..) Climate financing should complement efforts to promote development in accordance with national priorities and may include both program-based and project-based approaches.”

Yet, non-governmental observers are not entirely satisfied. In the words of WWF’s Kim Carstensen “It’s all about money. Rich countries are telling poor nations: oh poor you. But they avoid commiting to pay their fair share” He adds that ["]wealthy nations should show solid financial commitments and not comforting statements and should replace the blame game with responsible and credible commitments”.

But it is not only the non-governmental sector that recognises the difficulties. President Obama who chaired the meeting, acknowledged a good start but conceded that “progress on this issue will not be easy”. He especially cautioned against cynicism, in front of the immensity of the problem. Some others like CAFOD express it more directly “The G8 could be risking the lives of millions the world’s poorest if there is no agreement on climate in December”.

Bottomline: the outcome probably meets realistic expectations: whoever thought the MEF would do anything more than keeping the door open, i.e. whoever hoped that any substantial progress was to be made without the pressure of the last minute in Copenhagen is probably too optimistic. We also have to consider that without China’s presence moving negotiations towards a more definite outcome was next to impossible. No matter which perspective we take, it is pretty obvious that all sides are trying to push out a definite commitment and to keep the game open until the negotiations at the end of the year. The game continues…..

Read what could be decisive next steps in “What next for the G8“!

By Niel Bowerman, Ruth Brandt, Radhika Viswanathan and Marie Karaisl

This week WWF-Allianz released their annual scorecard in advance of the G8 negotiations in L’Aquila. Canada came 8^th, under-performing both Russia and perhaps more embarrassingly, the US. The report cited increased efforts by the US such as Obama placing high priority on stopping climate change, and Russia’s recent moves to come to the negotiating table as an example of how Canada was now the bottom placed country.

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191 countries. Wildly differing priorities. Scientific uncertainty. Limited budgets. Short timescales. It’s no wonder that reaching agreements at international climate negotiations is difficult.

But depressingly, making agreements is actually the easy bit: keeping to them can be much, much harder.

Take this week’s report by the Institute for European Environmental Policy (IEEP), a research organisation based in London and Brussels. It strongly criticises the EU and its member states for failing to keep promises they made back in 2001.

The report centres on the Bonn Agreement, a joint declaration made by the then-members of the EU and a handful of other countries. The Agreement was an undertaking by those countries to provide USD410million per year of climate change funding for developing countries. According to the IEEP, the understanding was that this would be proportional to the CO₂ emissions of the each of the parties, leaving the EU countries with a USD361million annual commitment between them.

It was agreed that money could flow through a number of different channels, including a number of funds administered through the UN’s Global Environmental Facility (GEF). Trying to describe the funds quickly turns into something resembling the results of a food-fight with alphabetti spaghetti – before you know it you’re wallowing in SCCFs or KPAFs and LDCFs. Anyone keen to learn more is encouraged to read the IEEP’s report.*

While the details are complicated, the IEEP’s conclusions are simple. The EU’s USD361million annual contribution was supposed to be in place by 2005. But the report’s authors found that

• There is little transparency on behalf of the signatories on how much they have actually contributed;
• The limited information that is available suggests that the EU is delivering less than the annual amount it pledged each year under the Agreement.

The IEEP concludes that the lack of transparency over its compliance with the Bonn Agreement is ‘clearly inconsistent with the EU’s claim to global leadership in the climate change process’.

Coming as it does along with criticism from the WWF the previous week, this report may hint that EU’s (perceived) obligations to the developing world will be an area of political pressure as it approaches the Copenhagen negotiations in December.  And despite all the complexities of funding mechanisms and development aid mechanisms, the EU will also need to find a convincing way to demonstrate that it really is putting money where its mouth is.

*For those who love acronyms but don’t want to read the report – the SCCF, KPAF and LDCFs are just funds for LDC actions agreed at the UNFCCC COP6bis and COP7 which are administered by the GEF. KPAF is funded by a CER levy. See? Simple.

Already a whole quarter has passed since the frenzy of negotiations that led up to the 20/20/20 Package agreement at the European Council meeting last December. The series of ministerial meetings that occurred back then are being repeated this month. Environment Ministers met last Monday; Economic Ministers will meet on Tuesday 10 March; and European heads of state (the European Council) will meet on 19-20 March.

NGOs are flagging up the importance of developing countries in a global deal

A number of NGOs, including WWF, Greenpeace and Oxfam are using the opportunity to pile on the pressure for the EU to agree on solid financing commitments for an in international climate deal. With the bloc having already committed substantial sums of money towards mitigation action domestically (see the EU section in Climatico’s new quarterly report), much of the NGOs’ focus has been on financing for mitigation and adaptation in developing countries.

Although the coming global climate negotiations in Copenhagen will feature on the agendas of the Finance Ministers and the European Council, it is very possible that both meetings will pass without substantial new commitments. The state of Europe’s economy will undoubtedly be the main priority for the Finance Ministers and the Council. Copenhagen is still relatively far away, and EU leaders may want to wait for other countries – particularly the US – to give some clearer indications of their intentions before making further climate funding decisions.

The good news

As reported in this blog last week, new rules governing the distribution of foreign donor aid under the REDD scheme had been delayed. It was however announced earlier this week that the new rules, as well as the new climate change fund, would be ready before the Bonn climate change talks in June. Agus Purnomo, former head of the WWF in Indonesia and speaking on behalf of the DNPI (National Board on Climate Change), stated that it was issues over taxation on profits and Indonesia’s bureaucracy that was putting investors, and especially private businesses, off investing in Indonesia but the new rules should address these concerns. Add to this the announced 70 approved CDM projects and it appears that the Indonesian government is finally building up some momentum in the climate change realm. While I share this blogger’s concern over how much of the money will be put into effective climate change policies, it is hoped that the rules will provide a clear explanation of how the money will be spent, thereby encouraging investments.

Now the Bad news

It has always been the presumption that billions of dollars will flow into the Indonesian economy once these rules had been formulated. However it appears that the global economic crisis could claim yet another victim. Mahendra Siregar from the Adaption Fund Board at the United Nations Framework Climate Change Convention (UNFCCC) was adamant: “the idea that Indonesia will finance its climate change programs on foreign money generated from the signing of the Kyoto protocol is a fantasy. No amount of foreign funding would be enough to deal with Indonesia’s climate change problems.” Add to this a collapse in the price of CO2 and a drive within companies to reduce operating costs, means payments into the UN Adaption Fund may not be what developing countries are hoping for. Indeed Mahendra speculates that instead of billions of dollars, the entire adaption fund would only amount to $150 million split between all developing countries. Indonesia’s budget for climate change in 2009 is Rp 1.8 trillion (US$ 200 million) and relied on a sizable investment from the Adaption Fund.

What to do? Local community engagement

So if international donor money does dry up, what can be done? One suggestion is engaging with local communities two ways. First of all, local engagement can reduce deforestation caused by palm plantation. And it need not be expensive. Yayasan Orangutan Indonesia, an Indonesian NGO dedicated to saving the orangutan, provides education and information to villagers explaining the dangers local communities face to their environment if they sell land to palm oil cultivators. Once explained what impact these plantations have, the communities are much more likely to refuse payments for land, thereby preventing deforestation.

Secondly, reforestation projects could utilize local labour and knowledge, along with direct private funding, thereby cutting out the multiple layers of government. A good example of this is the WWF NEWtrees scheme, created in conjunction with Nokia and Equinox Publishing. Originally launched in November 2007 in Sebangau National Park, Kalimantan, it initially planted 100,000 trees with Nokia providing the trees and tagging technology. This week, the scheme was extended to Mt. Rinjani, East Lombok hoping to replenish the 40000 hectares of deforested land. In collaboration with the local communities, the program hopes to help the 3 million people who have been directly affected by deforestation.

These programs and schemes highlight simple, effective ways to tackle climate change. By engaging with local communities and addressing their livelihood issues, climate change can be tackled at the local level at minimal expense. Whether schemes like this will be rapidly expanded in the coming year remains to be seen, but the global economic crisis should not be used as an excuse for inaction.

Floods in Bangladesh (credit: dfid.gov.uk)

Some commentators think that one of the few things we me see progress on at Poznan is the “Adaptation Fund” (AF). Unlike the LDCF (see my previous post), it was established to finance concrete adaptation projects and programmes in developing countries. It is operated by the Adaptation Fund Board, but the GEF runs the secretariat and the World Bank is the trustee.

Current arrangements suggest it will mainly be financed with a share of proceeds from CDM project activities (2% of CERs). This means its replenishment is heavily dependent on the success of the CDM.

The UNFCCC reckons that this process could yield anything between $250 million and $3 billion a year by 2030. However, this is a fraction of most assessments of developing countries needs for adaptation financing. Oxfam, for example, has estimated this to be $50 billion a year by 2015, and the UN has estimated $86 billion. WWF estimates that there is less than $1 billion currently earmarked for adaptation. Whichever way you look at it, there is a big financing gap.

Therefore, the AF clearly needs sources of financing above and beyond the CDM. One source is pledges from rich countries, but so far these have amounted to less than $300 million. Aid agencies and many developing countries have been making the case for more serious pledges by rich countries, given their historical contribution to carbon emissions. For example, China and India have suggested the rich countries commit to donating a percentage of GDP for mitigation and adaptation in developing countries. Whatever the figure agreed on, this is a sensible and equitable suggestion.

To make up some more of the shortfall, Oxfam has suggested that instead of 2% of CERs going to the AF, this figure should rather be 7.5%. Furthermore, as Simon noted the other day, Yvo de Boer has suggested another source of financing for the AF could be Joint Implementation (JI) projects, potentially adding an extra billion dollars or so by 2020.

Sorting out the AF is a matter of urgency. The chair of its board announced yesterday
that the AF is even short of the cash needed to just keep it running. There are many suggestions on the table for financing adaptation, and a key outcome of Poznan should be some clarity on which ones are likely to be taken up in a post-Kyoto deal. This is crucial as it will allow more research to flesh out proposals before Copenhagen next year.

Not precluding the results Poznan will have, there are warning signs that the global economic crisis has reduced the scope for the ambitious action that is needed to tackle Climate Change. A case in point is German policy these days, where the disjuncture between rhetoric and actions taken becomes harder to ignore.

Changing Direction in Germany? (Source: cgommel @ flickr)

With a declaration on Climate Change by Angela Merkel coming tomorrow, environmentalists warn that Germany has moved dangerously towards blocking progress in a time when action is sorely needed. Member-NGOs of Klima-Allianz following the events in Poznan conclude that the EU and Germany are close to losing their credibility in dealing with Climate Change: While the talks of Poznan are just starting, Germany is negotiating hard to try and soften up the impact of any EU agreement on coal-fired power stations, car-makers, and the most CO² -intensive industries. WWF and VDC (a transport NGO) warn that failure to take action on innovation and CO² reduction in transport will come to haunt Germany and Europe, who risk falling behind a possibly much more ambitious US-agenda on Climate Change. And while Sigmar Gabriel, the German environmental minister says that it would be unrealistic to expect something more concrete than the basic ‘architecture’ of a post-Kyoto framework from Poznan, the political signals coming from Germany these days sounds markedly less ambitious than they did just a few months ago.