By Michelle Pressend · 7 Dec 2011
As the 17th United Nations Framework Convention on Climate Change starts winding up, people all over the world are being told to reign in their expectations. COP 17 will likely not result in a second commitment period of the Kyoto Protocol, but does look set to become the launch pad for the new Green Climate Fund (GCF), also known by climate justice activists as the "Greedy Corporate Fund".
Since COP17 is floundering and Kyoto targets seem a distant dream, South Africa’s international affairs minister and the President of COP 17, Maite Nkoana-Mashabanehas, has already started informal discussions on the fund. There’s a good chance she’s pushing for an agreement on the GCF so that Durban at least shows some tangible results.
The major bone of contention at the COP17 negotiations is the financial resources required by developing countries for "adaptation" (money to help developing countries adapt or adjust to the effects of climate change) and "mitigation" (money needed by developing countries to eliminate or significantly reduce greenhouse gasses).
Three things are clear.
Firstly, some developed countries are not interested in ensuring a multilateral agreement to deal with climate change. They want a "pledge and review" system. This means countries will voluntarily determine the amount of emissions they wish to reduce. Those strongly advocating this position are, United States of America (the world’s biggest polluter), Japan and Canada.
Secondly, the European Union (EU) wants a legally-binding agreement, but with a compromise in which major emerging economies like China, India and others agree to a transition period to start negotiations for a new legally binding treaty that will take effect in 2020. Meanwhile, as NASA scientists pointed out this week, the polar ice caps are melting at a rapid rate resulting in rising sea levels.
And thirdly, that the mechanism for the GCF based on a Transitional Committee meeting co-chaired by Minister Trevor Manual, which recently took place in Cape Town, is adopted.
From a climate justice perspective, it is widely accepted that developed countries should be responsible for paying for the ecological debt they incurred given their historical contributions to the climate change crisis. In the words of climate justice groups, "Those who owe climate debt must pay reparations to all the countries and peoples of the South."
Importantly, these funds should come in the form of grants and not loans. If funds were to come in the form of loans it is likely to increase the indebtedness of developing countries. Thus it is important that these funds come from additional grants committed to by the developed world above and beyond official development assistance (ODA).
But it seems that a combination of market-based solutions are being touted to mobilise the GCF, raising serious questions about the ability of poor communities (those most affected by climate change) to access the fund and drive climate adaptation and mitigation from their own perspectives, based on their own specific needs.
Warning that it would be problematic if the framework from the Transitional Committee report on the GCF were adopted, Undersecretary of the Climate Change Commission in the Philippines, Naderev Sano, raised concerns about the proposed mechanisms saying, "If markets can’t be reliable, why use markets to save the planet." He made these remarks at a COP17 side event organised by IBON (an international non-profit that monitors global issues and links them to local struggles): "Improving Development Effectiveness in Climate Finance: Challenges and Opportunities".
In 2009, the United Nations World Economic and Social Survey estimated that between US$500-US$600 billion is needed annually, for adaptation and mitigation in developing countries.
This first problem with the fund is that there are no genuine commitments of actual money. Developed countries are committed to mobilise US$100 million by 2020 through various means, which include carbon trading (the real benefits of which to the environment are as yet unproven), private equities, and investments in cleaner development mechanisms. Thus, a major concern related to the sources of funding for the GCF is that it is predominately from private sources that are likely to view climate change more as a business opportunity than a social responsibility.
Leading to the second concern, which is that the fund makes provision for the private sector to access funds directly. So, for example, if coporations want to access the fund for controversial Reduced Emissions from Deforestation and Forest Degradation (REDD) projects, they will be able to do so, with few questions about the impact of their projects on poor communities. There is already a growing body of evidence demonstrating that REDD projects - apart from being ineffectual for poor communities who do not have the capacity to wait for their long term results - are actually threatening indigenous communities’ rights over their ancestral lands. In many instances, REDD is turning out to be just another land grab by the rich.
Thirdly, the World Bank is likely to govern this fund, and if this is the case, then these loans are likely to come with often-unreasonable conditions for developing countries. Cephas Lumina, a United Nations expert on foreign debt and human rights, emphasised at the IBON event that new finance should not extend the debt burden of countries of the South and that there should be no key role for the World Bank. "They have a record of failed projects and harmful policies," he said. He further stressed that finance should be in the form of grants not loans in addition to respect for state sovereignty.
A global fund for adaptation and mitigation for developing countries should not only address the inevitable effects of climate change, but also ensure the transfer of cleaner technologies to these countries for their public sectors without financial conditions. Financing this fund should come from taxing the profits of the economic sectors most responsible for climate change (oil, coal, cars, electricity generation, and so on), from shifting fossil-fuel subsidies and from financial transaction taxes.
The Financial Transaction Tax, also known as the Robin Hood Tax, is a small levy of 0.01-0.05% imposed on the trade of stocks, derivates, currency, and other financial instruments, which could generate billions of dollars. Civil society organisations argue, "We pay a transaction tax every time we buy food and clothes; it’s only fair that the banking sector also pay a transaction tax."
So while the creation of the GCF was meant to reflect calls from the international community over many years for a global fund that is representative, democratically governed, effective, accountable, and designed to meet the needs of those most marginalized and vulnerable to climate change, it is in danger of being used as another vehicle for private sector interests, a mechanism to avoid responsibility by developed countries, and for the continued damaging influence of multilateral institutions like the World Bank.
But the United Nations appears committed to this problematic path. Martin Krause from the United Nations Development Programme indicated that ODA-related flows would never be enough or sufficient. Thus, countries need to catalyse domestic public and private funds as well as international private funds. He emphasised that countries need to help leverage private investment by getting policies right and create incentives and an enabling environment for investors. He also mentioned the importance of bringing climate finance into national budgets.
Moreover, it appears that the EU will not commit to further public funding.
As pointed out by Martin Khor from the South Centre "Many are worried it (the GCF) will be a rather empty structure at first, as funding from developed countries is getting scarcer with the impending economic recession." So even if developing countries’ plans were founded on the basis of sustainable development, it is doubtful that these plans would get funded.
Climate change is a global problem, which requires global solutions. Governments need to face up to the apocalyptic impact of climate change, move away from a predominant dependence on market mechanisms and promote shifts in global economic policy making that dismantle unsustainable consumption and production patterns as well as growing inequalities.
The main concern of climate justice activists at COP17 is that climate solutions are increasingly being based on market mechanisms while legal frameworks, especially multi-lateral legal frameworks, are being diminished in this round of negotiations, creating huge new challenges and obstacles for protecting people’s rights.
We need to be clear about this. If legal frameworks are watered down, then people’s rights will be far more difficult to protect. Human rights are being systematically erased from the climate change agenda.