International Climate Change

Posted on: 6 August 2015

Obstacles on the road to an effective legal agreement in Paris – Part Three

Posted by: Frances Lawson

With the submission of Parties’ mitigation commitments gathering pace, the obstacles to an effective legal agreement at the 21st Conference of the Parties are becoming ever clearer. Below is the third of a selection of the most contentious issues that remain to be resolved if the new agreement is to be credible and effective.

Finance

As highlighted in the previous post, the developed/developing country divide is so hotly contested in large part because of the financial implications that accompany it. In simple terms, developed countries are the donors under the UNFCCC regime, whilst developing countries are the recipients. Consequently, a vast proportion of negotiating time is occupied by discussions over how much “climate finance” developed country Parties will commit to providing those in the “developing country” bracket.

The stumbling block is even greater because some developing country Parties have made their mitigation and adaptation commitments contingent upon receipt of sufficient climate finance. Morocco, for example, states in its INDC that its mitigation commitment is contingent upon the country gaining access to new sources of finance, whilst Ethiopia hinges its pledges upon getting international support. Kenya alone estimates its financing needs to 2030 as US$40 billion. With developing countries outnumbering developed country Parties by 3-1, meeting the former’s cumulative financial demands, particularly at a time of widespread austerity, is more than difficult.

An indication of the scale of the challenge is the existing commitments on finance. In 2009 at COP15 in Copenhagen, developed country Parties pledged to provide US$100 billion per year in climate finance from 2020. The fulfilment of that pledge remains uncertain, yet the COP21 negotiations are characterised by demands for funds to be provided over and above what has already been promised. China, for example, is calling for quantified financial targets, with the level of funding increasing year-on-year, and a roadmap to indicate how the quantified targets will be met. The Moroccan Government, which will take over presidency of the Conference of the Parties (COP) after the Paris conference, has also made climate finance one of its key priorities. ‘We’re willing to participate, but you’re going to have to pay for it’ is a message underlying a sizeable portion of the developing country voice around the negotiating table.

The finance debate is not without some convergence. It is beyond contention that developed countries, both as part of their historic responsibility for climate change and for reasons of equity and fairness, have financial obligations towards developing country Parties. Rather, the issues are twofold: first, which developing country Parties should be the recipients of climate finance. Providing funds to support a clean development pathway and adaptation measures are uncontroversial when those funds are destined for the Least Developed Countries (LDCs) and small island states which are particularly vulnerable to climate change impacts. Meeting demands for finance from far wealthier developing countries – China, India, Brazil, South Africa and even Morocco – is more complicated. Given the decision of the UK Government a few years ago to cease overseas aid to India due to its increased affluence, the latter’s demands for climate finance – arguably indistinguishable in essence from “overseas aid” are problematic, both from a practical and from a principled standpoint. At what point does a developing country cease to be entitled to climate finance from developed country Parties is an interesting question that would add clarity and legal certainty to the Paris Agreement, but which is unlikely to feature therein.

The second issue is just how much finance can, and should, be provided. Given the challenge for the developed country Parties of finding US$100 billion per year from 2020, developing country demands for financing significantly in excess of that amount are both politically unpalatable and almost impossible to meet. Hence the focus of developed country Parties on identifying “new and innovative” sources of finance, code for private sector involvement. Nevertheless, China in its INDC has specified that most of the annual $100 billion should come from the public sector, so even diversifying the sources of finance looks to be divisive.

A linked concern is that climate finance needs could increase exponentially. An issue which is thorny in 2015 could plausibly become toxic in negotiations to come. This is particularly so because the longer it takes to get global warming under control, the greater climate impacts will be. As adaptation needs increase, so do the associated costs and therefore the financing requirements. The international community may well be faced with a heavier tab in the future for its reticence to risk prejudicing ‘the economy’ now.

COP21 looks set, therefore, to involve a great deal of argument over how much money developed country Parties will commit to providing, when, to whom and by what means. The figures and timescales will probably be left out of the Agreement to be fought over another day, along with detailed plans for transparent accounting and effective monitoring to ensure that the funds are fully deployed in effective climate change mitigation and adaptation. With finance occupying an ever-greater place in the negotiations, there is also a danger of the UNFCCC becoming the new ‘gravy train’ – a means for developing countries to secure additional funds rather than primarily as a vehicle to safeguard global ecological integrity. From a legal perspective, meanwhile, the importance of finance to the fulfilment of the Convention means that part of the Agreement will require particularly careful wording, and effective means of implementation. So much of the international community’s commitments, and their efficacy, will stand or fall on the extent to which the monetary aspect thereof is drafted in Paris.

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