Its not about money

I pledge 0.2% of my personal GDP if you can identify which section this text is from: “Identify ways and means of providing new and additional financial resources, to developing countries, for environmentally sound development programs and projects in accordance with national development objectives, priorities and plans…” Well, this text was drafted twenty one years ago. A couple of years later a  set of delegates pledged $125 billion of financial assistance to the developing world for implementing sustainable development practices as identified under the Agenda 21 of the Rio Earth Summit. It’s a different story that most of that money never saw the light of the day.

But history, as they say, repeats itself. Climate change is apparently not as grave a threat as unsustainable development, so in Copenhagen the rich nations pledged only $100 bn/year. Kevin has written about the inadequacy of this amount here. I suggest do not even try to compare the climate panacea with the bailouts of US, EU, Ireland or even Iceland– it’s a depressing picture.

Earlier this year the Secretary-General of the United Nations established a High-level Advisory Group on Climate Change Financing (AGF) to identify the sources of mobilizing these “challenging” levels of finance. The co-chairs, Meles Zenawi, the PM of Ethiopia and Jens Stoltenberg the PM of Norway, presented the AGF report in Cancun today. The report – that has some high profile authors like Lawrence Summers, George Soros, Nicholas Stern, Zhu Guangyao, Chris Huhne, Montek Singh Ahluwalia and others – unfortunately raises more questions than answers. The major sources of $100 bn/year are carbon taxes and markets, maritime tax, aviation tax, financial transaction tax and private sector finance. Majority of the revenue flows are driven by an assumed carbon price of $20-$25/ton-C, which is not just far removed from the current levels but highly unpredictable in future given that the price for carbon is dependent on the demand for carbon and in the absence of any legally binding emission reduction targets – where is the demand?
Dominance of non-budgetary flows strengthens the suspicion that the developed countries are shirking away from even their voluntary committed financial pledges. When questioned on this by Malik Amin Aslam Khan from Pakistan, the PM of Ethiopia, justified the futility of it all by saying that, “I come from a developing country and do not trust the developed country governments to have the interests of developing countries in their mind everyday… and so budgetary allocations are even more unpredictable then private finance.” What was left unsaid was the fact that “innovative” international taxation like maritime, financial etc will have significant incidence on the developing world as well. Surely there is a difference between providing grants and passing the buck! Moreover the delivery of finance is left to the highly venerable MDBs which are deeply distrusted by developing countries and are a contentious issue in the ongoing negotiations.
In a parallel session, the World Bank launched their version 2.0 of carbon markets as “Partnership for Market Readiness.” The Australian representative on the panel announced, amidst great audience applause, their “pledge” of A$10 million for the partnership followed by the US representative topping it up with a staggering $5 million pledge. It was a gala affair with much cheering followed by a small celebration featuring exquisite looking tapas and wine. Sadly I did not have the guts for the freebies they doled out and instead I am left ruminating on the ominous words of H.E. Meles Zenawi the Prime Minister of the Federal Democratic Republic of Ethiopia, “We poor countries do not have the luxury of time, we should accept a good enough solution.There has not been and will not be any perfect justice here.”

Sameer Kwatra