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Climate finance crossroads

Since the start of the rainy season, we have been in constant threat of floods, strong winds, and damaged crops (and yes, traffic). Improvements in existing policies, creation of new rules and regulations, better coordination within and among national agencies and local government units are among the myriad of solutions. Yet most of the time, if not every time, the talks end up being about putting money on the table.

This problem exists not only in the Philippines but in almost all developing countries that continue to struggle against a problem they are least liable for.

We have written numerous columns on the United Nations Framework Convention on Climate Change (UNFCCC), the most recent of which was an update on the international negotiations. Among the unfinished major battles in the Convention we still face is finance. As always, anything that involves money takes a long time to settle.

There is a common and agreed understanding that developed countries are the main culprits for the increased greenhouse gas emissions, and consequently of climate change. Developing countries, on the other hand, suffer due to the advancements that these developed countries are enjoying.

It is, therefore, the responsibility of developed countries to pay up and provide assistance to developing countries. This is generally and loosely termed as “climate finance” but its exact definition is still debatable.

Empty promises?

In 2009, developed countries committed to provide US$30 billion for 2010-2012, mobilize $100 billion a year by 2020 to reduce greenhouse gas emissions, and to adapt to the changing climate in developing countries.

There are diverse views as to whether or not developed countries were able to faithfully deliver $30 billion for 2010-2012. As for the $100 billion, we cannot simply assume that the money will magically appear by 2020 (neither are we assuming that no support will be received from now until then).

At first glance, $100 billion per year seems an enormous amount of money. This, however, is gravely inadequate. A number of studies estimate that the actual cost needed is twice or thrice this commited amount. Wrong investments, delayed action, misallocation of funds will simply aggravate the problem.

The World Resources Institute, an international environmental think tank, has documented and analyzed the state of international climate finance. These studies can be downloaded fromhttp://www.wri.org/topics/climate-finance and reveal the complexity of the issue.

The Work Programme on Long-term Finance (LTF) was created in view of making this $100 billion commitment a reality. It is tasked to (1) inform

developed country parties in their efforts to identify pathways for mobilizing the scaling up of climate finance to $100 billion per year by 2020 from public, private and alternative sources in the context of meaningful mitigation actions and transparency on implementation; and (2) inform parties to enhance their enabling environments and policy frameworks to facilitate the mobilization and effective deployment of climate finance in developing countries.

Simply put, the work programme on LTF lessens uncertainties and gives developing countries the assurance that they are not on their own.

Word play

As previously mentioned, there is still no agreed definition of what “climate finance” is. Even the mandate of the Work Programme must have made you scratch your head from confusion. We assure you, you are not alone. Even negotiators grapple with what it

means — most of the time, this is made on purpose.

Pathways are referred to as sources (i.e., public, private and alternative), period (e.g., commencement date, duration, milestones, replenishment cycle), and channels (e.g., institutions for collection and disbursement, intermediaries). All these determine how the $100 billion per year will be generated.

There are barriers that prevent the effective and efficient generation, deployment and collection of funds. These barriers often come in the form of public policies and financial insturments. All these determine what are the necessary structural and procedural conditions — or enabling enviroment — to mobilize and deliver the $100 billion.

Tracking of climate finance is one vital element in this whole process. By being able to create a mechanism for reporting the flow of money, developing countries can hold developed countries accountable to their commitments. Likewise, this provides developed countries the assurance that the funds are used well.

Doubts abound whether the $100 billion can be met using public funds alone. To meet this target, institutional changes must be done by developed countries.

Leveraging private sector investment and exploring “alternative sources” are suggested to meet this gap. Teased and enticed, most developed countries believe that these are indeed viable sources to address the issue of new and additional adequacy, predictability, and sustainaiblity.

In contrast, these suggestions are generally resisted by developing countries. Involving the private sector often involves debt-creating mechanisms such as loans.

No blank checks

From Tuesday until Wednesday (July 16-17), the first meeting of the Work Programme on Long-term Finance, co-chaired by the Philippine Climate Change Commissioner Naderev Sano and Swedish Finance Ministry Special Adviser Mark Storey, will be held here in Metro Manila. Delegates from various countries will come together to engage in a technical discussion away from the heavily political dialogues that happen at the UNFCCC negotiations. With that aside, we can expect a more productive meeting with favorable results.

A similar meeting of the same topics and coverage will be held in Germany next month. For proximity and economic reasons, we can expect more developing countries attending the meeting here in the Philippines.

The outcome from these meetings would be part of the components of the recommendations that the Work Programme on LTF would bring forward to the high-level ministerial meeting during the annual end of year meeting of the UNFCCC.

It is therefore crucial that all the technical matters are fleshed out before countries start removing recommendations that may otherwise be in conflict with their country’s interest.

Case studies

The upcoming meeting will also look into the experience from the 2010-2012 deployment of $30 billion. More than this, it would be a worthwhile endeavor to gather actual examples of completed or ongoing climate finance activities.

The burden is not to be fully placed upon the shoulders of developed countries. Unconditional assistance from developed countries is perhaps a dream far from happening. Truth of the matter is, most of the examples that we can bring forward to the meeting are those coming from developing countries.

Case in point is our very own People’s Survival Fund (PSF) Act, whose IRR we hope to be signed before the year ends. Among the key elements that can be drawn from here are the following:

  • Firstly, the P1 billion a year is the minimum appropriation. Better performance of supported projects may mean greater budget allocation for the succeeding year.
  • Secondly, this budget will primarily come from our own national treasury.
  • Thirdly, there is provision for direct access which mean no more approval from several institutions before disbursement.

The leadership of the Climate Change Commission, headed by the President himself and ably managed day to day by its Vice-Chair Climate Change Secretary Lucille Sering, is important to implement PSF properly.

At the Ateneo School of Government, along with our fellow members of the Aksyon Klima Pilipinas network, we are promoting the incorporation of climate change adaptation into the local development processes. Climate change activities are therefore lodged into their local budgets, thereby mainstreaming it.

By doing so, climate change is not to be seen as a separate, independent issue, but a fundamental problem that cuts across issues, and which is equally important as any other developmental issue.

This is not to say that contributions from our partners are not welcomed. It is and truly is an essential ingredient. We do not also blame developed countries for being stringent with their requirements. After all, these funds will come from their people’s pocket. The examples provided above highlight simple testimonies that we too are doing on our part. We hope that developed countries do also fulfill their responsibilities.

By: Dean Tony La Viña and Margarita Roxas, Ateneo School of Government

This article is re-posted from Rappler’s Thought Leaders.

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