What’s up in Cancun and what’s the deal for Africa?

From 29^th November to 10^th December, the 16^th Conference of Parties (COP16) to the U.N. Framework Convention on Climate Change (UNFCC) convenes in Cancún, Mexico to follow up on last year's summit in Copenhagen, where word leaders failed to negotiate an international, legally-binding treaty to curb harmful emissions of greenhouse gases.

There are low expectations for successful negotiations in Cancun. This is because people have lost faith in not only the ability for a political agreement and consensus to be made, but also in the process. And on Tuesday (30 November 2010), UNEP released a report that concluded those reductions committed to in the Copenhagen Accord, even if fully met, are only 60 percent of the reductions needed to stop prevent global temperatures from rising by more than two degrees Celsius above preindustrial levels – the point considered to be the threshold for catastrophic climate change which will expose millions to drought, hunger and flooding.

So even if an agreement is made at the end of Cancun, the commitments within it will prevent some of the worse case climate change scenarios playing out, especially since from day one of the negotiations, Japan stated that it explicitly will not have anything to do with a post 2012 Kyoto Agreement.

So where does this leave Africa? Ironically, the lack of trust in attaining a political agreement has shifted discussions to issues more relevant to Africa, specifically on finance, forestry, technology transfer and adaptation in general.

Scientists agree that the best starting point for adaptation is to be rich, though it is not foolproof: not even the rich can buy off all hazards. But wealth buys information and it opens up options. Resources help people adapt both before the fact, by reducing risks, and after it, by aiding recovery from harm. Wealth can create hedges against the effects of climate change. It is wealth that Africa, compared to the rest of the world is short of.

Fortunately, a key pillar of the Cancun negotiations is the establishment of a Green Climate Fund, which was agreed upon in Copenhagen – disbursing $30 billion in 2010 to 2012, and then $100 billion each year after that until 2020. Multilateral funds have been established before so it’s not as if the Green Climate Fund is charting new territory. However, the political sensitivities and the criteria countries will have to meet to access these funds are looking onerous.

If African countries want a piece of this pie, they will have to focus seriously on governance, transparency, monitoring and valuating their carbon emissions and sinks - a tough job for any country. It would seem that many African countries will need funding to build this capacity in the first place. All of this is feasible, but African countries need to now use these conferences and meetings to gather information, exchange knowledge, learn and build their expertise from the participants and get everything in place so that they are an attractive destination for new climate and development specific funds.

For more information on climate finance and to check out the flows and channels, visit the new platform created by the World Bank and UNDP to track climate-change related finance by region, focus area, sector or financing mechanism: http://www.climatefinanceoptions.org/cfo/index.php. And to be ahead of the games for the climate change negotiations in Durban, South Africa, the official COP17 website was just launched: http://www.cop17durban.com/Pages/default.aspx

Climate finance after Copenhagen

Calculating the real cost of climate is a highly complex and contentious affair. It is undeniable that we need to fundamentally transform our economies to get on the path of low-carbon growth, especially by reducing energy consumption and reliance on fossil fuel and halt deforestation as one of the biggest single contributors to climate change. We also need to adapt our way of life to the unavoidable effects of climate change such as changing rainfall patterns, extreme weather events and rising sea levels. While it remains difficult to calculate the costs of the required action on such a massive scale, there is a clear urgency to make substantial funds available as soon as possible.

A variety of climate funds have already been established, most of which have a very specific purpose and relatively limited funding from donor countries. A proposal for a new approach in raising up to $100 billion a year for “Green Fund” for the transition to a low-carbon economy by the World Future Council has been taken up by the IMF. The principal idea is to raise finance through the issuance of additional Special Drawing Rights (SDRs), a reserve asset created by the IMF. The creation of “new money” by issuing new SDRs should not cause inflation if the funds are productively invested into renewable energy.

Africa has long been demanding significantly increased climate funding as the continent most affected by and least responsible for climate change. The official Proposal by the African Group in Copenhagen demanded the establishment of a new adaptation fund to finance the full costs of adaptation activities and the related transfer of technology sharing and capacity building in developing countries, with sources of funding be new, substantial and sustained public funding from developed countries, with an annual scale not less than 2.5 % of the GNP of developed countries. The hopes for such significant funding were shattered together with many other aspirations for the Copenhagen conference but at least some commitment was made in the Copenhagen Accord with regard to climate finance:

“Scaled up, new and additional, predictable and adequate funding as well as improved access shall be provided to developing countries, in accordance with the relevant provisions of the Convention, to enable and support enhanced action on mitigation, including substantial finance to reduce emissions from deforestation and forest degradation (REDD-plus), adaptation, technology development and transfer and capacity-building, for enhanced implementation of the Convention. The collective commitment by developed countries is to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010-2012 with balanced allocation between adaptation and mitigation. Funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa. In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries. This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries. A significant portion of such funding should flow through the Copenhagen Green Climate Fund.

To this end, a High Level Panel will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, towards meeting this goal.”

While the Ethiopian Prime Minister Meles Zenawi was criticised by many for his willingness to compromise and settle for less adaptation funding than requested, the fact that there now is such as fund can partly be attributed the to Joint appeal of France and Ethiopia from 15 December. Meles is now a member of the high-level panel for the Green Climate Fund which has a formidable task ahead in addressing the following key issues:

1. Out of the USD 10 billion committed, how much is new and additional money, i.e., not a diversion of Official Development Assistance (ODA) or previously committed funding to deforestation by countries such as Norway or low-carbon growth by countries such as the UK? And if it is not “new money”, how should additional commitments be measure without penalising countries for their commitments earlier on?

2. What will be the mix of public and private, bilateral and multilateral, including alternative sources of finance for the fund and will the funds be dispersed as grants or loans?

3. Which financial institution will allow fulfilling the long-standing demand by developing countries to have balanced representation in the administration of the fund in addition to figures such as Meles already taking prominent positions?

4. What will the money be spent on? Just deforestation and forest degradation, adaptation, technology development and transfer and capacity-building as outlined in the accord or other measures such as finalizing national low-carbon growth and adaptation plans, improving in-country capacity to design and implementing national climate change actions as proposed by the UK, Mexico, Norway and Australia?

5. And last but not least, how will Africa build its capacity to be able to absorb and us additional climate funding after 2012, especially if it comes anywhere near the USD 67 billion for adaptation and USD 200 billion for mitigation as requested in the run-up to Copenhagen?

Despite all the shortcomings of Copenhagen, the rather timid initial financial commitments together with the prospect of something more substantial might provide a good opportunity to address these questions and make climate finance work for Africa

Outcomes from Copenhagen - No legally binding deal but a Copenhagen Accord of vague commitments

Climate change talks at Copenhagen ended last Friday, 18 December, without a legally binding protocol.

An agreement was brokered by the US and China, backing scientists' call to limit global warming to within 2 degrees centigrade against pre-industrial levels. But it contains no improved targets on greenhouse gas emissions from rich nations, does not commit anyone to a legally binding cuts and is not endorsed by the United Nations which needs a consensus from all countries to be enforced.

While it was endorsed by other big players such as the European Union, India and South Africa, the so-called Copenhagen Accord was rejected by smaller UN members such as Sudan, which during the conference acted as the chair of the G77 group of developing nations.

As part of the accord, rich nations agreed to quantify the amount of aid they were willing to give to poor nations to help them reduce their emissions and cope with the consequences of climate change.

Immediate, 'fast-start' aid was quantified at $30 billion over the next three years, with the EU and Japan pledging around $11 billion each, and the US offering $3.6 billion. Rich nations also set themselves the goal of 'mobilizing $100 billion a year by 2020 to address the needs of developing nations'.

One of the most controversial issues standing in the way of a legally binding deal between the US and China - which together account for about 40 percent of global emissions - hinged on the question of how much right third countries should have to inspect each other's greenhouse-gas emission claims.

While Obama had called for 'transparency' in the way emission targets should be monitored and reported, China strongly opposed any international exercise that would infringe on its national sovereignty.

The full significance of the deal will not be known until well into next year. Countries are supposed to fill in details of planned cuts in greenhouse gas emissions, left blank in the accord, by the end of next month. The UN is to follow with more talks towards a legally binding global treaty.