Rich Nations Promise $100 Billion Per Year Aid to Poor Nations in Climate Fight

Mridul Chadha, PlanetArk 2 Jun 09;

During one of the many meetings preceding the Copenhagen round of talks scheduled to take place in December, the developed countries have tentatively agreed on a plan to collectively raise $100 billion per year in order to provide financial support to the poor and developing nations as they try to make the transition from fossil fuels to clean energy sources.

Funding for the international adaptation fund has been one of the contentious issues during the negotiations for the next climate treaty and the global recession has made it even worse with many countries showing reluctance in providing monetary support to developing and poor countries citing problems like unemployment and dropping GDP back home.

The problem is not only 'who would pay how much' but also 'who gets how much'. As far as the first issue is concerned, the European Union had pledged monetary help for the developing and poor nations but failed to reach a final decision since there were no signs of support from the United States. While the EU has its Emission Trading System, the United States is yet to start its carbon trading scheme.

The European Union which has set the boldest emission reduction goals in the world hasn't had any strong support from other developed nations; Japan has been calling for more ambitious goals on the lines of UNFCCC recommendations - 25 to 40 percent reductions by 2020 - and has also lent financial support to developing countries. However, leaders of the European Union want the United States and Australia to do much more. The EU has been pushing the two nations to kick start their emissions trading schemes.

While the United States is reluctant to put extra burden on its industries and giving most of them free emission permits, the Australian government has delayed the introduction of emissions trading system by a year due to adverse economic conditions.

There are also concerns the effectiveness of this financial aid in cutting carbon emissions. A report released by the World Bank states that even though the global emissions trading market doubled in value the actual emissions cuts reduced by a third. Which brings us to the second issue, the quality aspect of the emission reduction mechanism.

A big portion of those $100 billion would be the money given to the developing nations to protect the forests which act as a major sink of carbon dioxide. While the developed nations can claim that they have fulfilled their commitments by giving few million dollars in aid to some tropical country, it is important that to evaluate how the aid money has been utilized at the ground level. Very few countries, if any, have clear policies regarding the deforestation and utilization of aid money. For instance, Brazil has created a $21 billion conservation fund for the Amazon and has been inviting developed nations to donate money to the fund, however, the Brazilian government has clearly stated that the donor nations will have no say in the utilization of the aid money.

The Clean Development Mechanism has been called a failure by many experts, including those at the UN, since it is complicated and overlooks some environmental issues while giving priority to reducing carbon emissions. India, a major carbon credit selling market, wants the right to sell credits before the concerned clean energy project comes online and offsets any carbon emissions while the developed nations want to change this. Even if India feels that financial aid is essential to start clean energy projects it must agree to a mechanism through which the actual amounts of carbon emissions offset or reduced could be measured and further monetary aid could be based up on.

In addition to the developed countries, the advanced developing countries like China and India, should also do their bit in helping poor countries. They could be a part of a second-tier emission trading system (for developing countries only) where they could offset their carbon emissions voluntarily by providing technological and financial aid to African countries. China seems to have agreed to sectoral emissions reductions for its industries, investing in clean energy projects in poor countries can help it achieve some of those goals.

The new climate treaty should have provisions which are not biased in favor of a few countries. Developed nations have been hit the hardest by the economic recession and even though they will provide the bulk of the financial aid to the developing and poor countries for transition to clean energy technology, the advanced developing nations must play their part by agreeing to voluntary emission reductions and help poor nations. The UN must also ensure that the emissions trading system is not reduced to merely a business tool for industries, the actual emission cuts must be measured so that the primary goal of reducing greenhouse gas emissions could be achieved.

Reprinted with permission from Red Green and Blue