ECO Newsletter

In recent years, ECO has observed, with concern, the negotiations on the future of the Adaptation Fund (AF) in the post-2020 agreement.

Among all of the financial mechanisms under the Convention, the AF has made unique progress. The AF plays an important role in the climate finance landscape by providing funding for small-scale adaptation projects. It now has a portfolio of 50 such projects, enabled especially through its direct access modality. Furthermore, the AF has successfully accredited 20 national implementing entities (NIEs) and helped build local capacity. The AF’s wings should not be clipped.

Unfortunately, the Co-Chairs’ earlier draft text did not recognise these achievements, and failed to paint a clear picture of the AF in the future finance architecture. Thanks to the last surgical insertions, the new version contains a good proposal featuring the AF as a key instrument of the Financial Mechanism.

ECO feels warm and fuzzy about the proposal by the African Group. Currently, adaptation finance is in crisis. Any enhanced action on adaptation requires contributions of all funds, particularly the AF. The AF can help recipient countries to implement their NAPs and their INDCs. Despite the scarcity of the resources, the Fund’s board received an unprecedented 15 proposals (including the first regional programmes) at its last meeting.
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Everyone knows that real climate negotiations cannot take place in public. ECO is therefore pleased to have spent Tuesday occupying the cafeteria seats instead of delaying the rapid progress being made in the spinoff groups. At last check, we were on track to warm the seats by 3°C, enough to ensure negotiators could later sit comfortably while celebrating their work with beer and pretzels.

Monday’s negotiations progressed at a snail’s pace as unruly observers interrupted the positive flow between the Co-Chairs and Parties. Thankfully, the unanimous frustration with observers was remedied today with a single objection in the plenary. The applause and high-fiving among developed countries following Japan’s statement signalled that they spoke for us all.  Similarly righteous, but under-appreciated, the Secretariat deserves similar praise for doing what the Co-Chairs could not—they took away meeting space that civil society had reserved. One can only hope that the hotels of Bonn follow this lead.

ECO would like to remind Parties of the continual stalling role played by observers. They are notorious filibusters, unwilling to compromise, vociferously opposed to long-term commitments, and they try to undermine the principles of the Convention more frequently than wi-fi in the plenary hall cuts out. After trying the “Mango Heaven” smoothie in the cafeteria for the umpteenth time, ECO suspects the observers may have developed secret plans to profit from tropical agriculture in Antarctica.
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Earlier this month contributors showed us what a US$100 billion commitment looks like. The OECD/CPI report revealed that the commitment consists mostly of loans and private finance. In 2013, the contributions consisted of more than $20b in loans, almost $20b in private finance, equity and guarantees, and a mere $13b in grants. These numbers don’t quite add up and ECO feels that the “$100 billion” is desperately lacking the spirit of the 2009 promise—to provide new and additional money to help meet the needs of developing countries.

ECO has heard donor Parties complaining about being haunted by the spirit of the $100b, but the effort to evade the original intentions with new accounting methodologies isn’t fooling anyone. So, here is an alternative approach, one that is more in keeping with the spirit of the commitment:

• Address the adaptation finance gap: According to the report, only 16% of climate finance was for adaptation. Parties should commit to allocating at least 50% of public finance for adaptation. ECO would also encourage Parties to take action to address the gap before 2020. A public adaptation finance target for 2020 would kill two birds with one stone.

• Use innovative sources for climate finance: Alternative sources, like financial transactions taxes on bunkers or redirecting fossil fuel subsidies, could allow donor countries to contribute to climate finance without raiding their aid budgets.

ECO believes it is high time to deal with the problem that, when it comes to finance, Parties speak about two separate issues: one is the shifting, attracting and mobilising of financial flows, public or private; the other is the provision of financial support by rich countries to poor countries. They are lumped together in Article 6 because the word finance appears in both of them, and because one can nicely be used to marginalise the other. The issues are linked, and both have their role in the Paris Agreement, but ECO needs to remind everyone that they are not the same. One cannot replace the other.

The Umbrella Group’s finance proposals are about mobilising financial flows but not about committing financial support, leaving a wide finance gap. Article 6 now contains both the Umbrella Group’s proposals, and the G77’s proposals—a dramatic improvement.

ECO suspects that the Umbrella Group would have preferred the earlier version of the Article, as their “surgical insertions” re-hashed the old version instead of making the key changes  needed to improve predictability and adequacy of financial support under the Paris Agreement. Smartly, when making their insertions, the G77 stood up for their needs.

The new Article 6 now includes much of what is needed for an article whose role will be to organise financial support for adaptation, loss and damage, enhance mitigation, and to achieve the long-term goal of full decarbonisation by 2050.
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There’s one particularly valuable piece of mitigation text that got lost in the co-chairs’ pressure cleaning of the text. Namely, the text that called for full decarbonisation by 2050.

ECO urges Parties to bring it back into the first paragraph of Article 3.

Why?

Because the Paris agreement needs to be a phase-out agreement, rather than another emissions management agreement.

In light of the latest IPCC findings and the carbon budget it outlines, fossil carbon emissions must simply be phased out. And that needs to happen fast, by mid-century at the latest, if we are to have a good chance of staying below 2°C, not to mention 1.5°C.

Those who believe we have more time for the phase out, even until the end of the century, are betting on  hypothetical and highly problematic ”negative emissions”.

That’s not a plan. That’s just reckless gambling with our future.

A goal of full decarbonisation by 2050 would reflect the true urgency of the situation. It would make it increasingly difficult for businesses to justify investing in high-carbon emitting infrastructure, because the energy systems we’ll need to have in place by 2050 are being built now.

On the other hand, a long-term goal of decarbonisation by end of the century would have the opposite effect.
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Seasoned negotiators among you will recall that there was a time when Canada was not a shoe-in for the Fossil of the Year awards. While never perfect, Canada once had a reputation for punching above its weight when it came to the climate talks—a reputation that began to fracture in Nairobi, was crumbling by Bali, and a distant memory by the time Copenhagen rolled around.

Even bad things must come to an end.  In a dramatic election yesterday, Canada threw out the near-decade long rule of climate laggard Stephen Harper. Incoming Prime Minister Justin Trudeau has his work cut out for him. To be sure, his party’s election platform pushed some of the right buttons: promising to contribute Canada’s fair share to keep the world below 2°C; working with the premiers of Canada’s provinces to come up with a new INDC target and a strategy to meet it (within 90 days after Paris); phasing out fossil fuel subsidies; and investing $2bn in green infrastructure.

Sounds great, eh? Not so fast. ECO’s Ottawa correspondents report that Trudeau also talks about building new tar sands pipelines to get Canada’s dirty oil to market. It seems Trudeau is not yet the boldest when it comes to making the tough calls on Canada’s carbon bomb, the tar sands.
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ECO is eager for the discussions on Workstream 2 to start. Without a strong outcome on pre-2020 ambition, we are likely to lose any chance of keeping global warming to below 2°C, let alone 1.5°C. ECO would like to suggest a few surgical insertions for our patient to grow into a strong and healthy workstream:

• Recognise the ambition gap and the need to close it: The efforts under Workstream 2 have to be informed by a clear purpose: the urgency of closing the pre-2020 gap.

• Acknowledge the need for finance and the role of the Financial Mechanism: Like the Technology Mechanism, the Financial Mechanism should be given a role. Those environmentally, economically and socially sound opportunities identified under Workstream 2, particularly in renewable energy and energy efficiency, should receive priority support.

• Task high-level champions with matching potential and support: Appointing champions can move Workstream 2 from discussion to implementation. They need a clearer mandate to enable coalitions and to match mitigation opportunities with the necessary support.

• Criteria for initiatives: The champions and high-level dialogues will catalyse efforts, initiatives and coalitions. Criteria are needed so we can recognise those efforts that respect human rights, social safeguards, and environmental integrity.

• Review of implementation of initiatives: Once initiatives are launched, we need to ensure they deliver.

ECO joins you in being glad that Monday is behind us, dear Delegates. And that the text ended up slightly less (or should that be more?) lost and damaged than it started. The reinsertion of institutional arrangements for loss and damage can be the basis for making the mechanism fit for purpose. In addition, a provision for finance for loss and damage is essential if the Paris Agreement is to enable the most vulnerable people to deal with the worst impacts of climate change.

As Typhoon Koppu (Lando) deluges the Philippines, causing flooding and mudslides, knocking out power to nine million people, displacing 16,000 and killing 11 people, it is surely more obvious than ever that a durable climate change agreement must deal with the real and pressing issue of loss and damage, alongside scaling-up action to adapt to climate change.

ECO was saddened to hear Switzerland put brackets around the whole loss and damage article–and saddened-yet-not-suprised to hear the Umbrellas pushing for no reference to loss and damage. The EU seems to have exited themselves from the debate. EU: your celebrated “partnership” with vulnerable countries means nothing if you don’t stand with them on this critical issue! [PS: This ECO article is not entirely bracketed. Gruezi!]

Flexible mechanisms should not be so pliable that they undermine the already impoverished collective ambition of Parties. The Paris agreement needs to ensure that all Parties are decarbonising their economies and commit to the phase-in of 100% renewable energy by 2050. For this to be possible, any use of carbon markets must be supplemental to strong domestic action. This may seem obvious to most, but let ECO remind delegates that the relevant text on supplementarity is currently bracketed.

It is good to see that certain quality criteria—real emissions reductions, permanence, additionally and supplementarity—have made it into the co-chairs’ new text, in para 34 of the decision. Parties should endorse these, and to make them durable for the lifetime of the agreement, include them as principles for the use of markets  in the core legal agreement.

To make sure that market mechanism are used appropriately, ECO believes that the need to achieve a net decrease in emissions needs to be mandatory though, and not left to the whims and fancies of participating Parties. It is also imperative that any use of markets contributes to sustainable development and avoids double counting. The lack of environmental integrity of market mechanisms under the Kyoto Protocol have so far created a 11Gt “hot air” loophole.
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