G20 Summit Brief 2009 Climate Change Pittsburgh Web

G20 Summit Policy Brief

September 2009

The G20 and Climate Change For more information, please contact: Vanessa Dick Senior Legislative Associate for International Development InterAction [email protected] Janet Redman Co-Director Sustainable Energy and Economy Network [email protected]

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olutions to the global economic and financial crisis must include plans to respond to the impacts that climate change is having and will continue to have on the global economy. Every nation is facing a future in which fluctuations in climatic patterns will be unpredictable and erratic. Impacts will be felt first and worst in the developing world, striking at the very livelihoods of poor and vulnerable communities; the same communities that continue to have the least capacity to cope. In the Bali Action Plan, developed and developing countries recognize finance as a key component to any successful and equitable international climate treaty in Copenhagen. InterAction strongly supports the progress that has been made thus far and applauds the U.S. government for actively reengaging in the UN international climate change negotiations. Within the context of the G20, finance ministers have the opportunity to dismantle the log jam that is preventing progress in the UNFCCC process and signify strong commitments for moving forward to Copenhagen. We strongly urge finance ministers at the G20 to consider the following: 1. Developed country finance ministers should use the G20 as an opportunity to take ambitious steps forward in fulfilling their responsibility to provide new, additional, predictable and adequate financial resources for adaptation, enhanced mitigation actions, technology sharing, and capacity building in developing countries. 2. Finance ministers should make concrete calls for climate finance by endorsing viable sources of funds. 3. Decisions about the institutional arrangements should be decided in the UNFCCC process where all parties are represented. However, when approaching these discussions, finance mechanisms must respect basic equity principles. 4. Finance Ministers should use the G20 to take advantage of broad public consensus on the need to make public money available for financing near-term climate action.

Recommendations

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1. Developed country finance ministers should use the G20 as an opportunity to take ambitious steps forward in fulfilling their responsibility to provide new, additional, predictable and adequate financial resources for adaptation, enhanced mitigation actions, technology sharing, and capacity building in developing countries. • Finance essential to a deal in Copenhagen: An agreement by the G20 countries to an overall financing target will demonstrate their commitment to shared financing of global climate goals, and will help open the door to negotiating details of adaptation planning and enhanced mitigation actions under the UNFCCC.

• Scale: To effectively support and enhance developing countries efforts on adaptation and mitigation, the world will need to mobilize public funding for developing country actions at the scale of at least US$ 150 billion per year by 2020.1 This figure, based on conservative estimates, represents the minimum resources required to meet the developed country obligations for support to developing countries for mitigation and adaptation measures. Nicholas Stern estimates that by 2050 two percent of global GDP (about $1.08 trillion) will be needed per year to hold greenhouse gas emissions below 500 ppm carbon dioxide equivalent, already above the 450 ppm threshold.2 The UNFCCC has put the incremental price tag of moving to a low carbon economy at $200 billion to $210 billion above today’s investments in greenhouse gas mitigation per year –about half of that will be needed in developing countries.3 The UNDP calls for another $86 billion each year to help communities in the developing world deal with the impacts of global warming that is already “locked-in.”4 • Prioritize public finance: Public finance should be at the center of support packages that help developing countries meet public policy objectives for adaptation and mitigation efforts and the distribution of related public goods and services. Moreover, public finance is critical for providing the incentives that are required for strategic investments that will have long-terms returns, like innovative clean energy and 1 The figure is dependent upon the scale of reductions achieved as well as the prices of goods, so it requires constant revision in light of new science, relevant studies, and improved policy frameworks. 2 Juliette Jowit and Patrick Wintour, “Cost of tackling global climate change has doubled, warns Stern,” The Guardian, June 26, 2008. See: http://www.guardian.co.uk/environment/2008/jun/26/climatechange. scienceofclimatechange. Stern’s 2006 cost estimates pertain to atmospheric levels equivalent to carbon dioxide (CO2) concentrations of 450 to 550 parts per million. Stern’s 2008 revision of this estimate refers to 500ppm. This level of CO2 is significantly higher than the 350 ppm target that NASA scientist James Hansen says we need to stay below to avoid catastrophic global warming. (Remember This: 350 Parts Per Million, Bill McKibben, WashingtonPost.com, December 28, 2007. Available at http://www.washingtonpost.com/wp-dyn/content/ article/2007/12/27/AR2007122701942.html) 3 The United Nations Framework Convention on Climate Change, “Investment & Financial Plans to Address Climate Change, Executive Summary.” See: http://unfccc.int/files/cooperation_and_support/ financial_mechanism/application/pdf/executive_summary.pdf The World Bank estimates the gap in annual financing for transitioning to low-carbon development trajectories in developing countries is $100 billion annually. WWF. July 2008. New finance for climate change and the environment. p29. http://assets.panda.org/downloads/ifa_report. pdf 4 UNDP. May 2008. Scaling up International Efforts to Meet the Climate Change Challenge. http://www.mfa.gr/softlib/Gklemarek. pps#1770,7,Financing Climate Change

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adaptation technologies, and that may be considered too risky for private investors. In addition, it may be required to stabilize the private sector in times of crisis, as the current financial crisis has demonstrated. 2. Finance ministers should make concrete calls for climate finance by endorsing viable sources of funds. At the G20, finance ministers should support the following options, which if implemented together have the potential to mobilize predictable public resources at the scale needed, $150 billion annually, starting 2020: • Auctioning Emission Allowances:  Revenue could be raised through an international auction of developed country emissions allowances under a post-2012 climate regime and/or national climate protection instruments in developed countries and channelled to a multilateral fund, or used to purchase international allowances. • International Aviation and Shipping Mechanisms:  These mechanisms could generate finance from developed countries that could be connected by an international body, while reducing greenhouse gas emissions from aviation and shipping sectors at the same time.  • International Assessments or Dues: The UNFCCC could require dues over and above Overseas Development Assistance from developed countries that could be raised through bonds, compliance fines or other means of fund generation. Additional innovative sources of climate finance that curb greenhouse gas emissions and economic instability include: • Financial Transaction Tax:  This proposal would place a small levy on international financial transactions such as currency transactions.  This could be passed unilaterally by developed country legislatures, and national governments would then participate in the international cooperation necessary to enact multilateral enforcement procedures through the UNFCCC or other multilateral body.  • Fossil Fuel Subsidy Shift: The Kyoto Protocol and subsequent decisions of the Parties already call on developed member countries to reduce fossil fuel subsidies as a matter of priority. The more than $67 billion in production subsidies annually given by Annex 1 countries to the oil and coal industries could be used to support adaptation and clean energy.

Subsidy shifts are supported by environmental and development groups, and communities impacted by extractive industries.

• Country ownership: maximize national, sub-national and community level buy-in in order to facilitate overall effectiveness.

3. Decisions about the institutional arrangements should be decided in the UNFCCC process where all parties are represented. However, when approaching these discussions, finance mechanisms must respect to the following principles:

• Subsidiary decisions: should be made by bodies at the most local level with appropriate competence. 

• Inclusiveness:  participatory policy and program planning, equitable representation, and meaningful engagement of civil society and climate impacted peoples in all stages of activities

4. Finance Ministers should use the G20 to take advantage of broad public consensus on the need to make public money available for financing near-term climate action. G20 countries can build political goodwill by presenting concrete plans for pre-2012 finance outside the narrow window of market instruments.

• Rights protection: including those enshrined in UN declarations on universal human rights, indigenous rights, territorial rights and customary use

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