WWF Climate & Energy Blog

 

By Leia Achampong, Climate & Energy Assistant at WWF European Policy Office

What’s #MyClimateAsk for COP21? It’s for governments to up-scale climate finance, and to recognise and affirm the need for inter and intra -generational equality.

Mitigating climate change by transitioning to zero-carbon societies that rely on renewable energies, coupled with energy-efficiency initiatives, and adapting to the impacts of climate change (droughts>>deplenished crop yields; floods>>soil erosion) are hard truths for many countries now, and will be a necessity for all states in the future.

Two mutually-reinforcing goals standout as core necessities for this transition; 1) a reduction in greenhouse gas concentrations to keep global temperatures between 1.5°C (ideal maximum temperature) and 2°C; and 2) financial contributions. In addition, climate finance must enshrine the 1.5°C/2°C target, in that it should be used for zero-carbon projects that aim to cut and keep emissions below 1.5°C. To this end, both public and private sectors should be working to scale-down high-carbon finance, and scale-up predictable and quality, climate-friendly and climate-proof finance; with streams for adaptation and mitigation (including REDD+ forestry projects and Loss & Damage).

Vulnerable countries and communities who need these finances to adapt to climate impacts, achieve emissions reductions, and fund any losses due to climate change damages, are often the poorest with few domestic resources, and little opportunity to attract investment for mitigation or other critical actions. By providing assistance to adapt to, and mitigate against climate change, vulnerable countries can build up resilience against impacts for which they are the least responsible. As it stands, current climate financed projects are not overly inclusiveness of developing countries’ own private sectors. Strengthening developing countries’ domestic industries within zero-carbon sectors is vital, and will create the space for enhanced use of domestic resources for climate resilience, and individual sustainable national development.

Finance is much larger than just developed countries and those in a ‘’position to do so’’ (Potodoso) contributing finance, it is additionally about providing the means for a transition to a zero-carbon economy, truly climate-proofing investments, and shifting financial flows away from fossil fuel investments and towards building resilient societies. Paris provides the opportune moment to make the decarbonisation era a reality and to stimulate the necessary adjustments that are needed within the private sector. Hence it is an investment in a new zero-carbon society and about societal reform.

At the very least, the Paris agreement must close the finance gap between 2015 and 2020, by reinforcing the commitment for states to fulfil the $100Bn per year by 2020 goal, formally agreed in Cancun. Research by the Climate Policy Initiative (CPI) shows that developed countries have reached approximately one third of this goal, leaving a gap of about $70Bn per year to fill. Increasingly, developed countries have called for the goal to not be solely fulfilled with public resources. Thus the quest for new sources of public finance continues.

New (or rather previously proposed but shelved) sources of finance are resurfacing in 2015. Notably for Europe the ones most mooted are a financial transaction tax (FTT) which should be operationalised as soon as possible ahead of Paris and allocations from the revenues earmarked for climate action domestically and internationally; shifting the trillions from fossil fuel subsidies towards renewable energy and energy efficiency projects; and utilising the current legislative revisions of the EU Emissions Trading System (EU ETS) to ensure that auctioned EU-ETS revenues go towards climate finance; specifically 50% to domestic climate finance, with a further 50% going to international climate finance. To guarantee a stable source of income from auctioned ETS revenues, a robust carbon price must be a part of outcomes from the review. In sum it all draws a striking picture of available options, which the EU must use to action a road map and an implementation plan towards predictable finance to 2020 and beyond.

However, climate finance cannot only be an exercise in fundraising. It must be bolstered with criteria on additionality rules to prevent fungibility – any contributions must be truly additional public funds to ensure resources are not diverted from existing and waning ODA budgets; include a mechanism on scaling-up public finance; provide transparent and reliable pre-2020 and post-2020 finance strategies; a sound roadmap outlining how finance targets will and can be met including innovative financial mechanisms; a clear definition on which finance streams will be used, strict criteria on private, bilateral, and multilateral streams, and on which projects can be funded (ideally zero-carbon, not low-emitting); as well as monitoring, reporting, and verification criteria; all to establish accountability, transparency, and to avoid double-counting.

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