Much work has been – and is currently being – put into agreeing on the format of the much anticipated Green Climate Fund (GCF), a facility that would funnel public and private money to tackle both climate change mitigation and adaptation in developing countries. As mentioned in previous articles, the control of the funds (i.e. the precise mechanisms through which funds would be allocated) has been the subject of heated debates.
While an agreement on the format seems like the least one can expect from the intense negotiations at Durban, the actual funding of the fund is less straight-forward. Cash-strapped nations, and most notably those vulnerable to political pressure, are keen on calling on the private sector for investments. However, the funding ofadaptation measures is of less appeal to the private sector than climate change mitigation ones, since they consist mainly of defensive expenditures (that is, expenditures that do not create conventional economic return on investment, but creates value through hedging nations, populations and environments from potential losses). It is unavoidable that the public sector has to chip in if necessary sums of money are to be leveraged.
Another difficulty that adaptation faces as an issue at Durban is the heavy attention that mitigation receives. In the words of one negotiator cited in IISD’s Daily Coverage (Dec. 5th edition), “it’s time we start discussing adaptation”, as opposed to focusing almost exclusively on ways to reduce GHGs. While the two issues are not formally linked to each other in the UNFCCC arena, commitments on either issue are effectively used as bargaining chips by both developing and developed countries.
Some signs of hope came about recently, as a document circulated at the Conference mentioned the potential contribution to the Green Climate Fund of an international levy on bunker fuels used by be shipping industry. Thanks to the leadership of the International Chamber of Shipping (ICS), the shipping industry is reportedly “broadly supportive of such a scheme as long as it is applie[s] globally”. The contribution of the sector could be significant, providing the GCF with something near 10% of its $100b by 2020 objective.
Will other governments step in at this early stage to promise funding or wait for the precise GCF (fund control) mechanism to be agreed on? Will opening on mitigation efforts by developing nations constitute a big enough “carrot” for the developed nations to loosen up their wallets? As prior mentioned in this publication and elsewhere, the UNFCCC’s is a process where nothing is agreed on until everything is agreed on. The shipping industry’s recent move, however, has operated a breach in the catch-22 of the negotiations on adaptation funding. The end of the week will tell if this will have helped catalyzing international public investments in adaptation and thus provide some wind for the adaptation funding ship to sail at last.