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May 2, 2013
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The need to reduce greenhouse gas emissions that cause climate change is agreed but progress in actually reducing them remains slow. There’s good news that the IMF is focusing on cutting fossil fuel subsidies. Despite the US’s own limited and messy policy framework, it continues to try to coordinate major emitting countries to cut emissions. In climate finance, the US continues to push for a major role for private finance to meet the 2020 target of mobilizing $100 billion to finance climate actions in developing countries, the Climate Investment Funds have shown good results in mobilizing private finance, and the Green Climate Fund made progress toward becoming operational at its latest board meeting.
Michele de Nevers
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The Challenge of Reducing GHG Emissions Sharply and Soon
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A new study in Science reconstructing regional and global temperatures for the past 11,300 years finds that temperatures are shooting through the roof faster than ever. Although there have been higher temperatures, the lead author of the study, Shaun Marcott of Oregon State University, says that the rate of change in the last 100 years “is much greater than anything we've seen in the whole" geologic time period, which began around 11,300 years ago.
C02 emissions since 1850 (red); exponential growth (blue); cuts to hit climate target (dashed). Source: guardian.co.uk
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Two Ideas for Reducing Emissions: Cutting Fossil Fuel Subsidies and Optimizing Renewable Energy Location
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The IMF is stepping up its game on climate change. Emissions of GHGs from fossil fuel energy sources continue to account for 57% of global emissions. A new IMF study advocates strongly for eliminating direct and indirect subsidies for fossil fuels as a way to reduce GHG emissions.
Integrating renewable energy sources into national electricity grids can challenge system reliability. A new CGD study underway in South Africa will show how well-designed deployment strategies can take advantage of natural variability in wind and solar resources across space and time to minimize costs and maximize benefits, while ensuring reliability.
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US Progress in Meeting Emissions Reduction Targets: Halting
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In our last newsletter, we noted that the US is not on target to meet its climate targets. Now the Climate Policy Initiative has released a new report, “The Policy Climate,” at a discussion at The Brookings Institution on April 15. The report describes US climate policy as lacking focus, clarity and direction, being a collection of disparate national, state and local initiatives. And while US emissions have fallen in recent years they are projected by the EIA to start climbing again.
Meanwhile, the EPA has postponed the date for releasing its ruling on emissions from existing power plants. In August 2012, the EPA revised New Source Performance Standards regulations for the oil and natural gas industry. However, the revised regulations do not address the industry's methane emissions. Emissions from drilling, including hydraulic fracturing or “fracking,” and leaks from transmission pipes totaled 225 million metric tons of carbon-dioxide equivalents during 2011, second only to power plants, so it will be important to regulate methane emissions from fracking.And some people think that new rules on hydraulic fracturing of shale gas on public lands by the Bureau of Land Management are too industry friendly.
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Some Good News in China
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During Secretary of State Kerry’s recent visit to China, the US and China signed an agreement to accelerate action to reduce greenhouse gases by advancing cooperation on technology, research, conservation, and alternative and renewable energy. The two highest GHG emitting countries will initiate a Climate Change Working Group in anticipation of the 2013 Strategic and Economic Dialogue, elevating climate change into the high-level Strategic and Economic Dialogue for the first time.
The State of California is also working closely with China to establish cap and trade markets in several provinces, as described by Brian Turner, Assistant Executive Officer of the California Air Resources Board, at a recent discussion at the Center for American Progress on the potential to link US state carbon markets with other carbon markets.
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Meanwhile, What to Do about the Climate Negotiations?
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The Major Economies Forum (MEF) on Climate and Energy met on April 11-12 in Washington. The goal was to discuss how to make progress on the climate negotiations. (Our last newsletter highlighted a proposal for a collaborative international approach to the negotiations put forth in a new CGD publication, Greenprint, by CGD Senior Fellow, Arvind Subramanian, and Aaditya Matoo, Research Manager for Trade and Integration at the World Bank.) The meeting also discussed initiatives to aid the reduction of greenhouse gas emissions, including an initiative that has been highlighted by President Obama on how to increase energy efficiency in buildings.
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On the Climate Finance Front
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On the sidelines of the MEF meeting, the US State Department organized a Ministerial Meeting on Mobilizing Climate Finance. Climate negotiators and ministers from funder countries were invited to review the landscape of climate finance (tools, barriers, institutions) and to develop a common narrative on achieving the goal of mobilizing $100 billion by 2020 and the importance of using public funds to leverage private finance in order to reach the goal.
Reiterating the focus on private finance for climate, the Treasury Department also organized an April 19 meeting at the IMF on Mobilizing Private Finance for Climate with ministers of finance and development, alongside the spring meetings of the World Bank and IMF.
A new study that I prepared for the Climate Investment Funds (CIF) shows that, like the private sector arms of the MDBs, public sector Clean Technology Fund programs managed by MDBs also have had early success in mobilizing substantial private finance for low carbon investments.
The Board of the Green Climate Fund met in Bonn from March 13-15. It decided that during an initial interim period funds would be channeled through “intermediaries and implementing entities.” It also decided to start with grants and concessional loans and to add other financial instruments at a later time. These decisions may help the GCF to jump-start its operations while it develops an array of other approaches over time.
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