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Confronting Climate Change Update 
December 6, 2012

Despite climate news that is seemingly more dire each day and increasingly urgent calls for action, expectations are discouragingly low for the UN climate talks now underway in Doha, Qatar. A recent report from the  International Energy Agency warns that time is running out to hold global average temperature increases below 2 degrees Celsius, widely believed to be a possible tipping point beyond which runaway heating could destroy ecosystems and threaten civilization itself. Three big, new peer-reviewed climate studies published last week reaffirm the evidence.  And a new report from the World Bank describes in frightening detail what an average increase of 4 degrees Celsius would mean for development.  

These trends make the provision of climate finance to developing countries more important than ever. We offer an update on the Climate Investment Funds, the world’s largest climate finance entity, and the Green Climate Fund, the new kid on the block, now in the process of setting up shop in South Korea.

A new CGD book, Greenprint and accompanying video propose a fresh grand bargain as the basis for climate cooperation. Lastly, there are intriguing stirrings of interest in a carbon pollution tax that could cut emissions, stimulate development of clean renewables, and help to reduce the US deficit.




Michele de Nevers

Fossil Fuel Subsidies Up 30 Percent to $532 Billion

The International Energy Agency’s 2012 World Energy Outlook, released in November, argues that energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits. But it also warns that with current policies fossil fuels will remain dominant in the global energy mix, supported by subsidies that in 2011 jumped almost 30 percent to $523 billion, due mostly to increases in the Middle East and North Africa. The report projects that the United States will overtake Saudi Arabia and Russia as the world’s top producer of oil and natural gas by 2017. It warns that no more than one-third of already proven fossil fuel reserves can be used by 2050 if temperature increases are to be held below 2 °Celsius. 

Turn Down the Heat, Pleads World Bank

A new World Bank report warns that the extreme climate change likely if current practices persist will have huge consequences for development and will hit hardest at the poor and vulnerable. The report, Turn Down the Heat: Why a 4°C Warmer World Must be Avoided, warns that a world with an average increase of 4°Celsius would experience extreme heat-waves, declining global food stocks, loss of ecosystems and biodiversity, and life-threatening sea level rise. “Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today,” said World Bank president Jim Kim. “Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.”

Learning from $7 Billion in Finance from Climate Investment Funds

The Climate Investment Funds (CIF) 2012 Partnership Forum, co-hosted by the CIF and the European Bank for Reconstruction and Development (EBRD), took place on November 6-7 in Istanbul. CIF financing is channeled to countries through the public and private arms of five Multilateral Development Banks (MDBs), including the World Bank, EBRD, the African Development Bank, the Asian Development Bank, and the Inter-American Development Bank.  The Funds have raised $7.2 billion from 14 donors, and programmed more than $6 billion for 48 developing countries and more than 200 projects.

The CIF Partnership Forum attracted more than 400 people to learn from the experience of the largest global climate finance program, including representatives of donor and recipient countries, MDBs, UN and UN agencies, Global Environment Facility (GEF), UNFCCC, the Adaptation Fund, bilateral development agencies, NGOs, indigenous peoples, private sector entities, and scientific and technical experts.  The Partnership Forum was preceded by meetings of the two CIF decision-making bodies, the Trust Fund Committees and Sub-Committees of the Clean Technology Fund and the Strategic Climate Fund.  Together they allocated an additional $500 million for climate and disaster resilience, REDD+, and clean technologies. The sums are but a fraction of the finance that experts believe is necessary to address emissions reductions and climate change coping needs.

New Kid on the Block: Green Climate Fund

South Korea was selected in October as the headquarters for the Green Climate Fund (GCF). The fund is one of the mechanisms expected to channel to developing nations the $100 billion in annual climate finance that participants in the 2010 Copenhagen climate summit agreed to mobilize by 2020.  The GCF will be headquartered in Songdo, Incheon City, a satellite city near Seoul.

 

To learn more about the GCF, on October 14, 2012, CGD hosted a roundtable discussion with Ambassador Boonam Shin, the Republic of Korea’s ambassador-at-large for green growth, and Darius Nassiry, head of international cooperation at the Global Green Growth Institute, also based in South Korea. Ambassador Shin shared his thoughts for the GCF and expressed hopes that it will evolve into a major international financial institution that, like the World Bank, leverages its balance sheet to provide resources many times its paid-in capital.

Greenprint: A New Approach to Cooperation on Climate Change

In their forthcoming book, Greenprint, Aaditya Mattoo of the World Bank and Arvind Subramanian of CGD present a radically sensible approach to cooperation on climate change. The proposed new grand bargain requires a new way of thinking about the challenges ahead and how to meet them. They propose that leading emerging nations challenge developed countries to put in place policies that would raise the price of carbon high enough to catalyze a technology revolution for low carbon energy and mobility.  In exchange emerging nations would commit to funding technology transfer and in future reducing their own emissions.  You can get a quick preview by watching this video, or read the overview chapter.

Carbon Taxes: An Alternative Solution for the Fiscal Cliff?

In Washington, increasingly pre-occupied with negotiations on averting an end-of-year fiscal cliff (mandatory steep tax increases and spending cuts), there is small but growing interest in taxing “bads” (e.g. things people want less of, like carbon pollution) instead of raising taxes on “goods” (e.g. things people want more of, like jobs and income).  Despite a massive fossil fuel lobbing effort to keep climate change in general and carbon taxes in particular out of public debate, an odd bedfellows coalition is forming in support of the idea.