G-20 leaders of the world’s major economies who are meeting this week in France will be scrambling to deal with economic emergencies rippling across Europe, rising unemployment, and stagnating economic growth. But these leaders must also take up climate change, which will become more costly the longer we wait to deal with it. They can seize on the challenge of global warming to generate economic growth and enshrine a path for environmentally sustainable development. Specifically, they should use this forum to create revenue generators for financing used for climate change adaptation and mitigation as recommended by the World Bank. And they should advance a second international climate finance period. Both of these steps would do much to ensure necessary global warming emissions reductions.
Growing greenhouse gas pollution will lead to more frequent and intense natural disasters, droughts, rising food prices, water shortages, and the devastation of natural resources that are necessary to sustain livelihoods and the global economy. Experts agree that greenhouse gas emissions must be cut in half to limit a temperature increase of 2 degrees Celsius, which is the level necessary to avoid the worst impacts of global warming.
The assembled G-20 parties asked the World Bank in April to give them a plan to pay for an adequate response to address global warming. The World Bank responded. Now the assembled parties must take these recommendations and formulate a plan to implement them.
The World Bank recommendations for scaling up climate finance that the G-20 requested expand on the report by the U.N. Secretary General’s High-Level Advisory Group on Climate Change Finance. Both reports analyze sources of climate finance and tools to leverage private finance and multilateral flows.
Finance ministers at the G-20 should turn their attention to the World Bank recommendations, which include the removal of fossil fuel subsidies, comprehensive carbon pricing, and the development of aviation and shipping-market-based mechanisms as new sources of international climate finance.
Removing fossil fuel subsidies makes economic and environmental sense. An economy dependent on dirty fossil fuels is beholden to unstable and rising dirty energy prices. Moreover, the continued extraction, production, and burning of fossil fuels adds to global warming pollution and undermines efforts to address climate change. Funds saved on ending these subsidies can be redirected toward investments in adaptation and mitigation in developing countries that will protect livelihoods and create jobs.
But while the same G-20 leaders agreed in Pittsburgh in 2009 to eliminate all subsidies for fossil fuels by 2050, there was no follow up on this plan a year later when the leaders met again in Toronto. And there has been little movement on it since. Now is a good time to revisit the proposal.
Developing a market-based mechanism for aviation and maritime bunker fuels is another recommended source of climate revenues. Charging for fossil fuels in the international aviation or maritime sector will lead to innovation in clean energy technologies and generate opportunities for economic growth and job creation. (We expand on the significance of climate aid and economic opportunities such as job creation stemming from international climate investments here.)
Strengthening carbon offset markets, leveraging private finance, and mobilizing funds either through pooled financing arrangements under major funds such as the Climate Investment Funds or capital increases for lending by major development banks are identified by the World Bank as instruments to leverage private and multilateral finance for international climate aid. G-20 finance ministers should be tasked with continuing to advance and implement these recommendations.
In addition, G-20 leaders should support another three-year international climate finance commitment period subsequent to the end of the “fast start” period in 2012. During the December 2009 United Nations Framework Convention on Climate Change conference in Copenhagen, developed countries made a commitment to $30 billion in “fast start” financing for adaptation and mitigation in developing countries from 2009 to 2012. At the UNFCCC meeting in Cancun last December, all parties also formally approved a commitment that was discussed but not formally adopted in Copenhagen to create a Green Climate Fund capable of mobilizing $100 billion annually by 2020.
And we believe other measures will need to be taken. In a Center for American Progress report last December with the Alliance for Climate Protection (including analysis by Climate Advisors and Project Catalyst), we recommend a “ramp-up” period to increase public and private investment in order to fill the gap between the end of the first fast-start commitment in 2012 and the Green Climate Fund mobilization of $100 billion annually by 2020.
The report provides new mitigation and adaptation goals sector by sector and specifies the increases in public and private investment necessary to achieve during a ramp-up period. We recommend that on top of the substantial and much greater amount of funds already being committed by developed and developing countries around the world to fight climate change, an additional $60 billion be allocated between 2013 and 2015 during a ramp-up period.
Part of our rationale is simply that it’s unreasonable to expect that the global community could move from mobilizing $10 billion a year for climate finance until 2019—and that’s under an optimistic scenario where the same level of funding was continued annually through the decade—and then suddenly jump up $90 billion in 2020 to mobilize $100 billion annually.
More importantly, our report looked at the unilateral pledges to achieve emissions reductions made in January 2010 by developed and developing countries under the Copenhagen Accord consistent with the agreement’s goal of stabilizing humanly caused temperature increase at 2 degrees Celsius. Our analysis shows that if all the pledges made by the largest carbon polluters among those parties are achieved, we will be only four gigatons away from our estimate of the total of 14 annual gigatons of reductions in greenhouse gas emissions needed by 2020 to put us on a plausible pathway to stabilizing atmospheric concentrations of CO2 and other greenhouse gases at 450 parts per million. According to the Environmental Protection Agency’s analysis of the American Power Act in June 2010, this reduction will give us a 75 percent chance of stabilizing temperature increase at 2 degrees Celsius.
But a key point is that almost half of those promised reductions in emissions from developing countries by 2020 will only happen if climate finance continues to flow through the decade. And the final four gigatons needed to close the gap between what has been pledged so far and what needs to happen by 2020 will not happen at all without additional climate finance between 2012 and 2020.
This is why an additional ramp-up period between 2013 and 2015 is so critical. We must support reductions in emissions in developing countries where most populations will increase and hence where most emissions will come from through the decade—before the Green Climate Fund is fully up and running in 2020. Though the price may seem high, it is trivial compared to the cost of inaction and the escalating costs for attending to the climate crisis the longer we delay.
Countries are on track for meeting the initial $30 billion fast-start goal. But without a second period to tie investments to countries where the reductions in emissions are cheapest and where they need to occur, we may easily lose the political will and pace in developing stable private and public sources of monetary support for international climate aid. This second commitment to interim funding between the end of the fast start and creation of the Green Climate Fund is critical to ensure developing countries continue efforts to develop on a low-emission pathway through the remainder of this decade.
While climate change is a global problem at the moment, we don’t need a global solution. Since the countries who delivered on the first $30 billion in international climate finance following Copenhagen are but a subset of the G-20 parties, we only need a slightly larger circle of those parties to put us on the right path to 2020. Leaving this decision to the UNFCCC, where each of 194 parties has an effective veto over any outcome, will likely not get us the success that we need. The G-20 leaders are the best suited to meet this most crucial of climate challenges.
Andrew Light is a Senior Fellow and Rebecca Lefton is a Policy Analyst, both specializing in international climate policy on the Energy team at the Center for American Progress.