Failure at UN climate talks increases risk of grounding CORSIA

Policy Pulse - 16 December 2019 - George Anjaparidze

Veteran negotiators say that more time is rarely a recipe for better outcomes. That is certainly true for this year’s annual UN climate talks, which concluded in Madrid on 15 December 2019. The negotiations ran 2 days into overtime, setting a new record for the longest session since the start of the UN climate convention 25 years ago. Despite the extra time, the talks delivered very little in terms of tangible outcomes.

Most disappointing was failure to agree on the rules for international cooperation on mitigating climate change – known as Article 6 negotiations. These rules are a prerequisite for properly functioning international carbon trading. Not having these rules will impact the climate agreement on international aviation – known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which addresses CO2 emissions above 2020 levels. The absence of clear rules will likely delay implementation of the aviation climate agreement or worse partly “nationalize” CORSIA. Both developments would have negative consequences for the airline industry.

A delay in implementation of CORSIA will erode confidence in the scheme’s ability to stabilize net CO2 emissions from international aviation. This may prompt some ambitious states to impose measures not envisioned under CORSIA. Another danger is that in the absence of international offsetting rules, states may require airlines to purchase national carbon offsets. Requirements for sourcing offsets nationally will hinder the development of a global carbon market and lead to competitive distortions in the airline industry.

In response to these risks, the aviation industry should:

1. Deepen collaboration with leading institutions that have policy expertise in designing carbon markets. The aim should be to pilot approaches that will demonstrate how CORSIA compliant offsets could be generated under prevailing policy uncertainty. Existing carbon market catalyst programs, such as the one managed by the Asian Development Bank, can be used to support such initiatives with technical assistance.

2. Scale-up climate action within the sector. About 20% of CO2 reductions, needed to achieve net carbon neutral growth from 2020, can be generated cost-effectively from within the aviation sector. However, these opportunities are not being realized because of “non-price barriers” or non-financial factors. Industry needs to support interventions that target the barriers that are preventing the implementation of these measures (See op-ed: Change of CORSIA).

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#COP25 #UNFCCC #COP25Madrid2019 #climatechange #climateaction #aviation #ICAO #CORSIA #airlines #climateactionnow #offsetting #carbonmarkets #carbontrading #article6

Where is the $100 billion in climate finance?

Policy Pulse - 10 June 2019 - George Anjaparidze

As delegates start arriving in Bonn for the summer session of the UNFCCC, scheduled to formally start on 17 June, there is one question that is on everybody’s mind “Where is the $100 billion in climate finance?”

Since the 2009 Climate Summit in Copenhagen, developed countries have consistently reiterated their intention to provide $100 bn per year by 2020 to support climate action in developing countries. Although there is still time to achieve this target, the slow progress to-date is holding back action.

Data from OECD DAC provides a good measure for assessing net financial flows from OECD countries (See Chart). On aggregate, net financial flows in 2017 were $30.3 bn higher compared to 2013. Official flows showed bilateral ODA growing by $19.6 bn and multilateral ODA growing by $3.6 bn. NGOs based in OECD countries increased their contributions by $10.2 bn. Private flows at market rates exhibited higher volatility but remained mostly flat, lower by $3.1 bn in 2017 compared to 2013.

The increase in net financial flows should be welcomed. However, the data also points to the need to massively scale-up finance to meet the $100 bn per year target by 2020. The latest estimates from the Biennial Assessment of the Standing Committee on Finance (SCF) indicate that developed countries provided $34 bn in 2016 through bilateral, regional and other channels. This suggest that the increase in total flows has also translated to higher climate finance but falls significantly short of the 2020 target.

The SCF estimates that in 2016, a total of $681 bn in climate finance was mobilized in developed and developing countries, a significant increase compared to 2013. Domestic finance and flows from multilateral development banks (MDBs) help, in part, to explain the increase in available finance for climate action in developing countries. In 2017, climate financing from the world’s six largest MDBs reached a seven-year high of $35.2 bn, up 28% on the previous year and a 48% increase since 2013.

The last IPCC report estimates that to transform the energy system about $2.4 trillion per year of investments is needed to keep global warming within a 1.5°C scenario. Further resources will also be needed to support adaptation. While the $100 billion from developed countries is only one element of the financing landscape, it represents an essential component that can leverage larger private flows and build confidence for further scaling-up climate action in developing countries.

The 2020 climate finance target is at risk as developed countries face ever greater strains on public resources. Given these challenges, developed countries need to go beyond using budgetary contributions. They need to identify innovative approaches to mobilize finance in a predictable way. In this context, climate change negotiators in Bonn need to send a strong political signal ahead of the UN Climate Action Summit, including through expressing support to the work of the Leading Group on Innovative Financing for Development. The UN Climate Action Summit in September needs to deliver an immediate scale-up in climate finance and put in place mechanisms to secure predictable finance flows for climate action.

About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure. 

#climatechange #economics #climatefinance #greeneconomy #unfccc #unclimateactionsummit