Saturday, November 23, 2013

Show me the money

Since returning from Warsaw, it has been characteristically quiet in terms of media coverage about the international negotiations related to climate change. My students were on the lookout while I was away and also reported little coverage. But finally, some news about the UNFCCC proceedings has begun to appear in the U.S. media. From the New York Times on Friday (November 22nd): U.N. Talks on Climate Near End:

The United Nations climate conference ambled toward a conclusion on Friday, with delegates saying that the meeting would produce no more than a modest set of measures toward a new international agreement two years from now. As usual, the biggest dispute was over money.  

Finance is a word commonly heard in the halls and negotiating rooms of COP meetings: Long-term Finance, Fast-start Finance, Green Climate Fund, Adaptation Fund, Loss and Damage, the economic costs of mitigation. As with much of the UNFCCC process, there is lots of jargon around the topic of finance, and it can be difficult to keep all the different funding streams straight. (If you are interested in that type of stuff, details can be found here.) For those less inclined to delve into the policy and finance mechanism details, the short version is that negotiators debate the following:
  • How to transfer low-carbon technology to developing nations so they don’t further exacerbate the greenhouse gas problem and who pays for this technology transfer, adoption, and training (not to mention the loss of intellectual property income if technology is just given away);
  • How to help countries adapt to the impacts of climate change (ranging from adaptations in agriculture to reducing risk from extreme weather events). Something as simple as early warning systems such as the alerts on cell phones that may have saved countless lives in the Midwest this week can reduce risk, but such technology is not available in many parts of the world.
  • Whether countries should be compensated for the loss and damage they experience from climate change related events. Who should pay for all of this, and are some countries responsible for historical emissions dating back to the beginning of the Industrial Revolution?
  • Carbon markets such as emissions trading or sustainable development projects which help other countries avoid carbon-emitting processes or help remove carbon from the atmosphere for instance by protecting rainforests.
There are also costs of inaction that don’t directly enter the discussions at the COP meetings, but provide an underlying incentive for the talks to continue, despite little progress over the past several years. (See my post from December last year). Take for example the economic toll from weather-related disasters on Earth so far in 2013. The following is from Dr. Jeff Master’s blog from November 22nd on

Three billion-dollar weather-related disasters hit the Earth during October 2013, bringing the world-wide tally of these disasters through October 2013 to 35, according to the October 2013 Catastrophe Report from insurance broker Aon Benfield. If we add November's Super Typhoon Haiyan, the total reaches 36. This is the second highest yearly total of billion-dollar weather disasters for the globe since accurate disaster records began in 2000, though the total cost of weather-related disasters so far in 2013 is below the average for the past ten years, according to Senior Scientist Steve Bowen of Aon Benfield. The record highest number of billion-dollar weather disasters was 40, set in 2010. For comparison, during all of 2012, there were 27 billion-dollar weather disasters; the tally in 2011 was 35 (adjusted for inflation.) The U.S. total through October 2013 is seven.

In the table within Dr. Master's post, the annual loss and damage total through October 2013 comes to almost $102 billion. These numbers do not take into account the cost of damages from Typhoon Haiyan or the tornados that ripped through the Midwest of this country just this past week, so this number will rise dramatically. And the figure doesn’t take into account the loss of life.

A concept that came out of the COP meeting in 2009 – in Copenhagen (the first attended by Moravian College) was to create a fund to help cover some of these financial issues. This was put forth by wealthy nations that indicated at the time that this money would not come directly out of their treasuries.  Rather, there would be a mix of public and private financing and novel funding sources such as taxes such as on aviation and shipping fuel. A few COP meetings later, a figure of $100 billion of contributions per year by 2020 was thrown on the table.

One has to question how the figure of $100 billion was determined.  It clearly wouldn’t cover all of the annual damages based on extreme weather events over the past few years (which are predicted to become even more frequent). Hurricane Sandy and the major drought in the U.S. in 2012 alone had a price tag of $100 billion, according to the global reinsurance firm Aon Benfield, based in London. And that is for just for a single country and doesn’t take into consideration the lost revenue from tourism and recreation at the New Jersey shore during the 2013 year or the costs of the major 6-block fire in Seaside Park that destroyed 50 businesses – due to electrical damage from Sandy that went undetected.

Such reported figures are typically underestimates of the actual impact of an extreme weather event. In the U.S. in 2011, it was estimated that extreme weather events (tornados such as hit Joplin, MO, Hurricanes Irene and Lee, etc.) caused $50 billion in damages. That year, according to the Natural Resources Defense Council, there were 3,251 monthly weather records broken by extreme events that struck communities in the U.S.  Many of the losses were uninsured (perhaps as high as 60 to 80%) and thus, may not be calculated in the official numbers. Further, there are many indirect costs that are unaccounted for.  It is estimated that weather events cause significant losses (14%) to the mining economy each year due to price fluctuations for oil, gas and coal that change with the weather, threats to the security of mine water supply, and damage to mines and associated transport infrastructure.  Torrential rain and unreliable temperatures negatively impact crop yields, and thus there are agricultural losses -- perhaps as high as 12%. The manufacturing, finance, insurance, retail and utilities sectors are also sensitive (think weather-induced power outages which are a huge blow to electric-utility operations). Sometimes there are winners and losers that further complicate the economic picture. For example, in a snowstorm: air travel is disrupted and heating costs skyrocket, but ski resorts hit the jackpot. During dry spell, crop supplies dwindle, but construction projects are able to stay on schedule. According to Kinetic Analysis Corporation’s figures, the real damage costs in 2011 were probably closer to $485 billion.

From a colleague who was in attendance during week 2 of COP19:

Other news was that the Least Developed Countries (LDCs) walked out on Wednesday in protest of the developed nations to fully fund commitments and Environmental groups on Thursday to protest the sluggish funding of the Green Climate Fund.

I guess I missed the interesting stuff by coming back early! (See the story.)

On the day that the LDCs walked out of the COP meeting in protest, NPR carried a story entitled “Poor Countries Push Rich Nations to do More on Climate Change”. Commitments for finance have been slow in coming causing the developing nations to question whether the industrialized nations take the negotiations process seriously. But the funding proposal mentioned above did come with strings; it was contingent on meaningful action towards mitigation (pledges to reduce greenhouse gases) by all countries – not just the Annex I (developed, rich nations) countries.  In a second NPR story from this past Wednesday on the tensions between rich and poor nations at the climate meeting reported Richard Harris stated:

And I might add that about half of all carbon dioxide in the atmosphere has come from the developing world. That includes coal burning in China and deforestation in Indonesia and Brazil.

The spin coming out of Warsaw yesterday:

The Adaptation Fund Surpasses $100 Million Fundraising Target at COP19!
New commitments from Austria, Belgium & Regions, Finland, France, Germany, Norway, Switzerland (Warsaw, Poland, 22 November 2013): The Adaptation Fund has received strong support from the international community at the COP19 in Warsaw, Poland, with commitments for $ 72.5 million in funding from seven European governments, bringing its total raised in a major fundraising push to US$ 104.3 million. The governments of Sweden and the Brussels Capital Region earlier contributed US$ 31.8 million toward the goal.

Strong support?  Really?  That is $100 million (with an "m" not a "b").  For comparison purposes, JP Morgan, a single banking entity, agreed this week to pay $13 billion (that's with a "b") in a settlement over faulty mortgage assets it sold in the years leading up to the financial crisis as a big victory for the judicial system. (See the story here.)

The constant threat of financial crises and economic recession in developed nations is frequently held up as reasons why countries cannot make greater commitments to the various funds and finance mechanisms discussed at COP meetings. Yet what about the countries that have never climbed high enough out of poverty to know what a recession is?

This week (November 20th) Melissa Block of NPR interviewed Munjurul Hannan Khan, a Bangladeshi negotiator and spokesman for what's called the Least Developed Countries group at the talks.

[Melissa Block]: What is the argument by which rich countries should have to compensate developing countries, such as your own, for the losses that you've described due to climate change?

[Khan]: First, they [developed, industrialized nations] have to accept the reality. Realities on the ground that people are suffering, and the realities on the ground that we cannot do anything by - only by adaptation or only by mitigations. So there are some things called residual impacts. These residuals impacts need special attention that we are seeing called loss and damage.

A premise that has long been part of the UNFCCC deliberations is the “Polluter pays principle”, but a long-running debate is whether developed nations should be responsible for historical emissions. Another problem is that you cannot necessarily link specific weather events like Typhoon Haiyan to climate change. So how and when would allocations from a “loss and damage” fund be distributed? And who gets to decide? 

In some cases, the link between an observed impact and climate change are clearer -- such as warming global temperatures leading to sea level rise (due to melting of glaciers and polar ice caps, ice loss from Greenland and West Antarctica, and expansion of water as it warms).

[Mr Khan]: The whole coastal area is - salinity intrusion is so high, they couldn't do their agricultural practice. They couldn't actually get their livelihood support from that area.

Some like to question models and scientific predictions.   I am not sure why.  The weather patterns and other impacts (loss of sea ice, rising sea levels, etc.) are behaving as predicted by the Global Climate Models.  And the warming trend continues:  October 2013 was 344th consecutive month of above average global temperatures.

If you go to the website for the Green Climate Fund (GCF) you will find this at the top of the homepage:

The urgency and seriousness of climate change call for ambition in financing adaptation and mitigation.

Ambition has been a common (and hopeful) word at the past few COP meetings.  Continuing from the website:

The purpose of the Green Climate Fund is to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change.

Say what?

The Fund will contribute to the achievement of the ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC). In the context of sustainable development, the Fund will promote the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change.

A GCF press release from earlier this week:

(Warsaw, Poland, 19 November 2013) – The Green Climate Fund announced today that is on track towards completing the final steps that will enable it to mobilize funding and start its operations.

Hmmm.  On track?  More spin?

And a final thought from the interview between NPR's Melissa Block and the negotiator, Mr. Khan, from Bangladesh (Todd Stern is the U.S. Special Envoy for Climate Change):

[BLOCK]: Todd Stern is also saying here, the fiscal reality, as he put it, of the United States and the other developed countries is not going to allow this. The money simply isn't there.

[KHAN]: If you would like to compare Bangladesh with the U.S.A., we are so poor. Our poor people is really trying hard to get the next meal. But in case of the developed country, it's the question of compromising the lifestyle. In our case, it's a question of survival. (emphasis added) 

Lately, I have been once again pondering the work of British scientist and novelist C.P. Snow, especially The Two Cultures - from an influential and controversial 1959 Rede Lecture delivered in the Senate House, Cambridge.  Essentially, his thesis was that "the intellectual life of the whole western society" was split into two cultures -- the sciences and humanities -- and he lamented that this was a major hindrance to solving the world's problems.

Fifty years later in 2009, Peter Dizikes was reflecting on this work in the New York Times:

So why did Snow think the supposed gulf between the two cultures was such a problem? Because, he argues in the latter half of his essay, it leads many capable minds to ignore science as a vocation, which prevents us from solving the world’s “main issue,” the wealth gap caused by industrialization, which threatens global stability. “This disparity between the rich and the poor has been noticed . . . most acutely and not unnaturally, by the poor.”

I think Mr. Khan and many others from the LDCs would agree.

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