Durban Summit Set To Reshape Climate Financing

Dec 13th, 2011 | By | Category: Advocacy, Biodiversity, Carbon, CoP17, Financing, Forest, News, REDD+, UNFCCC

Business Green: Support for $100bn Green Climate Fund will help overhaul the UN’s carbon market and financing for forestry projects

While reactions have been mixed as to the overall success of the Durban climate summit, some progress has been made in terms of agreeing a fund to help poor countries combat climate change, reform of the UN’s carbon trading platform, and financing to protect forests. The Green Climate Fund (GCF) was agreed at the Copenhagen summit two years ago as a means of directing $100bn of aid per year to developing countries, with rich countries providing a further $30bn of fast-start finance in the interim.

alks on the GCF were complicated by concerns over the balance of public and private financing, and it initially looked to be at risk when the Saudis and US refused to adopt a draft text establishing the structure of the fund.

However, late-night negotiations secured the future of the fund, which countries will begin contributing to next year. Delegates also agreed to kick-start a technology transfer mechanism, and to establish a 16-strong Adaptation Committee in 2012, designed to improve the co-ordination of adaptation actions across the globe.

“This means that urgent support for the developing world, especially for the poorest and most vulnerable to adapt to climate change, will also be launched on time,” said Christiana Figueres, the UN climate chief who chaired the talks. However, campaigners criticised the fund with Friends of the Earth describing it as an “empty shell – akin to setting up a bank account with no money in it”. Many said firmer commitment from developed countries was needed to ensure poor nations had the funds to adapt to climate change and build domestic clean tech sectors.

Clean tech projects in the developing world will still be able to raise credits through the UN’s carbon trading scheme – the Clean Development Mechanism (CDM) – after the Durban Summit agreed to extend the Kyoto Protocol. The legal basis for the CDM is held in the 1997 Kyoto Protocol, but while the Durban Summit did not finalise the precise details of how the Kyoto Protocol will be extended post-2012, the world’s carbon markets are not now thought to be in danger of disruption.

Delegates did agree to define new market mechanisms and create a successor treaty, but talks on the details were pushed back into 2012, with recommendations likely to be made at the next summit in Qatar.

Parties were instructed to address the environmental integrity of new markets,  avoid double-counting and ensure that a net decrease in CO2 emissions is achieved by all CDM-qualified projects. A decision taken before the summit means credits generated from coal plants have been suspended from the CDM, but plants fitted with carbon capture and storage (CCS) technology will be included for the first time, possibly as early as next year.

Allowing projects in poorer countries to issue and sell carbon credits for the emissions they remove from the atmosphere makes the economic case for developing CCS much more compelling. “This is a critical development, given that many CCS projects in coming decades will have to be in developing countries if we are to meet climate targets, yet until now there had been no ready access to capital for the development of such projects,” said Brad Page, chief executive of the Global CCS Institute.

However, given the cost of the technology, no projects are expected in the near future, despite the International Energy Agency warning 3,400 CCS facilities are needed by 2050 to help keep global temperature rises below 2º Celsius.

Less progress was made on the Joint Implementation process, which allows richer nations to invest directly in emission reduction projects in any country. Negotiators could not come to a decision on whether to allow emission-reduction projects to earn carbon credits under the scheme beyond 2012 and put off any concrete resolution until the Qatar talks.

But countries did agree to include carbon markets as a possible funding source for activities to reduce emissions from deforestation and forest degradation (REDD+) activities, and technical framework and guidelines to measure progress. However, while the move potentially opens REDD schemes up to huge swathes of private finance, on top of public monies, parties were unable to agree on the detail to get the scheme off the ground.

Nils Hermann Ranum, head of policy and campaign division at Rainforest Foundation Norway, told news agency Reuters that investors might be put off by a lack of robust rules ensuring projects do not compromise the rights of communities and are properly monitored.

“There is a clear risk that REDD, without a credible system for safeguards, will not get sufficient funding, neither from public sources nor from private investors,” he said.

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One Comment to “Durban Summit Set To Reshape Climate Financing”

  1. […] Durban Summit Set To Reshape Climate Financing The Green Climate Fund (GCF) was agreed at the Copenhagen summit two years ago as a means of directing $100bn of aid per year to developing countries, with rich countries providing a further $30bn of fast-start finance in the interim. Source: chimalaya.org […]

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