Our Planet:Maintaining momentum - Financing action on climate


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Our Planet:Maintaining momentum - Financing action on climate

  1. 1. OUR PLANET The magazine of the United Nations Environment Programme - February 2008 MAINTAINING MOMENTUM Financing Action On Climate FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
  2. 2. OUR His Serene Highness Prince ...argues that the public and private Albert II of Monaco... sectors both have a key role to play in sustainable development. PLANET work together - page 5 Kristin Halvorsen, Norway’s Minister ...describes the importance of green of Finance... taxes and international engagement in addressing climate change. polluters should pay - page 6 Our Planet, the magazine of the United Nations Environment Programme (UNEP) Roberto Dobles, Minister of Environment ...describes a breakthrough in PO Box 30552 and Energy, Costa Rica... financing the conservation of the Nairobi, Kenya forests on which the future of the Tel: (254 20)762 234 planet depends. Fax: (254 20)7623 927 e-mail: uneppub@unep.org forests - the future - page 10 To view current and past issues of this publication online, please visit Martin Parry, Co-Chair of IPCC ...spells out the reasons why the world www.unep.org/ourplanet Working Group II... should invest immediately in adaptation to climate change. ISSN 0 - 7394 Director of Publication: Naomi Poulton time to adapt - page 12 Editor: Geoffrey Lean Coordinator: David Simpson Marina Silva, Minister of the Assistant Coordinator: Anne-France White ...describes how developing countries Special Contributor: Nick Nuttall Environment, Brazil... are ready to play an appropriate part in Distribution Manager: Manyahleshal Kebede tackling climate change. Design: Amina Darani Producedy by: UNEP Division of Communications and Public Information clear commitment - page 14 Printed by: Naturaprint Distributed by: SMI Books Monique Barbut, CEO and Chairperson of the ...describes the imperative of The contents of this magazine do not necessarily Global Environment Facility... effectively financing adaptation reflect the views or policies of UNEP or the to climate change. editors, nor are they an official record. The designations employed and the presentation do not imply the expressions of any opinion action time - page 16 whatsoever on the part of UNEP concerning the legal status of any country, territory or city or its Nicky Gavron, Deputy Mayor ...describes how cities are taking the lead authority or concerning the delimitation of its of London... worldwide in practical action on the ground. frontiers or boundaries. * All dollar ($) amounts refer to US dollars. driving change - page 20 Anilla Cherian, an independent ...describes how integrating climate consultant who has worked for a range change adaptation with sustainable of UN, intergovernmental agencies development objectives matters for and NGOs... vulnerable countries and communities. also scaling-up action - page 22 Christiana Figueres, a recent member of the ....gives a personal view of how page 3 reflections Executive Board of the Clean Development it will have to evolve to meet page 4 people Mechanism... the scale of the challenge of climate change. page 8 verbatim and numbers tuning the instrument - page 24 page 9 books Legendary Bollywood actor ... describes how he has taken up the cause of page 8 awards and events Amitabh Bachchan... climate change and is working to persuade page 9 www hundreds of millions of fans to do the same. page 26 products global cool - page 27 2 FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
  3. 3. reflections by Achim Steiner, UN Under-Secretary-General and Executive Director, UNEP If the world is successfully to navigate the Road Map agreed at the Bali climate change negotiations in December, ways need to be found to mobilize and focus the trillions of dollars in the world’s financial and capital markets on the greening of the global economy. Such greening has already begun, driven by the Kyoto Protocol, anticipation of even deeper cuts from a new climate regime after 2012 — and by the growing realization that if 21st century economies are to compete, flourish and deliver a new generation of jobs, they will need to be more resource efficient and less dependent on finite natural resources. Now the challenge is • 100,000 people in rural India now have solar power after UNEP, and local to accelerate and mainstream these real, tangible but fledgling beginnings. banks, introduced an affordable loan scheme. It is now self-financing. Financing a transition to a low carbon society is one of the central issues, • Emissions trading, developed mostly as a result of the European Union’s along with climate proofing economies, before delegates at the 10th Special Trading Scheme — saw 362 million tonnes of C02, worth around seven billion Session of UNEP’s Governing Council in Monaco. The attending environment Euros, traded in 2005. ministers, and their institutions, have been in the forefront of championing • Kyoto’s Clean Development Mechanism mobilized investment worth close forward-looking economic and policy instruments, through partnerships to $6 billion, in 2006, roughly equal to the funds from Official Development with pioneers in the financial services sector, industry, other UN organizations, Assistance in the same areas. organized labour, scientists, civil society and law makers. In preparation for the Special Session and the accompanying Global Ministerial Financing for adaptation presents a different challenge — one of making Environment Forum, I asked for a snapshot of the growing green economy, more intelligent use of conventional development assistance, as well as including UNEP’s collaborative work. It gives a glimpse into where we are, markets. The amounts required need more precision. But the UN Framework and perhaps where we need to go — and opens a window on such wider Convention on Climate Change says that, by 2030, additional investment sustainability challenges as the Millennium Development Goals and what could include: $14 billion for agriculture, forestry and fisheries; $11 billion Secretary-General Ban Ki-moon calls the “bottom billion” of our global society. for new water supply infrastructure; and between $8 and $130 billion for infrastructure. For example: Energy saving holds particular potential. If the annual rate of energy efficiency • 275 financial institutions, managing assets worth $13 trillion, participate improvement could be increased from the current one per cent to 2.5 per in the Principles for Responsible Investment — inspired and facilitated by cent world-wide it might be possible to keep atmospheric carbon dioxide UNEP and the UN Global Compact. concentrations below critical levels for this century. How can this be done and how much will it cost? Indeed, would it actually cost anything given the • Sustainable energy financial transactions reached over $100 billion in dramatic potential savings in fuel bills and resource use — and from averting 2006, according to UNEP’s Sustainable Energy Finance Initiative and the New the economic impacts of climate change? Economics Foundation. • Some 60 countries, including 13 developing ones, have targets for The momentum on climate change in 2007, driven by the science, was nothing renewables. Around 80 have market mechanisms, feed-in tariffs and renewable short of breathtaking. Policy makers must now drive the solutions. Many will portfolio standards. ultimately be found in the Stock Exchanges and banking centres, and in the • boardrooms of the world’s corporations, if only governments seize the moment, More than 2.3 million people now have jobs in the renewable energy define the objectives and devise the rules of the low carbon economy. sector versus around 2 million in oil and gas. UNEP promotes Cover photo © HArALD SUND/ Gallo Images/ Getty Images. The sun is rising on a new era in the fight against climate change. environmentally sound practices Governments, corporations and organizations have woken up to the tremendous potential of economic tools to finance the transition to a low-carbon society. UNEP is playing a leading role, both in defining the issues and delivering the solutions. globally and in its own activities. This magazine is printed on 00% recycled paper, using vegetable -based inks and other eco-friendly practices. Our distribution policy FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 3 aims to reduce UNEP’s carbon footprint.
  4. 4. people U2 frontman Bono has long been known for and Coast Guard Subcommittee. Before joining money will be channelled through the new his vocal activism against poverty. But the World the U.S. Senate, Ms. Fraenkel worked as a senior Masdar Initiative, which expects to raise more Economic Forum in Davos saw him take on a policy advisor in the Office of International than 200 billion US dollars for renewables in the Affairs within the U.S. Environmental Protection next decade. The most notable project tabled Agency in Washington, D.C. There she served by Masdar is a plan to build “the world’s first as coordinator for UNEP, and negotiated zero-carbon, zero-waste, car-free city” — the agreements in UNEP, the International Maritime car-free city will be designed to run entirely Organization, the World Trade Organization and on renewable energy and should be completed the Organization for Economic Cooperation by 205. The Crown Prince also announced the and Development. She has also served as establishment of the Zayed Future Energy Prize, a consultant to the United Nations and to which will award a total of 2.2 million US dollars the OECD. annually to “three individuals or organizations former member of the Parliament of Trinidad that have made significant contributions in the and Tobago, Ms Cropper brings to UNEP strong Wind power entrepreneur TulSi TAnTi is global response to the future of energy”. experience in environmental policy, analysis one of two Indians who made it onto Time and negotiations. Her list of achievements and magazine’s Heroes of the Environment list The United Kingdom has named former Merrill successes include senior positions held in a wide Lynch executive ADAir TurnEr to head its new angle – climate change. Bono appeared range of national and international institutions on stage alongside former US vice president and new Committee on Climate Change, which — including the Caribbean Community and climate campaigner Al Gore to call for solutions will advise the government on targets to Common Market Secretariat (CArICOM) and that combine the fights against global warming the World Conservation Union (IUCN) — as and poverty. “The brunt of this climate crisis is well as contributions to numerous key and going to be felt in the developing world. All your relevant boards, trusts, committees and global work... will be undone if you don’t focus on this,” assessments. Among her previous high-level Bono told the political and business leaders positions, Ms Cropper has worked as interim gathered at the meeting. Executive Secretary of the UN Convention on Biological Diversity and as Senior Adviser on AMy FrAEnkEl, the new director of UNEP’s Environment and Development with the United regional Office for North America, has more Nations Development Programme. than 20 years of experience in environmental and maritime law and policy. She has worked (the other one is glaciologist DP Dobhal). Mr. Abu Dhabi’s Crown Prince Sheikh MohAMMAD Tanti’s first business, a textile factory, suffered Bin ZAyED Al nAhyAn is taking his oil-rich from prohibitive energy costs until he bought country to the forefront of renewable energy two wind turbines. He then decided to start up investment. At the World Energy Summit in Abu a factory making them. By 2005 Mr. Tanti was reduce carbon-dioxide emissions. The high- Dhabi in January, he announced an investment on the Forbes list of India’s richest people. His powered committee will outline the amount of 5 billion US dollars of new money into company, Suzlon, is now the fourth-largest wind of greenhouse gas the U.K. should emit over alternative energy projects including wind, turbine maker in the world, with wind farms successive five-year periods in order to achieve solar and carbon capture technologies. The across Asia and factories on four continents. its goal of slashing emissions 60 percent from “Yes, green business is good business,” he says. 990 levels by 2050. Welcoming his nomination, “But it’s not just about making money. It’s about Britain’s Environment Secretary Hilary Benn said being responsible.” “the Committee on Climate Change will play a central role in our push towards achieving a UN Secretary-General Ban Ki-Moon has named low-carbon economy in Britain”. Mr. Turner, a AngElA CroPPEr, from Trinidad and in both the executive and legislative branches lawmaker at the House of Lords, has led two of the United States government, inter- Tobago, as the new UNEP Deputy Executive commissions for government on low pay and governmental organizations, and the private Director and Assistant Secretary-General. pensions and is a trustee of the World-Wide Fund sector. Ms Fraenkel joins UNEP from the U.S. Ms Cropper, who takes up her post in February, for Nature. Previous senior positions include vice Senate Committee on Commerce, Science and succeeds Shafqat Kakakhel after his nine chairman of Merrill Lynch’s European division Transportation where she served as Senior years of distinguished service in the post. A and director-general of the Confederation of Counsel of the Oceans, Atmosphere, Fisheries longtime environmental campaigner and a British Industry.
  5. 5. work together Message of His Serene Highness Prince Albert II of Monaco On the occasion of the tenth special session of the Governing Council of the The costs of restoring emissions to their current level in 2030 have been United Nations Environment Programme, the Global Ministerial Environment estimated by the United Nations Framework Convention on Climate Change Forum will be held in Monaco for the first time, from 20 February to 22 at more than 200 billion dollars a year. February 2008. State budgets should be greatly increased. A significant part of the investment This is a recognition of the actions carried out by the Principality in the field envisaged for the energy generation sector should be devoted to renewable of the environment. Environmental policy is central to all our concerns. energy sources. Additional investments will be needed for the research and It is present in every aspect of the economic, social and cultural life of development of new technologies. the Principality. The consequent budget investment will be futile, however, unless private One of the main themes of this meeting will be “Globalization and the investment sources are strengthened. environment — mobilizing finance to meet the climate change challenge”. It is only by mobilizing everyone, public and private partners alike, at the local and international level, that we can bring about solutions to safeguard the There is no longer any room for conflict between the ideas of the environment future of our planet. and economic development. Today the stakes are high, and every branch of the economy has to contribute to achieving this fresh goal, combining To meet this challenge, we have to work together to frame our responses to technological innovation and respect for the environment. It will be a source the problems posed. Unilateral declarations will not settle the issue. It is the of certain growth. whole planet that is under threat. This tenth special session of the Governing Council of the United Nations One of the main objectives of this debate, in my opinion, will be to show that Environment Programme will be a unique occasion for setting a concerted public finances and the private financial sector have a joint role to play in course of action and instituting an environmental code of ethics. promoting sustainable development. © Eric Gaillard/ Reuters FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 5
  6. 6. Climate change is now. The question is no longer whether human behavior is contributing to it, but how vast and irreversible the damages will be. Yet public awareness — and political focus on climate change issues and the need for mitigation — makes me believe there is still hope. Climate change is by far the biggest environmental challenge facing the world, but meeting it is still possible. From the perspective of a Minister of Finance Norwegian policy is twofold. We have a long and successful experience with pollu green taxation which alters national consumption in a more environmentally friendly way and gives incentives for technological innovation. However, climate change also requires an international strong, coherent, and sustainable response. We need an international emissions scheme with strong caps. We addressed this to some extent at the Bali climate talks in December. I will continue stressing these issues. Taxes have been introduced in Norway to reduce environmentally harmful emissions to air and water, and to cut the amount of waste generated. The first tax with an explicit environmental purpose was levied on sulphur in mineral oil in 1971, and ours was one of the first countries to introduce a CO2 tax. Today we have environmental taxes on emissions of climate gases, sulphur, NOx, the final treatment of waste, chemicals that damage the environment and health, and on beverage packaging — and several other taxes are differentiated according to environmental standards. This has contributed both to emission reductions and to the development of new technology. The present Government has introduced several new green taxes. We will continue this tax adjustment and offset the revenues from increases in environmental taxes by corresponding reductions in other direct and indirect ones. In Norway 5.5 per cent of central governmental tax revenue now comes from environmental and energy taxes — equivalent to 1.5 per cent of GDP in 2007 — among the highest in OECD countries. Through this means, we can maintain a high level of welfare, without increasing other taxes. Their main purpose is, and will always be, to reduce environmentally harmful consumption and production. However, it is no disadvantage that they raise income, as well as improving the environment. As Minister of Finance I also coordinate the Government’s work on sustainable development. Caring for our common resources through environmental policies is not a contradiction of sustained economic and social development but a precondition for it. Mitigation, including its costs and consequences for the economy, needs to colour all political decisions. Norway strongly advocates the polluter pays principle. Through economic policy instruments like green taxes and emissions permits, we make pollution costly and emissions reductions economically desirable. More than 75 per cent of our national climate emissions are regulated either by taxes or permits. A tax works like a price on emissions and gives the polluter an incentive to reduce emissions as long as the reduction costs are lower. The reductions are thus made as inexpensively as possible, and incentives are created to achieve them where the cost to the economy is the lowest, allowing us to get the most out of the resources spent. Cost-effective policies thus give countries room to undertake more ambitious international commitments. entities regulated under the system. Only 30 per cent of the allowances will A permit-trading system works in a similar way, but here the price is be allocated free of charge. This will contribute both to higher prices and to determined in a market. Emitters who can reduce emissions at relatively low real emission reductions. costs, do so and sell permits as long as the market price exceeds these costs. Conversely, emitters who have large mitigation costs will buy permits as long Carbon markets are key tools for reducing global greenhouse gas emissions as the market price is below the price of reductions. About 40 per cent of cost-effectively and so I am pleased that the number of permit trading systems Norway’s emissions of greenhouse gases will be covered by this system. and their coverage is increasing. An efficient system requires allowances to be allocated to create incentives We believe that the EU Emissions Trading System could be a very good starting for emission reductions. This takes place when the total amount of permits point for a global system, and are eager to participate in the effort to expand is sufficiently below the current level of emissions. In Norway permits are it to cover more countries and more sectors. The essence of an international allocated to represent a level 20 per cent below the total emissions from for system with tradable permits is to give all countries the same incentive to 6 FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
  7. 7. © Jim Corwin/ Stone/ Gallo Images/ Getty Images ters should pay by Kristin Halvorsen climate-friendly manner. Such a regime will generate more mitigation per dollar reduce emissions. Each country should then pass on the abatement costs as well as substantial resource transfers to developing countries to be used for to domestic emitters. Through this, both producers and consumers of their adaptation, reforestation, and investments in sustainable technology. products will be encouraged to contribute to reduced emissions. A global market price on greenhouse gas emissions will induce countries, businesses A well functioning international permit trading system will provide the world- and individuals to invest in low-carbon assets and push the world towards a wide private sector with strong and much-needed incentives for cutting more sustainable path. emissions. The business world knows that a tighter cap on greenhouse gas emissions will lead to increased permit prices. Expectations of higher costs A global system of equitably distributed national quotas will generate a linked to emissions will thus immediately influence business decisions. demand for permits from developed countries, and in this way become a For this to have the maximum impact, it is imperative that as soon as means of transferring resources from richer countries to emerging economies possible everyone perceives an effective global agreement as the credible and developing countries. Developing economies have a right to develop, and they should be given strong incentives and high rewards for growing in a long term solution. FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 7
  8. 8. verbatim © AFP/Gallo Images “It just shows that we are off the hype curve and “Existing energy technologies alone will not meet “Climate change policies cannot be the frosting on into solutions.” the growing global demand for energy, while also the cake of development; they must be baked into reducing emissions to necessary levels. the recipe of growth and social development.” Environmental entrepreneur Shai Agassi commenting on the lack of Ultimately, we must develop and bring to market an official ‘green’ agenda at this year’s Davos World Economic Forum robert Zoellick, President of the World Bank new energy technologies that transcend the current system of fossil fuels, carbon emissions, and “I think we have come a long way here. In this, the economic activity. Put simply, the world needs a “If the world is moving towards a low carbon future United States is very committed to this effort and technological revolution.” then those companies that are going to be ahead of just wants to really ensure we all act together. the others at arriving at low-carbon solutions will US Secretary of State Condoleezza rice We will go forward and join consensus.” really benefit most.” Paula Dobriansky, head of the US delegation at the Bali climate “The consequences of global climate change are so rajendra Pachauri, chairman of the International Panel on change conference Climate Change pressing that it doesn’t matter who was responsible for the past; what matters is who is responsible “In a process led by the United Nations, we must for the future – and that means all of us. The create a successor to the Kyoto agreement which rich nations and the poor nations have different “For Australians, climate change is no longer a ends in 2012. Some additional initiatives from other responsibilities. But one responsibility we all have, distant threat. Our rivers are dying, bushfires are countries could be useful. But it is important that and that is action…action, action, action! It is time more ferocious and more frequent and our natural they flow from the United Nations. For me, that is to come together in a new international agreement wonders – the Great Barrier Reef, Kakadu, our non-negotiable.” that can embrace rich and poor nations alike.” rainforests, are now at risk.” German Chancellor Angela Merkel Arnold Schwarzenegger, Governor of California Australian Prime Minister Kevin rudd numbers 40 percentage of the world’s 60 population which could be 50,000 affected by the melting of percentage of ecosystem 100 billion number of years during which snow and glaciers in Asia services assessed that some greenhouse gases may persist in worldwide investment in renewable energy in US$. — UN report are degraded or used the atmosphere — GEO4 report This makes up 8 percent of new investments in the unsustainably power sector — report by UNEP’s SEFI 34 — GEO4 report 20 70 percentage by which 40 percentage cut in CO2 emissions proposed by deforestation in the percentage of available water taken up by irrigation. GEO-4 percentage increase in the European Commission in its new climate Amazon increased in says meeting the Millennium Development Goal on hunger air miles flown between change package — European Commission 2007 compared to 2006 will mean doubling food production by 2050 — GEO4 report 990 and 2003 — Brazilian government — GEO4 report 40 1 million 30 billion 2 billion percentage of global energy used in the number of jobs which would be value of the carbon market in US$ in amount in US$ pledged by George W. Bush building sector, which is also responsible created in Europe by a 20 percent 2006, three times greater than 2005. for next three years for the US's new clean for one third of GHG emissions increase in energy efficiency This was dominated by EU allowances technology fund. — State of the Union address — UNEP report — UNEP ‘Green Jobs’ report worth nearly US$25bn — World Bank 8 FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
  9. 9. books The unEP yearbook 2008 — Carbon Finance: The Financial implications of CO2, highlighting the opportunities for business An overview of our Changing Environment Climate Change and governments. Sonia Labatt and rodney r. White With authors including (Wiley, April 2007) Ban Ki-moon, In this book, Sonia Labatt and Dr rajendra Pachauri, rodney White assess the carbon Sir Nicholas Stern, and market which is currently Eileen Claussen, the developing, with an analysis of book promotes dialogue the financial opportunities and between government and challenges presented by climate international industry, and change. The authors illustrate how highlights the sharing of challenges and opportunities will www.unep.org/publications best practice while raising awareness of the latest market arise within the carbon market trends, threats and opportunities in response to rising for banking, insurance, and investment activities as well as for global temperatures. the regulated and energy sectors. They also provide an in-depth description of adaptive measures and insurance products for Climate Change 2007 — Synthesis report managing risk in a carbon constrained economy. This latest report by the Intergovernmental Panel The UNEP Yearbook 2008 (formerly the GEO Year Book) World in Transition — Climate Change as a on Climate Change (IPCC) is the fifth annual report on the changing environment Security risk distills the challenges and produced by UNEP in collaboration with many world (Earthscan, 2008) opportunities facing the environmental experts. It brings the spotlight on new This report by the German Advisory world as a result of climate developments and scientific findings and highlights Council on Global Change argues change. The book — the the complex interconnections between climate change, that in the coming decades, climate final part of the IPCC’s ecosystem integrity, human well-being and economic change is likely to increase tensions Fourth Assessment report development. The Global Overview surveys the significant and conflicts over natural resources — includes a Summary environmental events of 2007. The Feature Focus in our climatically constrained for Policymakers which documents some of the creative efforts already working world. The book spotlights underlines the urgency in markets and financial circles to fight the growing places where possible conflict of acting to reduce greenhouse gas emissions, as well as climate crisis. The section on Emerging Challenges, finally, may flare up in the 2st century the economic costs and the benefits of a transition to a examines new and recent scientific findings on the role — jeopardizing national and low carbon society. It includes a detailed review of climate arctic climate feedbacks in climate change. international security to a new degree — unless climate change change observations and modelling for every continent, is kept in check. But the authors also argue that climate change as well climate model simulations. Written by over 600 unEP Annual report could unite the international community, provided that it leading experts from around the world, this is the standard This summary of UNEP’s scientific reference for everyone concerned with climate recognizes climate change as a threat to humankind and soon sets activities in 2007 provides change and its consequences. the course for the avoidance of dangerous anthropogenic climate UNEP 2007 an overview of the change by adopting a dynamic and globally coordinated climate ANNUAL organization’s contribution REPORT Climate change and adaptation policy. The book makes it clear that climate policy is preventative to the fight against Much of the developing security policy. climate change in a year world is highly vulnerable in which unequivocal to climate change, but Earth under fire: evidence established that these regions have not how global Warming is global warming is the yet been studied enough Changing the World United Nations Environment Programme defining challenge of our and gaps in knowledge era. The report also looks at Gary Braasch are impeding effective the broad range of other activities carried out by UNEP as (University of California Press, 2007) adaptation. ‘Climate it follows its mandate to provide environmental leadership ‘Earth under Fire’ is a comprehensive change and adaptation’ and promote sustainable development. look at the worldwide effects aims to help fill these gaps of climate change. In dramatic by presenting the results of Climate Action photographs, maps and quotes from case studies in Africa, Asia and Latin America that explore world climate science leaders, Launched in Bali at the United Nations Climate Change the nature and causes of climate change vulnerability, the book shows how the Earth is being changed right now. Conference, Climate Action — produced by UNEP in current practices for managing climate risks, and strategies With 0 photographs as well as maps and scientific essays, partnership with Sustainable Development International for adapting to climate change. The book is produced it illustrates the ongoing shifts our planet is going through, from — advises governments and businesses on how to lower by UNEP’s Assessment of Impacts and Adaptation to weather extremes and melting glaciers to disruptions of animal greenhouse gas emissions. It features a wide range of Climate Change (AIACC) project. The case studies were migration and plant growth — including the strong impact on articles that encourage the sharing of best practice and the co-sponsored by the IPCC and made a major contribution human life, cities and cultures. development of new technologies and initiatives to reduce to the panel’s 4th Assessment report. FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 9
  10. 10. © Bob Krist/ Corbis forests — t Tropical forests are one of the planet’s most precious ecosystems, home to a huge variety of species, storehouses of genetic resource diversity. They provide crucial environmental services — from conserving soil and watersheds to protecting against floods, landslides and other natural disasters — and are important sources of tourist income. Internationally, forests have a crucial role in maintaining the climate balance as reservoirs and sinks of carbon: standing forests are the most important carbon dioxide reservoir on earth. Yet deforestation is escalating, and now accounts for 13 million hectares a year, equivalent to 1.5 per cent of the 858 thousand million hectares of the world’s tropical forests. Even though an estimated 20 per cent of the world’s emissions of greenhouse gases are associated with deforestation — and two thirds of this is attributed to the loss of tropical forest — the issue has, until recently, been conveniently swept under the carpet. Two years ago in Montreal, the 11th Conference of the Parties (COP13) the UN Framework Convention on Climate Change, took up the issue under a new agenda item on “Reducing emissions from deforestation in developing countries: approaches to stimulate actions”. Proposed by Papua New Guinea and Costa Rica, it was finally decided last December at COP 13 in Bali. The decision —“Reducing emissions from deforestation and degradation”(REDD) — is a major accomplishment, sending a strong message that developing countries are prepared and willing to reduce emissions. The Bali conference — already being dubbed “the Forestry COP” — also included “policy approaches and positive incentives related to reducing emissions from deforestation; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries” as part of the Bali Action Plan for a full, effective and sustained implementation of the Convention through long-term cooperative action, which will be part of the new international climate regime that will come into being after the present provisions of the Kyoto Protocol expire in 2012. Thus Bali finally put forestry into the climate equation. As many agree, compensated reductions under REDD would facilitate more ambitious targets as part of the post 2012 agreement , lower the costs of climate change mitigation, and buy time for research and development of technology to cut future emissions. It will also increase the developing countries’ contribution, since deforestation is, for many, the main source of emissions. There is still much uncertainty about the form REDD mechanisms will take in developing countries — but, as projects and pilots are already being established, it is essential to understand their implications now. The signs are that they are likely to be very context specific, although bound by certain indicative guidance (e.g. under a voluntary non-market approach) and by the fundamental principles of market systems (e.g. under a market based instrument of the post 2012 climate regime). 0 FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
  11. 11. he future by Roberto Dobles There is consensus that methodologies exist, and are good enough, for of carbon stocks by sustainable forest management. Market stability is proceeding with designing the REDD mechanism, addressing such issues therefore, a weak argument against REDD credits. as developing emissions baselines (based on historical emissions, taking into account national circumstances) to estimate future reductions, and Developing countries wishing to reduce their emissions from deforestation establishing monitoring and reporting protocols. must have immediate access to the carbon market, since early action will provide early learning. Banking and grandfathering REDD compensated Challenges related to governance pose the greatest obstacle. Major reductions will help grasp opportunities that may not be around for long on institutional and policy ones must be overcome. Significant investment will be present trends. needed to develop specialized institutional capacity and technical expertise — and for the process of policy and regulatory reform since deforestation is a Decisions to convert forests fail to account for the value of the environmental side effect of lack of governance, legal uncertainties and non-forest policies services they provide. Since these externalities don’t enter the cost-benefit equation, the social costs of deforestation exceed the private gains, and Depending what is driving deforestation, REDD payments could be used forests will continue to be converted or degraded. to: (a) strengthen existing polices — or create new ones and innovative measures — including law enforcement and capacity building; (b) enhance In 1950, half of Costa Rica was covered by forest, but this declined rapidly to stakeholders’ involvement through such economic incentives as payment for 29 per cent by 1986. Over the last decade the country has tuned the tide, on environmental services. The former provides an opportunity for governance both public and private lands. Deforestation is more than counterbalanced reform. The latter is a means of translating carbon payments into effective by reafforestion and regeneration of abandoned productive land, and forest incentives for sustainable forest management, combining international cover is almost back to the 1950 level. support and national action. This success is due to a remarkable set of institutional innovations and The question of how these compensated reductions or enhancement of legal reforms in the mid 1990s. In 1996, for example, a new law explicitly sinks will be financed is left open. The Stern Review of the Economics of recognized forests’ environmental services and gave private landowners Climate Change estimated that halving global deforestation rates over the compensation under a contract where they undertook to protect the forest next decade would cost approximately US$ 5- US$10 billion a year through a land for 20 years. Simultaneously, Costa Rica moved aggressively, establishing system of policy approaches and positive incentives. a National System of Conservation Areas under the Ministry of Environment and Energy. Thus, by the end of the 1990s, a novel set of institutions was ready There are already payments for carbon sequestration from afforestation and to mediate the creation of markets for forest environmental services, with the reforestation. However, after the Bali decision on REDD, emission reductions government acting as an intermediary. from deforestation and degradation will also be eligible for funding under the Convention, though how this will happen under a post 2012 regime is Forest ecosystems protection is an issue of public good, and it is hard still unresolved to conceive of an effective and equitable solution without appropriate compensation for those that provide them. Forest carbon has been excluded from regulatory markets through concerns REDD is particularly important as it provides a unique market incentive for about methodology and market stability. It is increasingly recognized that tackling some of the underlying market and governance failures. methodological concerns can be tackled and that forest carbon is vital in mitigating climate change. From a market perspective, it brings together the demand and the supply sides of the problem by making sustainable forest management more Market stability concerns have centered around the effect of the potential attractive. As for governance, it provides an opportunity for reform and magnitude of emission reductions from REDD in developing countries on reducing opportunity costs. the already determined Kyoto Protocol target for 2008-2012. The post 2012 situation is different. Commitments for the new climate regime have not yet If countries want to engage with forest carbon markets, they need to been fixed but are expected to be much more ambitious – so the potential tackle failures of governance and policy. Governments and donors must magnitude of REDD credits should provide hope, not concern. also invest in capacity building. All this will reduce transaction costs and risks to buyers, and thus increase the demand, and willingness to pay, for Combining an ambitious long-term target with shorter Kyoto-type ecosystem services. However, fully including REDD credits in the carbon commitment periods could create a robust balance between the demand for market will only be possible once there is a long-term global post 2012 and supply of emissions reductions from deforestation and the enhancement climate regime. FINANCING ACTION ON CLIMATE THE MArINE ENVIrONMENT OUr PLANET MAGAZINE MAINTAINING MOMENTUM
  13. 13. time to adapt by Martin Parry As every month goes by it becomes increasingly clear that we will need to a priority shortlist for targeting resources for early adaptation: The most adapt to climate change. Of course, early action needs to be taken to mitigate affected regions are likely to be: it by reducing emissions of greenhouse gases, but this must be complemented • by investment in adaptation in the places most affected. The sooner we put Africa, because of projected drying there, together with the region’s low resources into adaptation the less damage will be sustained. capacity to adapt; • small islands, because of high exposure and projected sea-level rise The latest assessment by the Intergovernmental Panel on Climate Change • mega-deltas in Asia and Africa, due to large populations and sea-level rise; (IPCC) came to the new conclusion that the effects of climate change • the Arctic, because of high rates of projected warming. are occurring now. The Earth has already warmed by 0.5 degrees C due to increases in atmospheric greenhouse gases, and we can observe the effects of this on every continent — most troublingly the current drying and warming The most affected systems and sectors are likely to be: in Africa’s Sahelian region, and the effects of sea-level rise on coastal flood plains and small islands. Inevitably, some adaptation is also occurring now • water resources in already-dry parts of the world, especially the but little of this is planned and almost no additional resources have yet been semi-arid tropics; deployed toward it. • agriculture in these same regions; Some further warming is inevitable. Even if we were to cut emissions both • low-lying coasts; immediately and so enormously that greenhouse gas concentrations in • human health, especially in poor areas; and the atmosphere are stabilised at current levels — an impossible task — a • particular ecosystems that are prone to damage from warming — such as temperature increase of a further 0.6 degrees C would still be inevitable due to tundra, boreal forest, and mountain regions — or already weakened by other thermal lag of the oceans and atmosphere. So 1.1 degrees C of climate change current stresses like mangroves, salt marshes, and coral reefs. is the very least that we should plan for. The impacts from such an increase will probably include: reduced water availability — with consequent falls in Adaptation is a ‘win-win’ strategy. Most of the adaptive actions we would wish agricultural productivity — in the dry tropics; increased coastal flooding; and to take to reduce damage from climate change are, in fact, ones we need to increased morbidity and mortality from heat waves and droughts. Adaptation take anyway to protect ourselves and our activities from today’s weather. is the only way of avoiding or reducing these. For example, protecting farmers in north-east Brazil from the current risk of drought — such as by introducing drought-resistant crops, or catching Humans have, over many generations, developed great capacity to adapt to and retaining water and using it more efficiently in drip-feed irrigation extreme weather conditions. We know, for example, what farming systems — also serves to increase their resilience against increased drought from work best in drought-prone areas, and what sea-defences protect best on climate change. The same is true for adaptation in coastal protection, in low-lying coasts. Much effort goes into protecting our activities from the primary health care or wildlife management. Investment in adaptation can adverse effects of weather, as well as into making the most of the benefits that therefore yield near-term benefits and, at the same time, protect against the good weather can bring. Adapting to climate change would mean deploying medium-term future. this wealth of knowledge to meet the new changes in weather that will result. But our capacity to adapt will probably be exceeded if we do not reduce It is clear from the IPCC assessment that there is a two-way street linking emissions very soon. climate change and sustainable development: Climate change can threaten attainment of the Millennium Development Goals. But the corollary is that We cannot say precisely how much climate change we can adapt to, but it is sustainable development can make a community or region much more unlikely to be much above 1.5 degrees C simply because many of the plants resilient to damage from climate change. There are therefore two sound and animals that supply our food would be stressed in warmer conditions. reasons to ‘mainstream’ adaptation into the development process. Genetic modification might find a way through, but this is far from certain. Thus, if greenhouse gas emissions are not reduced both substantially and soon, Until recently those advocating adaptation were accused of defeatism, we could be locked into a pathway leading to temperatures that ultimately of implying that mitigation would not succeed. We need now to be exceed our adaptive capacity. Mitigation and adaptation have, therefore, to pragmatic, and recognise that we cannot mitigate our way wholly out be seen as complementary. We can neither mitigate nor adapt our way wholly of the climate change problem. A portfolio of adaptation and mitigation out of this problem. Both strategies are needed together. strategies is needed to confront this huge issue. For too long adaptation has been the poor sister of mitigation. Now it needs the resources to do We now have a picture, from the latest IPCC assessment, of the regions and the job. systems and sectors most affected by climate change. This can be used as FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 3
  14. 14. © Markus Botzek/ zefa/ Corbis Opinions and assessments of the results of December’s climate negotiations in Bali vary according to the level of expectation. For Brazil, the outcome of the 13th Conference of the Parties of the United Nations Framework Convention on Climate Change, was less than the seriousness of the problem requires but, undoubtedly, significant progress was achieved and this should not be underestimated. Bali reinforced the understanding that — in spite of their different interests, needs, circumstances and priorities — all nations must contribute to solving such a serious problem as climate change. There is still no better alternative to the multilateral system for consolidating this collective effort, even though its capacity to provide appropriate responses to global problems leaves room for doubt. The international community’s expectations for Bali were raised substantially in a year which had climate change was at centre of the global agenda. For international institutions, governments and citizens, the reality emerging from the data published by the Intergovernmental Panel on Climate Change is unequivocal, visible to the naked eye and leading to the almost unanimous conclusion that urgency, responsibility and commitment are required. The issue has now most definitely left the desks of scientists and negotiators to permeate the concerns of whole sectors of society; these are now not only better informed, but better trained to intervene and propose alternatives to join the wide array of policies and technical solutions to address the problem. For developing countries, the Bali conference was an excellent opportunity to demonstrate their commitment to participating in global efforts to combat cle climate change. This helped deflate the arguments of some developed countries which — when called upon to shoulder their own responsibilities — protected themselves by pointing a finger at nations that historically have contributed little to the problem. Brazil vigorously defended the concept in Bali that developing countries, recognizing that they are part of the problem, should show the world that — within their specific circumstances — they are also part of the solution. The oft repeated principle of common but differentiated responsibilities comm should not be used to hide or evade obligations. Brazil’s actions over climate change concentrated on its common responsibility — towards its own population and that of the world - -rather than on the unacceptable position of waiting for developed nations, the ones most responsible for the situation, first to do their part. We therefore supported the Bali decision that developing countries should adopt suitable mitigation actions — through programs and policies to reduce emissions — that are measurable, reportable and verifiable. This historic decision, for the first time, very clearly translates the provisions of the Convention that establish the common responsibilities of all countries. by Marin It must be said, however, that this was not easily accepted by developing countries. When invited to take part in solving a problem to which, historically, they have barely contributed, several pointed to the inconsistency of the developed countries, which not only have done little at home, but have failed to meet their international commitments to support developing countries — through financial resources and technology transfer — in pursuing socially, environmentally and economically sound development models. For the world’s poorest nations, the ones certainly that will be most affected by the perverse effects of climate change, this is not an acceptable form of leadership. Despite being very controversial, the developing countries’ acceptance of language that made their commitments to the Convention very clear neutralized the reactive attitude of developed ones who still resisted their own role. Although a timid and unambitious text, the decision approved by the Bali Conference led to a consensus that represents a significant result: it opens the doors to a new round of negotiations, which will finally be based on the perspective that all countries are part of the solution. 4 FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM