Our Planet:Maintaining momentum - Financing action on climate
The magazine of the United Nations Environment Programme - February 2008
Financing Action On Climate
FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM
His Serene Highness Prince ...argues that the public and private
Albert II of Monaco... sectors both have a key role to play in
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
forests on which the future of the
Tel: (254 20)762 234
Fax: (254 20)7623 927
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
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
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
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.
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
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
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
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
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
distills the challenges and
produced by UNEP in collaboration with many world
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
an overview of the change by adopting a dynamic and globally coordinated climate
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)
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
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
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
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
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
systems and sectors most affected by climate change. This can be used as
FINANCING ACTION ON CLIMATE MAINTAINING MOMENTUM 3