Climate Financing: The 50 Billion-Euro Question

 

Words can be explosive. Especially if they imply that billions of euro will be transferred from state coffers.

So it should not come as a big surprise that the Swedish government has difficulties in finding agreement on the financing of climate adaptation measures in developing countries. EU Finance Ministers fought about the issue last Tuesday. Now, climate financing is likely to dominate the European Council on Thursday and Friday (together with discussions on the top posts in the Lisbon Treaty).

The draft conclusions for the Summit (prepared for the COREPER meeting last Wednesday) mentions both short-term and long-term costs. Two key sentences illustrate the stakes involved:

 “The European Council appreciates the Commission´s estimate of an overall financing need of EUR 5-7 billion per year for the first three years following an ambitious agreement in Copenhagen and underlines that the EU in this context is ready to contribute its fair share of these costs”

 “The European Council considers that the overall level of the international public support required could lie in the range of EUR 22 to 50 billion per year by 2020, subject to a fair burden sharing at the global level in line with the distribution key agreed by Parties…”

Poland is refusing to agree on concrete numbers without promises that the burden sharing will to a large extent be based on GDP, not only on carbon emissions. Negotiations are further complicated by the fact that Germany is forming a new government.

Billion Euro Baby: Finance Minister Anders Borg is keeping a firm grip on climate negotiations. Photo: Pawel Flato/Government offices

Billion Euro Baby: Finance Minister Anders Borg is keeping a firm grip on climate negotiations. Photo: Pawel Flato/Government offices

Thus, the conclusions are likely to be watered down. That may come at a high price. Climate negotiations are already in crisis, with a close adviser to Fredrik Reinfeldt ruling out a legally binding agreement in Copenhagen. If the EU Summit does not mention ambitious figures on climate financing, it will be even more difficult to achieve a political deal in December that is strong enough.

There are a number of other open issues. What should happen to the `hot air´, the emission allowances not used by countries primarily in Eastern Europe? How will the new system of flexible mechanisms work in practice and how will it be controlled? What criteria should apply for the distribution of financial support to developing counties? Will climate financing be additional to current development assistance?

Agreement at the European Council is further complicated by internal conflicts in the Swedish government. `I hope the rumour is true, that Anders Borg is running the government´, former Finance Minister Pär Nuder said at a seminar about the Government Offices last week. But when it comes to conducting the EU Presidency, a strong Finance Ministry is not always a good idea.

Regarding climate, Finance Minister Anders Borg seems to lack the diplomatic skills needed to find agreement among 27 Member States. Dogmatic instructions from Stockholm are making things difficult in Brussels. Unfortunately, the Prime Minister´s office is weaker this time than in 2001, when State Secretary Lars Danielsson was able to give negotiators clear guidance.

Agreement on climate change in Copenhagen is the Swedish government´s first priority for the EU Presidency. It would have been easier to achieve if Fredrik Reinfeldt had been more active from the start. Instead, the Swedish Prime Minister already in December last year stated that it would be difficult to agree new commitments for emission reductions by developed countries. The government negotiators are accused of trying to accommodate every divergent view instead of showing leadership in the way former chief negotiator Bo Kjellén did. In the important area of `policies and measures´, Sweden has not put forward any innovative proposals.

Some of the criticism might be unjustified. The task is difficult. However, the government has made a number of strategic mistakes. Fredrik Reinfeldt might have to pay a high political price for the lack of a strong agreement in Copenhagen.

Note: The excellent Arte blog on Europe also highlights climate and the Swedish EU Presidency.

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