4. FINANCE:

U.S. and E.U. prepare full accounting for climate-related aid

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The United States has delivered $5.1 billion in climate change assistance to the world's poorest countries since 2009, U.S. Deputy Envoy Jonathan Pershing said yesterday.

Speaking in Durban, South Africa, where nations are meeting for an annual U.N. climate change conference, Pershing said the United States gave $3.1 billion of that money in 2011. The funding is part of a global "fast start" commitment to deliver $30 billion to vulnerable countries by 2012.

"The U.S. and other developed-country parties are well on their way to fulfilling the fast-start $30 billion finance goal," Pershing said.

Developing countries and environmental groups are monitoring the fast-start promise closely to ensure that developed countries make good on that promise. The United Nations this month unveiled new sites with interactive maps to help track who is giving money, who is getting it and what kind of activities the dollars are underwriting.

Pershing said the United States on Thursday will release a full report detailing where U.S. money has come from and where it has gone. The report will include individual fact sheets for the 126 countries where the United States provided assistance, which Pershing described as "part of a broader effort to be as transparent as possible." The 2011 funding, he said, includes $1.8 billion from congressional appropriations and $1.3 billion from development finance, including loan guarantees by export credit agencies.

A major chunk of that comes from a $600 million compact that Secretary of State Hillary Rodham Clinton signed earlier this month with Indonesia through the Millennium Challenge Corporation. More than half of the investment will finance Indonesia's Green Prosperity Project to develop renewable energy projects, improve management of natural resources and reform agriculture and forestry. As part of the fast-start funding, the United States has promised $1 billion in forest protection under a program known as Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD).

Money harder to raise without cap and trade

"The U.S. will come much closer, and it could push them over the line for meeting its REDD commitments," said Michael Wolosin, who directs forest work at Climate Advisers, a consulting firm in Washington, D.C. However, he noted, "The government of Indonesia has mixed feelings about whether it should count this toward it."

Europe's chief climate negotiator, Artur Runge-Metzger, said yesterday that the European Union is on track toward meeting its pledge of delivering €7.2 billion ($9.9 billion) in climate aid, and has so far channeled €4.68 billion ($6.2 billion). The European Union plans to unveil its full accounting this week, as well.

Meanwhile, developing countries are worried about a promise that wealthy nations made to deliver $100 billion annually by 2020. They are asking for a number of things, including some type of policy to bridge the gap between the fast-start commitment that ends in 2012 and the future pledge. Developed countries are resisting that, but say their funding commitments are only growing.

Developing countries are also keeping a keen eye on who will deliver the $100 billion. How much of the money is to come from private industry versus public coffers is a subject of fierce international debate. Industrialized countries like the United States also are resisting attempts to hold discussions nailing down the source of funds, and insist that much will come from private industry.

In a major new report this week, Trevor Houser, a former senior adviser to U.S. Climate Envoy Todd Stern, called fulfilling that pledge "crucial both to protect diplomatic progress made to date and help ensure large developing countries like China and India do their part to address climate change in the years ahead."

In the absence of a cap-and-trade program, which passed the House but failed to reach the Senate in 2009 and has since been dropped like a hot potato, raising that money is a tricky proposition. A domestic cap-and-trade plan, Houser estimated, would have mobilized between $10 billion and $64 billion annually by 2020 in public and private finance -- sufficient to cover the U.S. share of the $100 billion pledge.

Will some developing nations contribute?

He predicted the United States would at most appropriate $2.8 billion by 2020 for climate assistance, and cast doubt on proposals like a financial transaction tax. That, he said, "could raise considerable revenue, but there is little prospect for the adoption of such a tax in the United States and no prospect that, if adopted, its revenue would be used for international climate finance." Similarly, he argued that eliminating fossil fuel subsidies -- a goal of the Obama administration and the G-20 countries -- would likely be used for deficit reduction or clean energy deployment domestically, not abroad.

Houser called U.S. negotiators' "best bet" pushing the World Bank and other multilateral development banks as well as the Export-Import Bank of the United States and the Overseas Private Investment Corp. to more aggressively pursue climate-oriented financing. Together, he predicted, those sources could deliver $23 billion per year (gross) by 2020, "which, when combined with plausible direct budget contribution flows, would total $25 billion."

This, he said, "satisfies the lower end of the range of estimates of America's fare share ... and would not require new congressional appropriations."

Last week, U.S. Envoy Stern also left open the possibility that wealthy developing countries might contribute. He noted that the Green Climate Fund now being designed to channel most of the dollars was designed by the Mexican government. The original plan was that all countries would put money in the pot, though poor and vulnerable nations would be net recipients.

"That has dropped off the table," Stern said. Yet while developed countries are expected to contribute, "there is an open door for developing countries to contribute, and I think some developing countries will."

"Certainly it makes enormous sense for that to happen," Stern said. "It's not called for, but I think there will be an open door, and I think you will see it happen. "