FINANCE:

Papers for the Pittsburgh summit pose more questions than answers

Wealthy nations intend to rely heavily on the carbon markets to help raise the billions of dollars that developing countries will need to fight climate change, draft G20 documents obtained by ClimateWire show.

The three papers, written in advance of a meeting next month of world finance ministers in Pittsburgh, do not pledge a specific dollar amount or even estimate how much poorer nations will need. They also offer no specific proposals for the best way to raise funds, even as the authors dive headlong into politically charged international waters over which institutions should govern the flow of money.

Revised reports are expected this week. But so far the drafts have raised hackles in India and other developing countries.

"They were just too dominated by the developed world and they didn't have the input from developing countries that they needed to have," said Angela Anderson, program director of the US Climate Action Network.

Figuring out how to pay for both reducing emissions in developing nations as well as helping poor countries cope with the impacts of global warming is central to international climate talks. Nearly 200 countries hope to complete an emissions treaty in Copenhagen, Denmark, this December, and a key part of the puzzle for industrialized nations will be coming up with the money that they already have in principle promised to poorer countries. Large developing nations are in turn expected to spell out new goals for curbing their own emissions.

President Barack Obama last month called on finance ministers and central bank governors from 20 key countries to come up with climate finance proposals. He instructed them to report back when they gather for the G20 summit in Pittsburgh on Sept. 24 and 25. Climate change analysts say they are pinning hopes for new political momentum to kickstart stalled climate talks on the upcoming meeting.

So far, though, international flare-ups about the draft papers are dominating the discussion. With the U.S. and other major nations offering little clue as to how much money they are prepared to offer, many activists say their optimism is waning.

"The political opportunity of this meeting is not being seized," Anderson said.

The draft G20 papers look at three main financing issues: raising public money; raising private money; and governing the funds.

'Show us the money' remains a crucial issue

Raising the most concern so far is the paper on governance, which analysts said was produced by the U.K. and France with no input from the developing countries that will be the recipients of the money. The authors take for granted that groups currently directing money to developing nations but which are strongly criticized -- like the World Bank -- will continue to do so. The paper also floats an idea for a "high-level body" that could measure and verify developing country claims of emission reductions in return for international dollars.

At a United Nations discussion of the papers earlier this month in Bonn, Germany, several countries -- India most strongly -- recoiled at the idea that their national low-carbon plans might be open to international scrutiny. Others slammed the G20 for taking up an issue that affects dozens of other nations and that is primarily the purview of the United Nations climate change body.

Meanwhile, the paper on driving private dollars to help solve climate change call the global carbon markets "a central vehicle" for mobilizing capital. But the paper has raised concerns about where the money will come from and how it will be counted.

Currently in Europe and in other countries where greenhouse gases are regulated, countries and companies can offset their emissions by launching a clean-energy project in a developing country. The U.S. and other industrialized nations have suggested that the money also could go toward meeting their financial commitments to helping poorer countries reduce their emissions.

Steve Herz of Greenpeace described that as "double counting," as did other activists who said they will fight attempts to employ it.

A bargaining chip remains politically veiled

The final paper on public money, produced by the United States and Mexico, makes only glancing references to the amount poor countries will need to prepare for the impacts of climate change. Activists targeted that omission as the biggest problem with the papers and the larger G20 process.

"They don't talk in concrete dollar terms about what the need is, and that's the real gap," said David Waskow, climate change director at Oxfam International. "It's a critical political question that the G20 needs to grapple with."

The U.S. has been reticent about offering a specific amount. Analysts said the reason is largely political. Doing so could inflame members of Congress who may be less than eager to send American dollars overseas. Some say it also would eliminate a bargaining chip in the international climate negotiations, making it more difficult to win agreement from China and other nations on developing country targets.

Herz called it a "game of chicken" where the major issue is a lack of trust among developing nations that the U.S. will actually scale back its own emissions in a major way. But breaking the logjam, he said, is critical.

"Many developing countries, including China and India, are already doing a lot on their own. How much assistance the developed world provides them will determine how much more they can do beyond that," he said. The poor and vulnerable countries, he said, "just don't have the capacity to adapt. Either they're going to be supported, or they're going to suffer."

Waskow said he hasn't given up hope for the G20.

"The effective role it can play is to set some really top-line messages on paper and give clarity to where the overall process is headed," he said. "I think they still have time to make this productive."

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.