10 september 2009

EU Backtracks on Climate Finance for Developing Countries

Brussels, Belgium – The European Commission’s Communication¹ on climate finance, published today, had the opportunity to help break through an important deadlock on the road to a UN Copenhagen agreement. Although containing several positive elements, the Communication minimises the apparent need for European public financing of developing countries.

WWF calculates total public financing need of about €110 billion annually in the 2013-2017 period, of which Europe’s share would be about €35 billion. Despite stating that there is around €100 billion in financing needed by 2020, the Commission envisions the EU paying as low as €2 billion of this amount – remarkably little – or up to €15 billion.

“There is an impressive sleight of hand needed to arrive at these figures,” said Jason Anderson, WWF’s head of European climate policy. Developing countries are meant to take on much of the reduction effort themselves, with most of the remaining amount covered by private capital. Even though these are assumed all to be lower-cost efforts, Europe has long failed to achieve such cuts itself.

In a particularly impressive feat of financial jujitsu, the difference between the price of an offset credit and the cost to produce it – profit for the developers - is assumed to be fully captured and reinvested in emissions reductions by developing countries, cutting the amount of funding needed from Europe.

“Europe hasn’t found a way to ensure Member States will use revenues from its own emissions trading system for clean energy investment. So it takes quite some nerve to assume that developing countries would manage to do much more than we’ve agreed, and let us get the benefit of their having done so,” said Anderson

The Commission has kept the door open to some good ideas however, such as raising money from the aviation and maritime sectors. It also matched the call for developing countries to describe how they plan to use financial assistance with a promise to publish an EU long-term strategy by 2011. Unfortunately it does not recognise the option of auctioning emissions allowances to countries as proposed by Norway, which is one of the best chances to raise funding that doesn’t depend on unreliable promises.

Movement on climate finance is crucial in the international negotiations leading up to Copenhagen, offering an opportunity to create clarity and momentum. It is hoped that the optimistic assumptions in Europe’s favour are not seen by others as unwillingness to live up to its obligations.

While we welcome that the EU has presented concrete numbers, and tries to explain how it derived them, the methodology is flawed and the amounts are totally insufficient. WWF will expect much bolder European leadership if it plans to reach a deal in Copenhagen.

For further information:
Jason Anderson, Head of European Climate Change and Energy Policy, Tel. +32 (0)474 837 603 janderson@wwfepo.org

Alexandra Bennett, Communications Director at WWF European Policy Office, Tel. +32 (0)477 393 400, email abennett@wwfepo.org

Editor’s Notes

(1) European Commission Communication reference and weblink

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