forest fires_Indonesia_Image: Storm Crypt (Flickr)

Image: Storm Crypt (Flickr)

Finance for developing countries will help Australia in climate talks

20th November 2015

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Howard Bamsey was, until recently, Deputy Secretary of Australia’s Department of Climate Change and Energy Efficiency, and Australia’s Special Envoy on Climate Change. He is one of Australia’s most experienced negotiators, playing a key role in international climate change negotiations.

Research interests:

Climate change; climate change policy; energy efficiency; international negotiations; sustainable development policy; and public policy

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For those who have been impatient to see the Turnbull government change position on climate change, the successful Australian campaign to return to the chair of the Board of the Green Climate Fund is an early signal. The fund is designed to support climate action in developing nations as part of the UN process.

Australia and South Africa have been elected as co-chairs, a reprise for the team that presided over the establishment of the fund in 2010. The two representatives, Ewen McDonald from Australia’s Department of Foreign Affairs and Trade and Zaheer Fakir from South Africa’s Department of Environmental Affairs, were widely credited by insiders with strong and skillful leadership that overcame the – mostly political – obstacles that could have crippled the nascent organisation.

This election result would not have been possible had Foreign Minister Julie Bishop not decided last year that Australia would make A$200 million available to the Fund.

While a case could be made that Australia should have pledged more, this step was a breakthrough in the Abbott government’s hard-line policy on climate change. In the event, the A$200 million seems to have satisfied those who elected Australia to be a co-chair.

Funding for developing nations

Although the Green Climate Fund is not intended to be the only source of finance for climate action in the developing world, it is a cornerstone. While governed by its own board, the fund is an operating entity of the UN Framework Convention on Climate Change (UNFCCC) and receives guidance from its Conference of Parties (COP). Most UNFCCC parties would see it as the main vehicle for specific global climate change finance.

With its first investments of almost US$170 million just announced, the fund must succeed and be seen to succeed to keep developing nations in the game. Otherwise the future of international cooperation on climate change will be in jeopardy.

So Australia now has its hand on a vital lever. In the bargain on financing agreed in Copenhagen in 2009 and formalised in Cancun a year later, developed countries committed to mobilise US$100 billion a year to be invested in developing countries by 2020.

This underpins the reduction in tensions and improvement in trust between developed and developing nations. That improved trust in turn has enabled the progress that is expected to be captured in a legal agreement in Paris next month.

The bargain appears to be broadly on track. Recently the OECD and the climate policy initiative released a report showing that developed countries mobilised over US$50 billion in 2013 and over US$60 billion in 2014.

Australia back in the mainstream

Australia’s approach to international climate diplomacy has changed considerably. Last week, Environment Minister Greg Hunt pointed to his active role in a phase-out of climate-damaging chemicals. He noted that his presence at a ministerial meeting in Paris had been applauded (along with that of Canada’s new Environment Minister).

For Australians who, like us, believe we have a national interest in stronger climate action at home and internationally, this is all good news. But it will create expectations of further change that if not met, will cause disappointment.

Since the government seems to be making clear that there will be no major change to Australia’s climate policy until 2017, it has a limited range of tools to deliver on the new expectations.

More options on climate finance

Increased funding may be the best way for Australia to do more. Australia could do this through the Green Climate Fund, but there are other options.

There has been speculation that Australia might set up an investment fund similar to the Clean Energy Finance Corporation to lend money to carbon-reduction projects in developing countries. Given the opportunities for clean energy expansion are large and project finance is often a barrier, this seems to hold promise. After all, international climate finance need not only be in the form of grants as it is in the Green Climate Fund.

Specifically-targeted grant projects are also a possibility. Relatively small amounts directed at priorities in Pacific Island countries could help repair the gratuitous damage to confidence in Australia wrought by the previous government.

Australia could build on efforts made by Malcolm Turnbull, when he was environment minister, to help developing countries monitor changes in land use, such as deforestation. It is an area where Australia (and Canada too) has leadership credentials. This is essential if the considerable potential for emissions reductions in this sector is to be realised.

Beyond monitoring, there are tremendous opportunities to help Indonesia prevent forest fires, which are a huge source of carbon emissions and cause severe economic, ecological and health damage. Assisting Indonesia with forest conservation has long been on the environment minister’s radar.

One innovative idea in planning by legal firm Baker and McKenzie seeks to leverage private sector finance for climate action in developing nations. Launching an initiative such as this would be an opportunity for Australia to show a more progressive face on climate action.

At the same time, it would build on the foreign minister’s objective of making aid delivery more innovative and effective. Other opportunities are surely being advanced by proponents and we can expect to hear announcements about at least a few of them soon.

The Australian delegation in Paris is well served by this return to a position more closely attuned to the range of national interests embodied in the climate negotiations.

Australia’s influence will be stronger as a result and the presence of the prime minister as well as the foreign and environment ministers during the meeting will leave no doubt that the review of climate change policy, when it comes, will bring real change.

This article was first published in The Conversation.

Updated:  10 August 2017/Responsible Officer:  Director, RegNet/Page Contact:  Director, RegNet