Twisted logic: no money for adaptation unless the rich can emit more and profit from it

The Adaptation Fund, which is supposed to help vulnerable developing countries adapt to climate change, has now been made dependent on carbon markets which in effect free the rich countries from their obligations to meet their emission reduction commitments, says Nathan Thanki.

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THE old axiom 'adapt or die' haunted the halls of the UNFCCC's 18th Conference of the Parties in Doha last December.

As has been made clear over 20 years of apathy and inaction within the negotiations, the industrialised world will do everything it can to avoid making serious emissions reductions. The resulting 0.8-degree-Celsius warming, and certainty of a further 0.8 degrees, means that those who are particularly vulnerable are forced to adapt to the adverse impacts of climate change.

For the majority of humanity living in the developing world the response to the climate crisis represents an additional burden. The degree to which the countries of the South are able to cope with the crisis depends, and always will depend, on the provision of adequate financial resources. This is true of mitigation action as well as adaptation action: as the Philippines wryly noted in Doha, 'We would like to do mitigation action, but first we must stop drowning.' The failure to provide adequate, predictable, and additional resources marks a double tragedy: not only does it undermine global efforts to curb emissions, it also undermines the poverty alleviation and sustainable development priorities of the South. Failure on finance is tantamount to condemning much of the world to poverty and vulnerability, and future generations to a 4-degree warmer world. And that's putting it politely.

Although there has been, since Copenhagen, an unelaborated and meagre promise from the industrialised nations for $100 billion in climate finance by 2020, there is no reason to believe it. For one, the desperately needed trust-building 'fast-start finance' $30 billion - used as a bargaining chip by the industrialised countries to avoid serious emissions reductions - has been proven to be redirected aid money, usually in the form of loans, and usually for projects that the donor nations prioritised (read: creating 'enabling' conditions for carbon markets). It has not been subject to agreed measuring, reporting, or verifying, which has led to serious discrepancies, and has largely been done bilaterally with no clear rules for eligibility and access. Basically, it was everything climate finance should not be.

The industrialised countries tell a different story, which they did gleefully in Doha at fast-start finance 'side-events' amid incredulous looks from their Southern counterparts. But they need to get their stories straight. They say the $30 billion was a 'one-off' that shouldn't be expected again while at the same time saying there is no need to worry about a lack of clarity on sources and measuring of long-term finance. They then applaud themselves for, among other things, establishing institutional arrangements like the Green Climate Fund (GCF).

Everyone is very excited about the GCF, and I suppose they should be. It took a long, hard negotiation process (driven by the developing countries) to arrive at it, and finally we have a counterbalance to the other 'operating entity' of the UNFCCC's financial mechanism, the Global Environment Facility (GEF), which developing countries have criticised for being overly donor-driven and unresponsive to COP guidance, among other things.

Matters pertaining to the GCF, and its relationship to the governing body of the UNFCCC (the COP) were also on the table in Doha, but let's leave that for another day because we're overlooking some simple facts. The Green Climate Fund is not yet operational, and in any case is empty. Supposedly the GCF will allow for direct access of money for real on-the-ground projects - but there are also recurring concerns around private sector involvement and a potential imbalance between adaptation and mitigation funding. The adaptation gap that currently exists is huge - since inception the GEF has given $3 billion to mitigation projects and only $300 million for urgently needed adaptation.

One Fund that we do not have to wait around for any longer is the Adaptation Fund. Born of a decision in 2001, it took eight years to become operational - which tells you something about the heel-dragging of the powerful nations. Yet it does exist, and has boots on the ground. It too allows direct access, provides money exclusively as grants (no loans which add to the vicious debt cycle) and is away from GEF control, even if the World Bank is the trustee. Basically, it is a Fund considered extremely important by the developing countries as it directly, and in a proper manner, addresses their adaptation needs.

But the Adaptation Fund is on life support. The report of the Fund's Board in Doha showed that unless something urgent is done, it could cease to exist. There have been donations, but nowhere near enough; fast-start finance oddly overlooked the Adaptation Fund. Projects in the pipeline may now miss out on expected funding.

Part of the solution, now part of the problem, is that the Fund is supported by carbon markets: 2% of sales of Certified Emissions Reductions (CERs) under the Clean Development Mechanism (CDM) of the Kyoto Protocol go into the Fund. The CDM is a 'flexibility mechanism' of the Protocol - a way for Parties to avoid failing to meet their (unambitious) commitments by paying for projects in developing countries that reduce emissions (it's very debatable if this is actually the case) which the Parties can then use to offset their own emissions.

In theory this would keep the Fund full. Reality, however, has a way of intervening and inconveniencing. The price floor has fallen out of the carbon market. As it now hovers at a mere 80 cents per tonne, the low price of carbon in the CDM means that the mechanism is failing. The real crime is that we are seeing an (ultimately futile) effort to ensure its survival by taking the Adaptation Fund hostage. New Zealand and Australia have listened to developing-country concerns, and in response, they have replied: the solution to this problem lies in our being able to access carbon markets. This orthodoxy is not limited to Parties: Halldor Thorgeirsson, the Director for Implementation Strategy at the UNFCCC secretariat, told me via Twitter, 'The Adaptation Fund depends on vibrant carbon markets since it get [sic] a share of the credits flowing from the CDM.'

In one fell swoop, the provision of resources to adapt to climate change has been made dependent on market mechanisms, when in fact what is needed is for the industrialised nations to meet their legal obligations and provide new and additional funding.

It gets worse though. Here's the killer: New Zealand, Australia, Japan and other rich nations want the CDM to be open to Parties that are not undertaking a second commitment period of emissions reductions under the Kyoto Protocol. This is an affront. What they are saying is: there will be no money to adapt unless you let us emit more and benefit from it! It is a sick and perverse logic that was smuggled into the discussion at Doha, where the major battles were around the future of the Convention itself.

In the end we were left pondering a fairly ambiguous decision that allows those industrialised nations who have parted with the Kyoto Protocol to 'participate' in its flexible mechanisms without buying or selling the credits. On an optimistic day we might take that at face value and say that effectively neuters the threat, but you can rest assured of two things. One: the imprecise definition of 'participate' is pregnant with the possibility of revisiting the whole issue of access. Two: the overwhelming push for 'new market mechanisms' is only beginning. In the meantime, and in the absence of the promised finance, it's still a case of 'adapt or die' for the world's most vulnerable.                       

Nathan Thanki is a third-year Davis Scholar studying Human Ecology at the College of the Atlantic in Maine, USA. He focuses his studies on ecological economics, international environmental diplomacy and law, and identity politics. With the activist group Earth in Brackets he has attended several UN negotiations on biological diversity, sustainable development, and climate change, where he has tried to translate technical jargon for a broader activist audience. The above is a revised version of an article which appears on the Earth in Brackets website (www.earthinbrackets.org).

*Third World Resurgence No. 269/270, Jan/Feb 2013, pp 42-43