Feature Report: COP 21: The Paris Agreement

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COP 21: Funding the Transition in Developing Economies

The Paris Agreement brought together all the countries in the world in a collective commitment to combat climate change, while maintaining the principle of differentiated responsibility between industrialized and emerging economies. As part of the agreement, developed countries have agreed to mobilize climate financing for the poorest countries and to build upon these contributions on a regular basis.

COP 21: Funding the Transition in Developing Economies
One of the challenges of the Paris Climate Summit will be to get emerging economies actively involved in addressing climate change (here, a street scene in New Delhi, India). © Donyanedomam

Development Needs of the South

One of the major challenges of the Paris summit was to overcome the historical distrust existing between the industrialized countries of the North and the developing economies of the South. Developing countries argue that they aren't responsible for the buildup of co2See Carbon Dioxid in the atmosphere in the 19th and 20th centuries and that measures currently being proposed shouldn't be an obstacle to their growth, just when they are beginning to reap the benefits. For this reason they are calling for “climate justice”.

Demographic growth (the world's population is expected to grow from 7 billion to nearly 10 billion people by 2050) is particularly strong in the South, where the quest for development has fueled a sharp increase in energy demand. Global demand for energy is set to rise by 37% by 2035, with two-thirds of this driven by the developing economies. These countries want to live better, have access to cheap energy and reduce the gap with the North.

Nevertheless, they decided to adopt the Paris production sharing contract (or agreement)Oil contract under which the oil that is produced is shared between the state and the oil company..., aware that their regions are among the most vulnerable to climate change. To satisfy developing country demands, the accord has retained the principle of differentiation, although the wording has been modified. The agreement now stipulates that developed countries must "continue taking the lead" and establish "absolute emission-reduction targets", while developing economies should "continue enhancing their mitigation efforts", albeit in light of their respective capabilities. The emerging nations will receive financial assistance to help them conduct regular assessments of their emissions in a transparent manner.  

By 2035, two thirds of global demand for energy will be driven by developing countries.

$100 Billion a Year, At Least

The agreement confirms that developed countries shall "provide financial resources" to assist developing countries. Several new provisions have been added:

  • Major emerging economies, such as China, are also encouraged to pitch in on a voluntary basis. The industrialized nations would have preferred stronger language.
  • The level of support specified in the agreement is expected to be higher than in the past. The agreement stipulates that the $100 billion annual commitment, already announced in Copenhagen, is a "floor" and that a new objective will be presented before 2025.
  • Although the funding will come from a wide variety of public and private sources, the agreement highlights the "importance of public funding". This was an important issue for the least developed countries because of their limited access to investment capital.
  • Funding must be balanced between adaptation and mitigation efforts (without setting binding targets), particularly to help the least developed countries and island states. This too was an issue of critical concern for the most vulnerable countries. Mitigation, which is aimed at curbing greenhouse gas (ghg) Gas with physical properties that cause the Earth's atmosphere to warm up. There are a number of naturally occurring greenhouse gases... emissions, is of little concern to them, since they produce very few emissions. Adaptation on the other hand, which focuses on improving climate-resilient infrastructure with regard to food security, water supply and health care, is of prime importance1.
  • Loss and damage, which primarily refers to damage caused by extreme weather events, has also become a prominent concern. Although the agreement recognizes loss and damage as a distinct issue, developed countries have refused to take responsibility for the events or to commit any finance. They simply recognize the importance of minimizing loss and damage.

$100 billion: The minimum amount of money promised each year to help the poorer nations of the South adapt to climate change. The goal will be revised upwards before 2025. 

Green Climate Fund

The Green Climate Fund (GCF)2 was established in 2011 as a financial mechanism for channeling the different sources of climate funding. The GFC is based in Seoul, South Korea. Its board is comprised of members from both industrialized and developing countries.

Two recommendations were drawn up:

  • Ensure that that the GCF doesn't become an unwieldy international bureaucracy but provides funding through decentralized mechanisms combining public and private sources.
  • Ensure that climate funding isn't diverted from development projects, i.e. a wind farm and a school shouldn't compete for funding.

 

Sources :

(1) IPCC

(2) GCFUND