The Climate Action Network (CAN), a coalition of some 500 CSOs, presents the following position about the financing of mitigation and adaptation measures in developing countries.
· Developing countries must be supported in their efforts to limit the growth of their industrial emissions, making substantial reductions below business-as-usual. The support for their efforts to adapt to the adverse effects of climate change must also be scaled-up immediately and substantially, and the fact that certain loss and damage from climate change can not be avoided must be recognized.
· Emissions from deforestation and degradation must be reduced to zero by 2020, funded by at least US$35 billion per year from developed countries.
· Developed countries need to provide at least US$195 billion in public financing per year by 2020, in addition to ODA commitments, for developing country actions.
How are those billions of dollars going to be raised, leading up to some $230 billion by 2020? At what value of the dollar are commitments going to be made? How are they going to be distributed and by whom? How does the cap-and-trade systems in the EU and US deal with these financial obligations or should a global carbon tax system hold more promise? It seems that many of these financial questions are given far too little attention.
First of all, increasing amount of evidence shows that cap-and-trade fails to deliver significant GHG reductions. James Hansen’s OPED article in today’s New York Times presents some strong reasons against cap-and-trade and in favor of “fee and dividend”. In a more popular fashion a recent 10 minute video of the cap and trade watch project of the Transnational Institute makes the same point. Its various publications provide documented background on the video.
Second of all, these two main carbon reduction methodologies mostly deal with domestic climate change challenges and not with the financial requirements of the global system, particularly the necessary financing by industrialized countries for mitigation and adaptation measures in developing nations.
Given this insufficient attention to resolving the climate finance challenge the result will probably be that the World Bank will try to control the climate finance field with the assistance of the recently strengthened IMF. Thus, the present monetary, financial, economic and commercial systems will be kept in place, which caused the climate crisis in the first place. If Copenhagen decides to stick with the cap-and-trade-- the third phase of the EU-ETS runs up to 2015-- those systems will stay in place and they will continue to enrich the few, impoverish the many and imperil the planet.
What is needed is an institutional framework for climate finance that is based upon fairness, predictability, transparency and accountability. The Tierra Cap & Share approach is developing such framework. After capping the emissions at 350 ppm, equal allocations of carbon emissions permits are made to all adults everywhere, resulting in ecological creditor nations in the global South and ecological debtor nations in the global North. Basing the international monetary system on the carbon-based international reserve currency of the Tierra, climate finance becomes part of a nation’s carbon account in its balance of payments and accounts can be settled between Northern and Southern nations. Part of the Tierra architecture is a UN Tierra Monetary Board that is replacing the IMF. The World Bank will have become a part of an expanded UNDP.
Once cap-and-trade is abandoned in favor of a fee and dividend and once the need for fair global allocation is recognized as an essential element of an effective global climate change carbon reduction methodologies such as Cap & Share,
For this institutional climate finance and carbon reduction scheme of the Tierra Cap & Share to come into existence nations have to decide to cease greater monetary sovereignty to the UN monetary Board in the case of the Tierra as international reserve currency and to UN Central Bank in case of the Tierra as a vehicle currency. This monetary global governance cannot come about as long as privately owned banking systems are permitted to create money and as long as large financial corporations with the assistance of the IMF and WTO continue to control global finance within a weak regulatory structure. A paradigm shift have to take place away from the neo-liberalist philosophy on economics and governance towards a sustainability philosophy that integrates the social, political, ecological and economic dimensions of sustaining futures in the global North and South. A vision of such futures is represented in the integrated social and ecological values the Earth Charter, which is the ethical standard for the 21st century as was the Universal Declaration of Human Rights during the 20th century.