Breaking the Standoff: Post-2020 climate finance in the Paris agreement | Climate Change Mitigation | Top Down And Bottom Up Design

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Climate finance is fundamental to a fair and effective global climate agreement. Too few countries have delivered on their obligations. As a result, the world’s poorest people have not benefitted from the necessary investment, and climate finance has been a major obstacle to achieving a global climate change agreement. This paper suggests a new approach that recognizes the failings of the current climate finance regime and is better informed by needs and opportunities at the national level. It could break the current standoff and trigger a collaborative effort that delivers effective investment at scale in both mitigation and adaptation. Along with ambitious emissions reduction pledges by developed countries, this is key to success in the 2015 Paris climate negotiations. See also Stockholm Environment Institute discussion brief ‘Estimating International Mitigation Finance Needs: A top-down perspective’
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  201 OXFAM BRIEFING PAPER 1 DECEMBER  2014 www.oxfam.org Elisabeth Tamara near Nevado Huascaran,the highest mountain in Peru.  In t his area of Peru, glaciers are retreating, affecting communities who depend on melt water. Photo: Gilvan Barreto/Oxfam GB (2008) BREAKING THE STANDOFF Post-2020 climate finance in the Paris agreement Climate finance is fundamental to a fair and effective global climate agreement. Too few countries have delivered on their obligations. As a result the world’s poorest people have not benefitted from the necessary investment, and climate finance has been a major obstacle to achieving a global climate change agreement. A new approach that recognizes the failings of the current regime and is better informed by needs and opportunities at the national level can break the current standoff and trigger a collaborative effort that delivers effective investment at scale in both mitigation and adaptation. This, along with ambitious emissions reduction pledges by developed countries, is key to success in the 2015 Paris climate negotiations.  2 CONTENTS   Executive summary .............................................................................................................. 3 Breaking the stand-off ..................................................................................................... 3 Lessons learnt from the $100bn regime...................................................................... 3 From abstract global numbers to a focus on concrete national needs and potential 4 Finance and equity ...................................................................................................... 5 1 The choices ....................................................................................................................... 8 Quantitative commitments ............................................................................................. 8 B. A single target? ...................................................................................................... 10 C. Top-down or bottom-up numbers?....................................................................... 13 D. Who pays and who receives? ................................................................................ 15 E. What counts? ......................................................................................................... 21 Qualitative commitments .............................................................................................. 23 F. What commitments to policy action should be captured in Paris? ....................... 23 2: The numbers .................................................................................................................. 29 A. Mitigation .................................................................................................................. 29 Order of magnitude of a collective mitigation finance goal ...................................... 29 Oxfam's choice of mitigation finance numbers ......................................................... 37 B. Adaptation ................................................................................................................. 37 Order of magnitude of a collective public adaptation finance goal .......................... 37 Order of magnitude in national action and financing schedules .............................. 39 Oxfam’s choice of adap tation finance numbers ........................................................ 40 Conclusions and recommendations .................................................................................. 41 Notes ............................................................................................................................. 43   3 EXECUTIVE SUMMARY BREAKING THE STAND-OFF Negotiations are currently under way to develop a new international climate change agreement that will cover all countries and curb global warming to below the internationally agreed limit of 2 degrees. The new agreement will be adopted at the United Nations Climate Change Conference  –  Conference of the Parties 21, or COP21  –  to be held in Paris in November/December 2015, and will be implemented from 2020. International climate finance  –  the international support to help developing countries adapt to climate change and enable low-carbon development  –  must be at the heart of the Paris agreement. It offers the key to unlocking mitigation potential in developing countries and enabling communities to adapt to current and future impacts. It is also a basic building block of a fair agreement: one that accords with countries‟ relative responsibilities for the problem, and their capabilities to address it. Yet for too long finance has been branded as a stumbling block, hindering progress at the negotiating table. To be able to commit to low-carbon development pathways, developing countries need the confidence that they will receive adequate and on-going support from developed countries, who need to accept that it is in their own national interests to deliver. But with a new and revitalized approach to the climate finance discussions, negotiators in Lima and Paris can break through this standoff and unlock a brighter future for developing and developed countries alike.   Oxfam proposes a new approach that is guided by the lessons learnt from the failings of the current climate finance regime, as well as by a better understanding of climate finance need and potential at national level. This finance blueprint for Paris for the first time gets down to business in terms of who pays and who receives, and how much. Lessons learnt from the $100bn regime The current commitment among developed countries made in Cancun and Copenhagen 1    –  to jointly mobilize $100bn by 2020 from a variety of sources to address the needs of developing countries  –  has exacerbated the climate finance standoff. The $100bn commitment has become an iconic reference point in global negotiations, haggled over by negotiators and the source of much of the discontent and many of the problems that have dogged climate finance negotiations over the past five years. Progress in meeting this goal has been too slow. Current climate finance levels have flat-lined since the Fast Start Finance period, and despite recent progress with filling the Green Climate Fund to the bare minimum mark needed to get the new fund up and running, developed countries remain off-track for bringing up climate finance levels to meet their overall promise. One of the reasons for this is  4 the vague nature of the target itself. Too few details have been agreed by negotiators about how financial flows will be mobilized, which countries will mobilize them and which countries will receive them. This has undermined developing countries‟ ability to create  effective plans for their adaptation and mitigation needs. There are four key shortcomings of the $100bn approach, where the post-Paris agreement must do better. 1. $100bn is not enough to address the problem. It is too low a target if it is to come from both public and private sources, and too little if it is to be spread between both adaptation and mitigation. 2. Everyone and no-one is accountable. It is a target for all developed countries, meaning that no specific country has committed to a quantified pathway for scaling up towards it. Meanwhile all developing countries are entitled in theory to receive it, but none knows how much it might receive from one year to the next, making planning impossible. 3. There is too little clarity on rules for what counts, especially in terms of private finance: whether money is new and additional; whether loans can be used etc.  –  making it even harder to hold countries to account for real and comparable increases in finance. 4. Ultimately, it has become an abstract number that Parties fight over in the world of the UNFCCC, which is too far removed from the real business of cutting emissions and supporting vulnerable communities. It is time this changed. From abstract global numbers to a focus on concrete national needs and potential Success in Paris will mean negotiating a finance package that recognizes the true scale of the overall challenge  –  both in mitigation and adaptation  –  yet is responsive to the needs and specificities in given countries. This paper puts forward some numbers which indicate the scale of the financing challenge, drawing both on a synthesis of available global estimates, and a close look at existing national-level plans. For mitigation, Parties should collectively recognize and commit to bridge a mitigation investment gap in the order of several $100bn per year, perhaps in excess of $500bn per year (in both public and private finance). This is the difference between current investment levels and what the latest models estimate is needed to shift the world onto a 2 degrees pathway. For adaptation, Parties should collectively recognize and commit to bridge the scale of the  public   adaptation finance gap. Adaptation needs will increase the more temperatures are allowed to rise, so the target must be determined based on the mitigation ambition of agreement  –  for example in a 2ºC agreement, global estimates indicate an additional $60bn per year will be needed by 2050s for sub-Saharan Africa. Developed countries should commit to channel a significant proportion of these funds through the Green Climate Fund. While a collective commitment to closing this gap is crucial to the Paris agreement, achieving real progress lies in ensuring support at the country level.
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