developing countries demonstrate increasingly conflicted priorities
6.4.2.2 Developing countries’ changing and varied perspectives
Developing countries’ challenge to balance the need to encourage any possible new sources of funding with their desire to ensure that developed countries carry a fair share of the burden emerged as increasingly significant within policy negotiations in the lead-up to COP-15. Some countries, particularly larger developing countries, promoted innovative sources, and many echoed developed countries’ statements on the practical reality of requiring private finance. For example, at the first “Convention Dialogue” meeting (before COP-12), the Philippines ‘highlighted the need for innovative ways of financing’ and ‘urged innovative mechanisms for financing adaptation’ (ENB-297), and at COP-12, South Africa ‘stressed the need for innovative financing mechanisms to support climate action’ (ENB- 317). At AWG-LCA-1, (before COP-14), the G-77/China and others called for ‘developing a mechanism to mobilize resources’, ‘China stressed innovative funding mechanisms’ for technology transfer (ENB-361), and ‘Mexico noted the need to consider innovative means of financing’ (ENB-367). At COP-14, ‘Brazil said new options are needed to provide the vast resources required (ENB-390) and ‘Bangladesh underlined the need to involve and
incentivize the private sector’ (ENB-391). At AWG-LCA-6 (before COP-15), ‘Turkey identified the need to mobilize the private sector in addition to public funding’ and Tuvalu ‘stressed the need for a variety of sources and for innovative funding, such as levies on international transport and a share of proceeds on market mechanisms that may be developed under the AWG-LCA’ (ENB-415), reflecting broader conversations about possible ways to generate the required levels of climate finance. At AWG-LCA-10 (before COP-16), ‘Guyana explained that from a “pragmatic and realistic standpoint” market sources are needed to complement public funding’ (ENB-467).
On other occasions, developing countries pushed back against the rise of private and innovative sources: at the fourth Convention Dialogue (before COP-13), ‘discussions on investment invited familiar developing country concerns about the risks of relying too heavily on flows of private investment’ (ENB-336). At AWG-LCA-2 (before COP-14), the G- 77/China said ‘funding should come from implementation of Annex I countries’ commitments’ and ‘India, the African Group, China and AOSIS stated that the private sector can play only a limited role’ (ENB-370). At the intercessional meeting between AWG-LCA-6 & 7 (before COP-15), ‘China said that the increasing emphasis on the private sector as a source of finance would lead to unpredictable funding, stressing that finance should be provided by the public sector’ (ENB-424), and Venezuela, with Egypt, Argentina, Sri Lanka and the African Group, ‘said funding should come from public sources’ (ENB-425). Concerns were also raised about developing countries, particularly LDCs, being able to access private finance, such as at AWG-LCA-6, when ‘Tanzania highlighted that LDCs are not able to solicit funding from the private sector’ and ‘the Gambia described failed attempts to involve the private sector in her country’ (ENB-415). In addition, developing countries highlighted adaptation, which often lacks the features necessary to attract profit-motivated private investment. For example, at AWG-LCA-6, the African Group ‘said public financing is essential for adaptation technologies, which often do not attract private sector investment’ (ENB-416).
Ultimately, developing countries’ expectations and priorities were changing. There was increasing acceptance that public and private finance were both required, mixed with ongoing concern that developed countries should not use private sources to undermine their commitments or obscure their failure to deliver public finance. At AWG-LCA-6 (before COP- 15) ‘many developing countries also stressed the need for public financing, saying that the private sector and carbon markets should play a complementary role’ (ENB-415), and ‘while identifying the need to engage the private sector, the G-77/China emphasized that this cannot substitute the implementation of developed countries’ commitments under the Convention. He also urged ensuring that the public sector is the primary source of funding’
(ENB-416) and Colombia ‘expressed concern that parties’ commitments would be transferred to the private sector’ (ENB-415). Overall, the debate was summarised in this extract recording discussions at the intercessional meeting between AWG-LCA-6 & 7:
‘debate centered [sic] on whether funds should be derived from strictly public sources or a mix of both public and private sources. Developing countries generally preferred that the primary sources of funds be public, with no conditionalities. Developed countries highlighted the role of private sources, preferring a mix of the two. Switzerland said that there was convergence on public and private sources but not on their respective roles… Barbados pointed to divergence on the extent to which public and private sources will play in the generation of funds’. (ENB-427)
This disagreement continued at AWG-LCA-7 (before COP-15), where in the closing plenary, the Vice-Chair ‘highlighted a common understanding that public and private sources of funding are needed but noted that no common view prevailed on the main source’ (ENB- 439).
COP-15 at Copenhagen ended in widely-publicised disappointment, with little to show for the prior years of heightened negotiation rounds, but the Copenhagen Accord did include key headline targets for provision of climate finance (examined in more detail in Chapter 5). However, the commitment was to ‘mobilizing jointly USD 100 billion dollars a year by 2020’, which ‘will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance’ and can include ‘investments through international institutions’ (decision 2/CP.15, paragraph 8). Accompanied by an explicit reference to previous policy, the Cancún Agreements the following year (decision 1/CP.16) state that ‘funds provided to developing country Parties may come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources’ (paragraph 99). Despite a wide range of suggestions and perspectives in evidence between and amongst developed and developing countries, policy outcomes remained highly constrained within the existing path allowing flexibility of sources and channels, and lack of moral basis or reference to compensation. While the headline targets are a key milestone in UNFCCC climate finance and have formed the foundation of subsequent policy architecture, the failure to address the concerns of developing countries regarding prioritising public finance and transferring responsibility onto the private sector, indicates that the associated layers of policy were a product of and reinforced the institutional structures that have shaped expectations about the kind of policy framework that the UNFCCC can produce.