An economic and moral case to keep EU’s promises on climate finance

Posted by oxfameu on 12/11/12

Hurricane Sandy is the last clear cut example of climate change in action and a stark demonstration of the economic and human cost of extreme weather.  Homes battered down by storms, crops ruined by floods and droughts all lead to significant economic loss. Climate change is estimated to have cost 1% of global GDP in 2010, or 700bn USD. Inevitably, it is the poorest people who are paying the highest price as they are less able to cope with the disruption. As extreme weather holds back global development, the EU and the rest of the industrialized world need to keep their promises to help developing countries deal with this unrelenting crisis.

Last month, EU Environment Ministers revealed their position for the upcoming climate talks in Doha. They, however, failed to answer one crucial question – what will the EU put on the table to support developing countries with adaptation to climate change and developing in low carbon ways.

At the end of this year, the EU’s commitment to provide €7.2 billion to help developing countries deal with the effects of climate change (so called ‘Fast Start Finance’) will be fulfilled. And as it stands, no new commitments are on the table to scale up finance post-2012 towards the 100bn USD a year they promised they would deliver by 2020. Despite good progress made by the Green Climate Fund (GCF) to get itself up and running as soon as possible, it still is an empty shell without any commitments yet made on how it will be filled.

The European Union currently is at risk of arriving to the UN talks empty-handed and may bash hopes of poor countries to have some financial support in their battle against climate change beyond the fiscal cliff of 2012. This is not an issue to be brushed under the carpet. In order to progress in climate negotiations, the EU should bolster the progressive alliance between the EU, the Least Developed Countries (LDCs), and the Alliance of Small Island States (AOSIS). Now is not a time for turning our backs on the more than 800 million people going hungry in the world. The EU has a responsibility to ensure that poor people have the means to cope with climate-related disasters that are more and more frequently hitting their harvests and driving them into increased levels of poverty.

So what can be done in spite of the economic crisis? The solution lies in the hands of the 27 finance ministers, and it’s up to them to maintain the EU as a serious player in the fight against climate change on the world stage. The EU has a number of money-generating tools to hand that could be most effectively used to feed the Green Climate Fund. The Financial Transactions Tax (FTT) is one such tool. Based on the initial European Commission proposal, the German Institute for Economic Research (DIW) estimates that a financial transactions tax implemented in the current 11 countries on board could raise €37 billion. If each of these countries were to allocate 10% or 20% of their proceeds to the GCF, they could raise between €3.7 billion to €7.4 billion a year. Climate finance post-2012 would look a lot healthier, as would poor people’s chances of withstanding future climate shocks. These revenues could top budgetary contributions and signify to developing countries that the EU is making substantial steps forward on climate finance.

Needless to say, the EU can’t tackle global climate change single-handedly; but there’s nothing to stop it from making some prominent first moves to encourage the rest of the developed world to follow suit. The EU should arrive at Doha prepared to stand strong in their commitment to scale up climate finance post-2012, urging other developed countries to agree on a package for 2013-2015 that is double the levels of the Fast Start Finance period.

With climate change already contributing to around 400, 000 deaths due to hunger and communicable diseases each year EU member states and other developed countries have their work cut out at the upcoming Doha conference. For the sake of the planet and the millions of people already suffering from the adverse effects of climate change, let’s hope they deliver.

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Oxfam's EU Advocacy office in Brussels works to ensure EU policies and practices affecting poor countries have a greater impact on those most in need. Our work spans numerous policy areas including development aid, food security, climate change, and the provision of humanitarian assistance to victims of conflicts and natural disasters. more.



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