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U.S. Plans Meeting to Discuss How Nations Can Meet Climate Aid Commitments

Donor countries have vowed to offer $100 billion annually by 2020 for clean energy and adaptation, but with little progress
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The Obama administration will host a high-level meeting to discuss ways to mobilize hundreds of billions of dollars in annual international global warming assistance, State Department Special Envoy for Climate Change Todd Stern said in a recent speech.

Speaking to the State Department's Foreign Affairs Policy Board, Stern warned that there will be "enormous pressure" on donor countries to show they are making progress on a vow to generate $100 billion annually by 2020 for clean energy and adaptation.

The United States and other countries, he said, need to turn the focus toward ways of unlocking vast quantities of private-sector dollars and also "develop a narrative" of how nations intend to fulfill the pledge made at the 2009 climate summit in Copenhagen, Denmark.

"The key here will be to combine limited public funds with smart policies and instruments to leverage significant private-sector investment in clean energy and infrastructure in developing countries," Stern said.

"Given the slow pace and fraught nature of the U.N. negotiations, it is important to drive real action among willing partners that doesn't depend on treaties, negotiations, et cetera," Stern said. "This makes sense substantively and can also send a positive signal that concrete international action in the immediate term is possible and can deliver results."

Analysts and environmental activists praised the early spring meeting as a time to negotiate practical ways of unlocking private-sector dollars for climate change. Several said it is also a badly needed signal to other nations that the United States is thinking constructively about climate finance instead of continuing to reject others' ideas and avoid the discussion.

It also comes as the Obama administration considers several proposals that might signal a renewed domestic commitment to climate action, including a proposal for a White House summit (E&ENews PM, Jan. 9). Bob Doppelt, executive director of the Oregon-based Resource Innovation Group, who pitched the summit idea to the Council on Environmental Quality this week, said that whether the White House chooses that option or another, he's seeing a significant change in attitude and approach from the administration in this term.

"I'm pretty convinced, and I can be pretty cynical, that the administration is serious about how to figure out how the president can take a leadership role on climate change," Doppelt said.

Beginning of an international conversation
A State Department spokeswoman declined to offer details about the climate finance meeting preparations or its goals. But those familiar with the United States' intentions described it as the beginning of an unfolding conversation with finance ministers and others about the best ways to leverage private funding from limited public dollars.

"This sort of meeting can be valuable. It's part of an ongoing process, and I think it can be quite productive," said Gilbert Metcalf, an economics professor at Tufts University who led the creation of the Green Climate Fund at the U.S. Treasury Department before returning to academia this year.

Metcalf praised some ongoing work, like an effort to develop more private-sector involvement in the burgeoning Green Climate Fund. Still, he noted, climate negotiators are not generally experts in finance, and if nations are serious about raising big bucks to protect low-lying islands from sea level rise, to develop distributed solar generation or to do other much-needed work toward both mitigating emissions and building resilience against weather disasters, the conversation needs to shift.

"Bringing together smart people from ministries of finance might actually help work through how to deal with some of these ideas," he said.

Other experts echoed that but said the administration needs to think even more broadly. Michael Liebreich, chief executive of Bloomberg New Energy Finance, said he thinks the best way to generate fresh ideas that will actually work is to have the big banks be part of the discussion. Moreover, he said, the focus should be on understanding what companies need to provide financial backing to potentially risky projects in developing countries, rather than on just raising the cash.

"Who will go? You can almost measure the success of the thing by who is there and who is not there. Until Goldman Sachs is sitting around the table, then you haven't created an investment that is going to be at scale," Liebreich said.

"There's a lot of thinking on climate finance that focuses on the supply of money, but actually you need to think about the demand," including what the money should be used for and why the private sector isn't already doing a particular project. "What the private sector needs to do is surgically fill gaps rather than fill a pool," Liebreich said.

Barbara Buchner, head of the Climate Policy Institute Europe, who has written some of the leading policy papers on climate finance, noted that the $364 billion that went to clean energy activity globally last year is a pittance compared to the $1 trillion that the International Energy Institute says is needed annually. That, she noted, doesn't even take adaptation into consideration.

Moving nations out of 'comfort zones'
The scale of the need, combined with the unlikelihood of big increases in taxpayer-funded aid from the United States or Europe, she said, makes private-sector participation all the more important. From feed-in tariffs to risk guarantees, she said, governments need to talk out the different types of policy incentives that could unlock private capital in various parts of the world.

"There is a need to make progress in this area, and it is one area where we can make progress. But there's no one solution fits all," Buchner said. She called the proposed meeting "a positive signal that there are some policymakers that are going to drive the agenda."

Some activists, though, said they are concerned that the United States will focus entirely on private-sector funding and will once again sidestep ways of raising public money, including from "innovative sources," like a tax on bunker fuels or airline emissions.

"This needs to not just be a perceived conversation where everyone is trying to duck the issues that are complicated to them," said Jake Schmidt, international policy director for the Natural Resources Defense Council. While developing countries will need to move away from some ideological positions that demand public dollars as a form of retribution for climate damages, he said, the United States, in turn, will also have to move out of its comfort zone in order for any finance meeting to be productive.

"The U.S. needs to be prepared to have a discussion about what the public finance component looks like. What innovative finance measures would work for them?" Schmidt said.

Athena Ballesteros, who leads work on climate finance for the World Resources Institute think tank, said, "If this meeting will help contribute to the goal of coordinating countries plans and actions to mobilize the $100 billion pledge, that would be most welcome, and part of the conversation is to find innovative sources of finance that would complement the scarce public resources being made available."

What that conversation will look like remains unclear. Metcalf, the Tufts University professor, said he does not believe the United States or other governments should even be held to a minimum level of public funding to build up the $100 billion.

"Why would you do that? ... Anytime you start putting restrictions -- say, X amount must be public -- all it does is tie your hands so that you lose flexibility, which undermines your overall effectiveness," Metcalf said. "What's important is addressing climate change. That's what we need to keep the focus on."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500

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