Africa and the Global Climate Deal

Climate change is not a crisis of Africa's making, yet it is Africans, especially the poorest, who are already suffering and stand to lose the most. Not only does it make things harder for those struggling to combat extreme poverty and disease by exacerbating the conditions of poverty, but it threatens to erode the gains that have been made in recent years: more children in school, less people dying of disease, increased food production.

There are ten 'Must Haves' for Africa, and poor people across the developing world, in a new global climate deal. ONE calls on negotiators in Copenhagen to agree:

1. Additional finance. Diverting resources from existing aid commitments to fight climate change is like ‘robbing Peter to pay Paul’. It will reduce Africa’s chances of combating poverty and set back progress in areas like education. Public finance for adaptation must be additional to existing and promised aid.  
2. Development promises kept. Existing development promises must be kept in full, not undermined by double-counting of ODA as climate finance.
3. Sufficient finance for adaptation. Significant adaptation financing of between $75-100bn annually, from both public and private sources, is needed. Sub-Saharan Africa will require at least 30% of this figure.
4. Innovative finance. Public funds will not be sufficient to meet the challenge, innovative financing mechanisms must be agreed to help close the funding gap. Options include national domestic emission auctioning schemes or internationally agreed schemes, such as aviation and maritime levies.
5. Immediate finance. Short-term, fast-track financing must be agreed to assist the most vulnerable countries in their adaptation efforts and build trust in the negotiation process.
6. National ownership. Adaptation will have more chance of success if National Adaptation Programmes of Action are integrated with Poverty Reduction Strategies and existing channels, such as the World Bank or African Development Bank, are used to distribute funds to these programmes. A Global Climate Fund could be used to collect public and private contributions.
7. Ambitious emissions reductions. These must be agreed to limit climate change to 2°C above pre-industrial levels. This will require emissions reductions to be as close as possible to 40% by 2020.
8. Make the Clean Development Mechanism work for Africa. Reforming the CDM would make it easier for Africa to exploit its carbon offset potential and support global mitigation efforts.
9. Cut in deforestation. The Reduced Emissions by Deforestation and Forest Degradation (REDD) programme is an opportunity to cut deforestation in Africa but it needs to ensure that benefits go to the people who are really dependent on the land.
10. A legally binding deal. Tackling climate change is too serious a threat to Africa and the world to leave to best endeavors. A new deal must be legally binding.

Additionality is Essential for Africa

Figure 1. per capita and total emissions for different countries and world regions

Africa has contributed least to the current climate challenges. Only 3.6% of global C02 emissions come from the African continent (Figure 1). In stark contrast, the continent is already feeling the ramifications harder than any other. There have been severe floods in Zambia and Mozambique, shifts in rainfall patterns in Uganda and huge areas of land are experiencing longer and more intensive periods of drought. These are arguably only the first signs of what may be to come: By 2020 some regions could see crop yields from rain-fed agriculture fall by up to 50% and an additional 75 - 250 million people could be affected by lack of water.(1)

It therefore comes as no surprise that a global climate deal which provides significant new resources for adaptation, and includes ambitious mitigation measures, is of overriding importance for African countries. These resources must be additional to existing and promised development assistance.

Financing Adaptation:

African societies will need significant resources to adapt to the impacts of climate change. Adaptation means more than minimising the number of individuals who are worse off as a result of climate change. The gains made in the fight against extreme poverty and disease over recent years must be preserved and built upon. Under the polluter-pays principle, the majority of these funds would have to be generated in those countries that have the highest cumulative historic greenhouse gas emissions, as well as the capacity to pay.

The estimates of annual costs for adaptation measures in developing countries are steadily increasing. The most recent estimates from the World Bank are between $75 billion to $100 billion a year.(2) Investments in adaptation have two key features: First, they are public investments. Second, their costs will increase steadily between 2010 and 2050.

In the short-term developing countries need adaptation finance to kick in now so they can start the work of responding to the climate emergency. We call on developed world leaders to commit to a substantial and entirely public fast-track fund to run from 2010 until the date that a Copenhagen-agreed adaptation fund of between $75-100bn a year actually begins.

Agriculture, health, natural resource management (including forestry), water and infrastructure are the sectors where the need to adapt is the greatest. The obvious overlap with traditional development efforts shows that these new challenges can and should be integrated into existing development cooperation mechanisms.(3) Africa is facing some of the worst ramifications, while at the same time having the least resources to deal with the consequences. Based on the most recent estimates from the World Bank, ONE suggests that at least 30% of adaptation financing for the period 2010-2020 should go to this region.(4)

A number of proposals have been submitted to the UNFCCC by national governments and other bodies regarding the funding of adaptation (and mitigation) in developing countries. ONE urges that, in line with the principles of effective aid laid out in the Paris Declaration and Accra Agenda for Action, any international funding mechanisms for adaptation should be:

a) Sufficient - funds generated are equal to the scale of the task.

b) Predictable - funds are provided in as stable and predictable a way as possible.

c) Equitable - contributions reflect both historical responsibility and capacity to pay.

d) Additional - funds are 'new and additional' to existing aid requirements.

e) Verifiable - funds are collected and disbursed in a transparent and verifiable manner.

f) Implemented easily and transparently - mechanisms that can be readily implemented should be favoured, with transparent governance structures that give all countries a voice and ensure that the poorest benefit.

Innovative Financing:

Whereas it will be incumbent on the main emitters to mobilise the majority of these resources, the delays in scaling up ODA suggests that the necessary resources are more likely to be reached if innovative revenue streams are used in addition to national budgeting. No single financing mechanism will raise the level of funding needed on its own, necessitating that several finance mechanisms be established as part of a global deal. One such combination would include the following elements:(5)

1. Auctioning Emission Allowances-The European Emission Trading Scheme (EU-ETS) is already generating new revenue streams. These are set to increase to about $35 - 50 billion per year.(6) If 50% is dedicated to developing countries, it would generate between $17.5 - 25 billion annually. In this context, it is important to note that other countries and regions have introduced cap-and-trade systems (Australia, Tokyo, some US states) or are prioritising their introduction (US, Japan). These countries should consider allocating a significant portion of the new revenues for adaptation measures in developing countries.
2. Aviation carbon levy - This proposal, which is similar to the use of aviation levies to fund UNITAID, could apply a levy of around $6 for all international economy flights, and around $62 for business class flights. The levy would be charged by the airlines at the point of sale. With the exemplary tariffs above, it would raise $13 billion per year.
3. Maritime carbon levy - An emission charge applying to shipping to all Annex I countries could raise $15 billion per year.
4. Other innovative financing - Further innovative financing options need to be explored, including those under evaluation at the IMF as mandated by the Pittsburgh G20 and those raised by the Landau Report. Examples include a Financial Transactions Tax and action around Special Drawing Rights.

Together the first three mechanisms would raise between $45.5 - 53 billion annually, not taking into account revenues from auctioning under cap & trade systems other than the EU ETS. Gradually introducing these carbon finance mechanisms would allow for a linear scale-up of funding, while cushioning the impact on the budgets in the main emitter nations.

Supporting Africa's Sustainable Development:

Africa has very low carbon emissions and is therefore often not included when mitigation is discussed. However, there is a great opportunity for Africa to contribute to ambitious global mitigation targets. Africa offers an essential global public good in the form of carbon sinks. The rainforest in the Congo Basin, for example, is the second largest carbon sink in the world.

Mitigation strategies should also cash in on the "clean slate" advantage. Africa has limited energy infrastructure and production combined with rapidly growing energy demands. It will strive to fill the gap at the lowest possible cost: largely traditional thermal power plants. A "sustainable development deal" with Africa will enable African economies to be a global showcase for a low-emissions growth path. This has three components:

1. Ensuring and financing technology transfer - Africa's enormous potential to generate solar thermal, biomass and hydropower must be harnessed. Applying these technologies on a decentralised small-scale has the potential to sharply increase electrification rates in rural Africa. These technologies can also be used on a large scale, as can geothermal and wind power.
2. Admitting African carbon offsets to meet emission reduction targets in main emitter countries-Under the Kyoto Protocol, carbon offsets generated anywhere in the world can be used to comply with reduction targets. It is imperative that all cap-and-trade schemes set up by developed countries incorporate this key feature in order not to limit full eligibility of internationally generated offsets.  In addition, social safeguards in carbon offset projects need to be put in place so that local communities benefit in an equitable way.
3.  Reform CDM and operationalise REDD+ - African and other countries that generate few emissions, or where baseline data is inadequate, currently have a very limited number of CDM projects. Some alterations to the CDM can help industrialised countries tap more fully into the vast carbon offset potential on the continent. The country specific baselines and the project-by-project discretionary decisions of the CDM Executive Board need to be substituted by pre-agreed quantitative benchmarks and standard emission baselines that lead to an automatic admission of a project under CDM.
   
   African efforts to avoid deforestation have to be rewarded and strengthened. Currently, many African countries are developing a baseline scenario which will allow them to measure avoided deforestation. The "Reducing Emissions by Deforestation and forest degradation" (REDD+) programme would help by rewarding avoided deforestation. This can contribute effectively to reach global mitigation goals. In addition, by investing in re-forestation and agro-forestry programmes this asset can be maintained and expanded while at the same time providing sustainable livelihoods. Once REDD+ enters its implementation phase, it should include a mechanism to leverage private investments.
   
   In order to kick-start CDM and REDD+ projects in Africa, capacity-building programmes (e.g. for certification agencies) as well as start-up financing is of vital importance.

These three measures can set the right cost-incentive to set Africa on a low-emissions carbon growth path. This is a smart investment as it will be both cheaper and more climate friendly than reacting once Africa's emissions have reached problematic levels.

Notes

Annex 1: Climate finance for Africa must be additional to aid

Public financing for adaptation costs should be additional to current and promised Overseas Development Assistance (ODA). In the text of a Copenhagen agreement ONE calls for this to be made clear with the following line:

Climate financing specified in this agreement will be new funding, additional to existing and promised aid flows. Development promises will be kept in full.

Existing development promises must be kept

• In Copenhagen it should be clearly stated that pre-existing development promises must be kept, alongside a commitment to provide adaptation finance to developing countries. The EU's promise of reaching 0.7% of GNI by 2015, President Obama's pledge to double US foreign assistance and Japan's undertaking to double ODA to Africa by 2012 are commendable ODA commitments that should not be undermined by including financing linked to climate change negotiations.
• The results of increased aid have been plain to see in Africa: more children in schools, fewer people dying from preventable diseases, and a reduction of extreme poverty. If a deal in Copenhagen comes at the cost of support for the Millennium Development Goals it would compound the injustice of climate change as experienced by the world's poorest people.
• Climate change is already making life harder for the world's poorest, those that are least responsible for the effects. There have been severe floods in Zambia and Mozambique, shifts in rainfall patterns in Uganda and huge areas of land are experiencing longer and more intensive periods of drought.

Climate finance and ODA: overlaps and differences

• There are clear overlaps between aid and adaptation finance activities but also important differences. If part of ODA were used to finance adaptation there would be profound implications for African development. Sectors such as education and aid-for-trade would lose out.
• If aid is used for adaptation there will likely be a shift of resources away from Africa to other regions. Given that climate change is already increasing the demands on ODA, this would be disastrous.
• Considerably less overlap exists between fighting poverty and mitigation measures. So using aid for this purpose would particularly undermine the fight against extreme poverty, as it would shift investments from LDCs to emerging markets and from explicitly poverty-oriented interventions to emission reductions that benefit the industrialized countries just as much as the poorest.
• A manipulation of the negotiation process in this way would permanently damage the developed world's relationship with Africa. A situation where, for example, EU Council conclusions mention the additionality of funds for climate change but this is not committed to in Copenhagen is unacceptable.

Transparency of funds

• It is essential that transparency of climate finance is achieved. Rumours of double-counting undermine negotiations and breed distrust.
• The examples of the Netherlands, who have said that 0.1% of GNI will go towards climate finance, while 0.7% will go to development, and the UK who have made a clear commitment that a limit of 10% of ODA can go to adaptation, are commendable and should be followed by others.

Annex 2: CDM reform option for the AWG-KP in Copenhagen

The CDM Executive Board recommendations (Annex 54) to the COP on improving regional distribution should be adopted.  Among these recommendations are to increase the use of standardized baseline and additionality benchmarks in certain sectors for CDM project activities.

This reform proposal can enhance the efficiency and regional distribution of the CDM.  Standardization refers to the adoption of generally accepted uniform procedures, and is used to enable objective comparison or judgment to simplify and add more predictability to decision-making.

Standardized baselines provide numerous benefits to LDCs:

1. Objective additionality determination to alleviate delays in the system which affect small projects in LDCs most negatively.
2. Extensive cost reduction through a streamlined project registration and issuance process benefiting and making viable more small-scale and less profitable projects.
3. Greater predictability so the willingness of private actors to invest in CDM projects in less favorable host countries is increased. 
4. Increased transparency so objective determinations on additionality would rid the CDM of its perceived environmental integrity inadequacy.
5. Regional and sectoral distribution is incentivized.  The uncertainty and costs related to determining crediting baselines, establishing additionality, and determining emission reductions ex-pos on a case-by-case basis disproportionately impacts the economic viability of small projects, projects in LDCs, and projects trying to break into new, untried sectors.  Lowering these high transaction costs is absolutely key to incentivize the flow of investment dollars into underrepresented host countries.

Although moving to standardized baselines can technically be done now, without any new decisions taken, many issues, including time constraints, lack of a clear mandate from the Parties, and enduring concerns about how and by what bodies appropriate emissions intensity benchmarks, default factors, and positive lists should be determined mean that their development is moving much too slowly. The COP should provide clear direction for standardization in Copenhagen.

Annex 3: How REDD Finance is currently treated in the draft negotiating text (section C part iii of the AWG LCA)

The current text recognizes the need for a variety of funding sources, including both market and non-market sources. The text divides the financing needs into two distinct phases: finance for a readiness phase and finance for a full implementation phase. Options for readiness phase financing are primarily defined as non-market or market-linked sources. Options for the full implementation phase range from public funds (option 1) to the use of markets (option 2) to a combination of markets and funds (option 3).

Language for the final Copenhagen declaration:

Parties should narrow the options on REDD+ finance within the text to define a flexible, phased approach to finance that will provide a range of funding sources to fit the various readiness stages . The readiness phase is currently well established within the LCA text, and should be considered an essential element of REDD+ finance. It is important that the sources of finance for this phase are more clearly defined, with a strong role for new and additional ODA - including increasing funds for existing mechanisms and dedicated revenue from the auction of allowances in industrialized countries. Existing mechanisms such as UN REDD and FCPF do not currently have sufficient funding to meet demand. Funding for these mechanisms should be increased and coordination between existing mechanisms strengthened.

A second phase that is frequently discussed in REDD+ proposals is a ramp-up phase of demonstration activities. This phase is not well established in the text but should be included. Finance for this phase should come from a combination of non-market and market sources and should provide sufficient and up-front financing to get REDD+ implementation off the ground. The full implementation phase is established in the text, but should be narrowed and refined. Market access for this phase should be established such that countries can participate as soon as they have the capacity to generate verified compliance-grade emission reductions.

While it is important that the focus of a REDD+ mechanism in the near term remain on the forest sector, it should be designed such that a future transition to a mechanism based on the agriculture, forest, and other land use sectors (AFOLU) is possible. It is our position that a REDD+ mechanism in the near term should include activities that reduce emissions, conserve existing carbon reservoirs, promote sustainable management of native forests, and enhance carbon stocks in the forest sector. Inclusion of additional forest sector activities beyond reducing deforestation and forest degradation ensures the broadest participation of developing tropical forest countries possible, and promotes an effective and efficient REDD+ mechanism at the global scale. Furthermore, conservation of existing carbon stocks and ecologically and environmentally appropriate application of afforestation/ reforestation using native species further contribute to the preservation of highly biodiverse forest ecosystems and may provide additional co-benefits. The overall emphasis of a REDD+ mechanism, however, should remain on the reduction of deforestation and forest degradation, as this will provide the greatest mitigation value in the near term.