Germany announces doubling of foreign climate cash as tensions rise over finance

Published 13:14 on May 19, 2015  /  Last updated at 14:37 on May 19, 2015  /  Climate Talks, EMEA, International  /  No Comments

Germany will double the amount of climate finance it channels to developing countries over the next five years, Chancellor Angela Merkel said on Tuesday, in an effort to build trust towards striking a global climate pact in December.

Germany will double the amount of climate finance it channels to developing countries over the next five years, Chancellor Angela Merkel said on Tuesday, in an effort to build trust towards striking a global climate pact in December.

“Developing countries won’t accept an agreement if they don’t get financial support… in particular African countries,” said Merkel during a webstreamed roundtable at the Petersberg Climate Dialogue in Berlin.

“We know developing countries have to follow climate-friendly path of development … it is a challenge they will not be able to face alone.”

Germany’s climate finance has quadrupled since 2005 to around €2 billion in 2013, via revenue largely stemming from the sale of carbon allowances in the EU ETS.

Merkel said the annual amounts will reach double (to around €4 billion) by 2020 as part of an additional €8.3 billion Germany will spend on overseas development assistance over 2016-2019.

Industrialised countries have agreed to mobilise $100 billion a year from 2020 to developing nations to help them tackle climate change and the funding levels are frequently the biggest sticking points in UN climate negotiations.

Last year’s UN meeting in Lima only agreed on a vague pledge to scale up funding towards the 2020 goal, rebuffing calls by poorer nations and development groups for interim targets and greater transparency on whether the cash is additional, loan-based or includes ways of ensuring environment benefits.

PETERSBERG TENSIONS

The Petersberg Climate Dialogue is an informal meeting of ministers and representatives from around rich and poor 35 countries mostly held behind closed doors.

Meeting co-chairs German environment minister Barbara Hendricks and France’s foreign minister Laurent Fabius said many ministers had spoken of the need for “better predictability of public finance and more clarity on how the goal of mobilising $100 billion by 2020 will be reached”.

“It was stressed several times that developed countries have a special responsibility in this regard and should continue to increase their efforts in mobilising climate finance,” they said in their written conclusions.

Poland’s attendee Marcin Korolec was more direct:“Gloves are off… Discussion on finance shows how difficult a task we will face in Paris. It’s already emotional,” he said on Twitter.

MERKEL RESPONSE

In response, Merkel emphasised the need for industrialised nations to act and showed her support for setting interim goals to 2020.

“Developed countries have contributed to global warming and now we have the obligation to those that still need the development. This is a matter of fairness and responsibility,” she said.

“We will have to do more if we really want to reach $100 billion by 2020. One-third of these funds have been mobilised, $70 billion is the gap, we need a roadmap to close this gap.”

But she said the aid financing wouldn’t be for all developing nations: “some may receive financial support, some may have to make the technological shift by themselves.”

PRIVATE SECTOR CONTRIBUTION

India’s environment Minister Prakash Javadekar questioned if financial market mechanisms were “still a feasible way out” for developed nations to achieve the funding.

Merkel replied by stressing the need to leverage private sector money to help bridge the shortfall to the $100 billion level by establishing attractive investment conditions that can “keep the risk bearable”.

France’s President Francois Hollande, who will host the year-end UNFCCC Paris meeting, said it was necessary to “do the maximum with public resources” by leveraging private sector money.

“There will be a market mechanism set forth in order to attract complimentary financial resources, so we can combine what the market is able to leverage as long as it is incentivised to do so,” he said.

“We have to build a world market for carobon,” he said in separate remarks that echoed Merkel’s earlier speech emphasising the need to expand emissions trading worldwide.

By Ben Garside – ben@carbon-pulse.com