Cash shortage hinders climate battle

By Joshua Chaffin in Brussels
Published: March 22 2009 19:57

At the end of their two-day summit in Brussels last week, European leaders pledged to pay a “fair share” to developing nations to help them fight global warming and adapt to its consequences. Yet they failed to deliver the one thing that environmentalists most desired: money.
The omission of a specific contribution, as well as unresolved questions about how the EU would pay for it, has become the latest stumbling block along the path to a global climate deal that world leaders will try to negotiate at Copenhagen in December. “The risk is that with the delay, the negotiations will not make significant pro­gress. The developing nations are only willing to take further steps when there is money on the table,” said Joris den Blanken, a policy analyst at Greenpeace.

The money issue, Mr den Blanken said, had overshadowed other elements of the meeting’s final communiqué that environmentalists should applaud – including a commitment to create a global carbon trading market.
The EU and other wealthy nations committed to providing financing to developing nations at a United Nations summit in Bali in 2007. The money would be used to invest in new technology to reduce emissions, as well as to improve seawalls and other infrastructure to prepare for the effects of a warmer planet.
In a draft paper prepared this year, the European Commission estimated that the EU could contribute some €30bn a year, beginning in 2020.
But that figure was deleted from the final communiqué, and the commission instead concluded that it was incumbent on developing nations to first detail the level of emissions cuts they were prepared to make.
Member states have not yet agreed on the size of their contribution – let alone how to finance it – either through a market-based system or emissions taxes or some combination. Yet most agree that it would be foolish for the EU to reveal its hand first in what is likely to be a complex global negotiation with the US, India, China and Brazil.
“It is important that the United States, Japan and other major contributors signal what will be their position,” said José Manuel Barroso, the Commission president.
Nonetheless, the EU will be on the spot again in June, after heads of state promised that they would discuss the matter in greater detail at their next council meeting.
If they are not able to table an offer then, environmental groups fear the process could drag dangerously close to Copenhagen because of the disruption of the June European elections and then the summer holidays.
Rebecca Harms, the Green party MEP, said the EU was squandering the credibility it had built up after closing a landmark climate deal in December to reduce emissions 20 per cent from 1990 levels by 2020.
“The Europeans, in my view, have become the new hesitant and shy partner in the international climate negotiations,” Ms Harms said.
Copyright The Financial Times Limited 2009