Unsure and Unswearing Negotiations of Financing

Combating Climate Change (UNFCCC)

Xianliang YI

Ministry of Foreign Affairs, China

Oxford, August 2010

Content

I The status quo: the process of commitment and unswearing

II Interpretation of relevant parts of CAIII UNFCCC: impossible to create a financial mechanism with stability and predictability VI AGF proposals: impractical and unacceptable

for UNFCCCV IMO/ICAO: sectoral actions denote uncertainties

and decades effort needed for mobilizing resources

VI China's positions and perspectives

I The situation quo

1. Limited resource and huge need and expectation • resources under framework of UNFCCC: ---the 5th refreshment of GEF: 1.36 b US$ for climate of 4.25 b US$---Adaptation Fund: 149.6 m $--- others• needs: agreed: 30b US$ (fast start funding-FSF for 2010-2012 100b US$ (long-term finance arrangement-LFA

for each yr from/ beyond 2020UNDP: 200b US$ for mitigation and 49-171b$ for adaptation in developing countries in 2030

2. Ambitious promise but difficult action

• Promises made by some Parties (to the Copenhagen fast start fund)

-US: 10b US$ (Obama, COP15)

-Japan: 15b US$ (Hatoyama Initiative)

-EU: 7.2 b Euro (EU Env. Ministers'decision)

-Australia: 599 m AU$

-Canada: 400m US$

• None one commits to carry the promise out except EU reiterates its announcement

3. None progress in the negotiation either under FCCC context or any other forum to support a decision or conclusion by COP 16 on the financial issue which will be the decisive element of a successful Cancun Conference.

• FCCC: -fccc-centered or a mdb-centered

- how many and what kind of funds need

-CBDR, percentage and addition• AGF: the public resource would be denied • IMO: Experts Group on market mechanism will report its

study to IMO Council in 2011• ICAO: Ministerial meeting in this October will discuss

the next step action, but none concrete conclusion on levy and/or emission trade

II Interpretation of the Copenhagen Accord

1. FSF 30b US$ should come public resources

2. LFA 100b US$ should majorly from public resources with supplemental by market mechanisms if they could take place then

Q: how about the scale of 2013—2019?

III UNFCCC

Chapter III Enhanced action on the provision of financial resources and investment( Chair's Text to facilitate negotiations, Aug. 2010)

Agreed something but with fundamental and substantial disagreements

General agreement:

1.Scaled up, new and additional, predictable and adequate

funding shall be provided to developing country Parties, …

2.The main source of funding shall be provided by

developed country Parties. Private-sector financing and other

innovative sources of funding shall supplement the provision

of public financial resources.

Fundamental disagreement:

1. [developed countries commit to a goal of mobilizing

jointly USD 100 b US$ ][developed countries shall make

assessed contributions of 1.5% of the GDP of those countries]

2. [Developed country Parties] [All Parties, except least

developed countries,] shall, beginning in 2013, provide

resources based on an [assessed] [indicative] scale of

contributions to be adopted and periodically updated by COP.

3. New or existing bodies govern the resources

--A new body of the financial mechanism shall be

established under the guidance of and be

accountable to COP in order to perform, inter alia,

the following functions:

--Existing institutions shall be strengthened in order

to perform, inter alia, the following functions:

IV AGF might be practically resultless

•The Advisory Group on Finance convened by the Secretary General of the United Nations to develop practical proposals to mobilize new and innovative resources for long-term financing for climate change, as pledged by developed countries. The report of the Advisory Group on Finance is due to be presented to the Secretary General of the United Nations on 29 October 2010.

•The Chair of LCA believes AGF will deliver practical proposals/suggestions to LCA or COP16

•Actually, there are diversified disagreements in the AGF, mainly because of the dispute whether the public resource should be the dominant funding. Furthermore, the wording was changed to "grant" which was interpreted covering the public resource.

V Sectoral channels maybe the way to make deal but need time

1 ICAO2 IMO

Both could set MF and internal funds

3 Industries (steel, cement, etc.) without specialized intergovernmental organizations (INGs)

VI How Chinese positions1. China can not punch above its weight• job is the first priority• lower emission per capita in history • coal is the primary energy • a big embitter with great mitigation potential but more

emission needed • energy subsidies and taxation should be the first

consideration for financing climate issue

2. Cooperation in energy technology and efficiency should be the core

3. South-South cooperation should be strengthened

Data of PEW Centre

1 ） 1850-2000 emission ： US 30% and China 7% of the total emission in the world

2 ） 1750--1950 ， the developed emitted 95% of the total ； 1950--2007 ， the developed emitted 77% ； 1904--2004 ， 8% ；3) Emission (billion ton of CO2) from 1750: •world in total: 1122.2• developed countries: 805.6 ， 78% (if add other GHGs,

more than 80%)of the total ；

4) historical emission per capita(ton CO2, 1750-2006): India 43, China71 ， UK1125 ， US1107

Questions for discussion:

1. Need and possibility to decide a minimum percentage (50%) for public financial resources in the LFA from developed countries, based on 100b US$ of 2020

2. Possibility of a yearly increase ratio of LFA

3. How to connect sectoral funding with LFA

4. How to arrange the financing for 2013-19

Thanks