Much ado about nothing!

Less funds will be available in future for the central – and legally prescribed – tasks of poverty reduction such as education and health care, as well as the strengthening of civil society. Photo: Slum in Manila, Philippines.
Article AS news
The Federal Council still has no plan for how it intends to raise about 1 billion francs annually for international climate protection projects. Worse yet, it confirms its intention to divert hundreds of millions from the development budget.

The Paris Climate Agreement binds all OECD countries, according to their climate-related responsibility and economic performance, jointly to pay USD 100 billion annually to developing countries as of 2020. For years Alliance Sud has been pointing out that Switzerland's proper share is about 1 percent. Thus, in less than three years' time, new funding of around CHF 1 billion per year will have to be generated. In 2015 the National Council accordingly requested information about the international climate funding contributions "to which Switzerland could be bound as of 2020 and how they would be funded."

In its report on the matter dated 10 May 2017, the Government downplays the amount of the contribution. It proposes a "fair share for Switzerland" of a mere USD 450 to 600 million per annum, which it explains as the outcome of a "weighted view", in favour of emissions within the nation's borders. In so doing, the Federal Council understates Switzerland's economic strength – we generate about 1 percent of the income of OECD countries – and disregards the country's real responsibility in the global climate crisis; the key concepts here are grey emissions associated with imported goods, air traffic or the Swiss financial centre.

Contradictions…

The report is also disappointing for other reasons: some of its conclusions clearly contradict the analytically sound middle section of the report. It is correctly pointed out, for example, that under the Framework Convention on Climate Change "the funding provided by industrialized countries for climate-related projects […] must be new and additional." Despite this, the Federal Council plans to use "public funds from existing [1] sources and confirms – for the first time in black and white – that those funds "as hitherto, are to come mainly from credit lines for international cooperation (Swiss Agency for Development Cooperation / SDC, State Secretariat for Economic Affairs / Seco)."[2] Simply put, this means that annual contributions to the tune of hundreds of millions are to be funded from the shrinking development budget rather than from new funding sources – in other words, climate protection measures instead of poverty reduction. But the Federal Council's justification to the effect that climate projects are per se development projects, falls short not just for Alliance Sud. Even the Green Climate Fund (GFC) recently rejected a project application as it classified the project as a development project rather than a climate project.

…and calculated optimism

The Federal Council hopes "to raise a substantial part of Switzerland's fair share […] through private funds." And this, even though the report mentions the controversy surrounding "the way private funds are to be credited to the government funding target of USD 100 billion as of 2020." One may or may not share the Federal Council's (calculated) optimism, but the Federal Council should at least show how it plans to mobilize such private funds in Switzerland. Yet precisely on this key question, the report provides no answer at all, although as recently as May 2016 the Federal Council promised that the report would also lay out "funding options […] including possibilities that are innovative and based on the polluter pays principle." Instead, the Federal Council now wishes to use only "instruments" that are as yet largely unexplained, or to examine "new partnership models […] that encourage the mobilization of private funds."

Clearly, private enterprises or investors will only invest in climate protection measures in developing countries if there are direct or indirect benefits to be had, which is increasingly the case in the field of renewable energies. Urgent climate adaptation measures, however, offer hardly any prospect of commercial gain. This is why the Paris Climate Agreement underlines the importance of public funding and calls for half of all climate funding contributions for adaptation measures to be used to benefit the poorest and most vulnerable to climate change in developing countries.

Permanent standstill

It is alarming that the Confederation has made absolutely no progress since 2011 on the question of raising additional funds based on the polluter pays principle. At the time, an interdepartmental report recommended a range of funding options based on the polluter pays principle for further study, yet that nuanced overview was shelved.

It is conceivable, for example, that (some part of) the revenue from the CO2 tax could be earmarked for the purpose; a 2008 legal opinion already confirmed that this is constitutional and lies within the competence of the Federal Council.[3] Even a "quasi-voluntary" contribution by a private enterprise to a climate fund, for example in return for (partial) exemption from the CO2 tax, would in principle be possible. This approach would not even be new. The so-called climate cent (Klimarappen) could be extended to international climate contributions. The already existing compensation payment for fuel imports could also be increased and the proceeds specifically earmarked. It would be even simpler to introduce a mandatory compensation payment or a climate tax on international flights. Here too, several already existing solutions in EU countries could offer possible models. In conclusion, the Federal Council could also set a fixed basic charge for the emission certificates issued annually and use the proceeds specifically for climate protection measures in developing countries.

Conclusion

Instead of moving forward with concrete solutions, the Federal Council is pinning its hopes to private sector climate funding contributions that are vague and contentious under international law. At the same time, it is using limited development cooperation funds to cover its back. Is this merely an indication of weak leadership, of lack of courage or is it perhaps fear of political blowback in a Parliament that approves expenditures and government interventions mostly when its own clientele stands to benefit? What does seem clear is that the 19-page report by the Federal Council in no way does justice to the mandate it received from the Foreign Affairs Committee.

 

(Box)

Private and public climate funds

js. Redirecting trillions in private investment and financial flows toward climate-friendly technologies is an important credo of the Paris Agreement. The USD 100 billion contractually agreed and payable to developing countries for climate financing is another matter, however, as the poorest and most affected by climate change are hardly benefiting from these investments. Public funding is necessary above all for adaptation measures in developing countries, given the absence of any prospect of a return on investment.

 

[1] Author's emphasis

[2] International Climate Financing – Report of the Federal Council on fulfillment of postulate 15.3798 of 2 July 2015 of the National Council's Foreign Affairs Committee.

[3] Umbricht Rechtsanwälte, 2008: «Rechtsgutachten über den verfassungsrechtlichen Rahmen einer Klimalenkungsabgabe des Bundes».