Climate payments to be funded from development aid

Bruno Oberle
Article as analysis
Switzerland is to pay around 1 billion francs annually as of 2020 for international climate protection. In an interview with Alliance Sud News, FOEN Director Bruno Oberle goes on the offensive.

Interview with Bruno Oberle, Director of the Federal Office for the Environment (FOEN)

Alliance Sud News: What will it take to prevent the Paris Climate Summit in six months' time from failing as spectacularly as the Copenhagen meeting (2009)?

Bruno Oberle: We do not expect all outstanding problems to be resolved in Paris. But we must avoid creating overly high expectations so as to prevent disappointment. I did not find the Copenhagen outcome all that bad, by the way. After all, we did decide on US$100 billion in annual climate funding for poor developing countries as of 2020; and we did bring Heads of State together, in other words we did place the topic where it belongs.
Paris must now execute the undertakings of Durban (2011): overcoming the division of the world into one half that is rich and guilty and which must deliver, and another, which is poor and innocent and which can be passive.
A first central pillar comprises the Intended Nationally Determined Contributions (INDCs). These allow each country itself to state the amount of greenhouse gas emissions it is prepared to cut. An important second pillar consists of the rules: MRV stands for Measurable, Reportable, Verifiable; in other words, although the goals are not binding, they must be verifiable. These newly agreed goals and procedural rules allow rich countries like the USA and some developing countries to come on board and choose the pace they themselves consider appropriate. An important third pillar is the financing that was decided on in Copenhagen. There will be various sources, including the Green Climate Fund. France has now come up with yet a fourth pillar, which I find clever. In keeping with the motto "Let a thousand flowers bloom", an attempt is made to see what alternative or private sector initiatives may be forthcoming.

Climate conferences are premised on consensus amongst all countries, which is why agreement is reached only on the smallest common denominator.

Beyond individual countries, however, there are many other players involved. The world does not consist merely of a number of governments. We have always known that the US Senate would never ratify the Kyoto protocol. On the other hand, US Federal states the size of European countries as well as a number of private players have become active. Broadly speaking, there are lame ducks and pioneers everywhere. The pioneers act out of conviction, as they know that it will make them more competitive in tomorrow's world. As part of the Paris climate conference, one might say that a great book is now being opened in which each country can record its reduction target. This allows to check back later and hold countries to their word.

But does this not mean losing sight of the target of not exceeding a global temperature increase of 2°C?

That is of course the overarching goal, no-one disputes that. But climate is just one element of a much broader agenda in which direction we should be moving, namely that of the Sustainable Development Goals (SDGs). That is "The world we want" or, in fact, "The world we need".

If we understand you correctly, there is a certain air of disillusionment in government circles: reaching a binding agreement with sufficient reduction and financial targets is an exaggerated expectation in your view.

When you put it like that, all you are doing is anticipating disappointment yet again. What I say is that if we are to achieve results, we need the cooperation of a great many players. With the above-mentioned book country and leading private sector representatives set the general direction and send a signal that the issue is an important one. The problem, that is to say the 2-degree target, is well known. But Merkel, Putin, Modi and Obama will solve the problem by themselves. They will, so to speak, announce to the world: "This is an important topic, this is the goal we must strive towards, and this is the direction to take." They will then, like others too, deliver their contributions.

Individual countries or groups could also register themselves together as "progressive climate clubs" in this book and thus send the message: "Even though you are lagging behind, we are moving ahead."

Coalitions of the willing could very well be formed. What remains important though is for them to have clout. If Vanuatu, Tonga and Switzerland were to make common cause, they would not change the world. The major CO₂ emitters are well known. If they are not part of such initiatives, we risk being left with nothing but beautiful words.

Compared to our European neighbours, Switzerland's targets are much less ambitious. If we got together with Germany or other big players, we could also achieve much more even as a small country.

Switzerland's domestic per capita emissions are just about half those of Germany. Both countries are very similar – but we emit only about half as much as they do. Others could emulate us, or not. One thing that does help solve problems is technology; which Switzerland develops and exports. China, for example, is a mass producer of solar panels. The Swiss industry has significantly delivered the relevant technology.

Your comparison with Germany omits the fact that due to a much higher per capita consumption of imported goods, Switzerland also accounts for emissions abroad in an amount comparable to its emissions at home.

Kyoto and UNFCCC (UN Framework Convention on Climate Change) provided that only national emissions are taken into account. If account were to be taken of all emissions for which we are responsible, the State would then needs a control mechanism with which to prohibit imports involving substantial amounts of grey energy. But that would infringe trade agreements.

At the end of May, Germany joined the "Carbon pricing leadership coalition". This is giving fresh impetus to the originally Swiss idea of a global CO2 price. Is the time ripe for Switzerland to revive the proposal?

There have been encouraging signs of late. Much still speaks in favour of a global CO₂ price, as that would constitute a sound regulatory instrument and an ideal source of needed global investments. Our suggestion did nevertheless assume that all emissions in all countries would be subject to a tax. To accommodate developing countries, we had proposed a different tax rate for rich and less rich countries. Furthermore, we suggested that the proceeds from the tax in developing countries be managed in the form of national funds and used to pay for local climate protection measures.

Moving on to international climate finance: The US$100 billion have indeed been promised, but there is no roadmap for taking us to 2020. Germany recently announced that it will provide €4 billion in public funds every year as of 2020. Transposed to Swiss circumstances, that would correspond to CHF 750-800 million per year. Is Switzerland ready to follow Germany? That would encourage developing countries also to commit to ambitious reduction measures.

Let us make a few things clear: "There is no such thing as "the developing countries". Beyond all doubt, the LDCs, or least developed countries, will have to be supported, and it is a fact that, at least today, they are making as good as no contribution to global warming. This does not necessarily apply to all G77 countries, however. Large, emerging industrial countries like China, Brazil or South Africa are now less dependent on economic aid than previously. On the contrary, there will be discussion of the extent to which these countries will participate themselves in climate financing in the future.

Obviously we are talking about the poorest developing countries. But precisely these countries are being expected to do what we are unable to – prosper without additionally emitting large quantities of greenhouse gases in the process.

It will take enormous amounts of funding if humanity is to be organized sustainably and in dignity on this planet. This is now more urgent than ever, as we are all beginning to feel the negative consequences of climate change. Delaying the necessary investments would prove financially very costly, to say nothing of the loss of human lives. Such a situation would simply overwhelm public finances.

The problem is not the amount of funding needed. In any case, countless billions are being invested in infrastructure, transport and production systems. The main issue is channelling them in the right, low-carbon direction. Public funding is needed to create the relevant incentives.

Indeed, the amounts involved in climate-related matters are appreciable, as they are in other areas of sustainability. And no, not only public funding alone is needed. It will be part of the solution, but private investors must be convinced to get involved in this area too. Private and public investors, however, require clearly structured projects, reassuring governance and a return on investment.

And that is the point. To "convince" private investors, publicly funded market steering mechanisms are needed. The private sector will not do it on its own. But such mechanisms may not and cannot be funded from the development aid budget, as this contradicts the law on development aid…

Getting back to the matter of the US$100 billion for climate funding, our position differs from that of Germany. Germany is taking on 10% of the 100 billion, 40% of which is pledged from public sources, and 60% from private. In determining its own share of the 100 billion, Switzerland makes a mixed calculation based on gross national product and our domestic share of emissions. This conforms to Swiss law and yields a contribution of roughly half a billion. Of that amount, one-third is publicly funded, and two-thirds represent private funding.

An amount of 100 billion dollars was promised, but as funding additional to existing development aid.

As was decided at Copenhagen, the public part is new and additional, as it is part of the increase of the ODA credit line to 0.5% of GNP (Gross National Product). The funds have been budgeted accordingly.

That has perhaps been so up to now. And this line of reasoning could continue to be used should it be decided to increase ODA to the internationally agreed 0.7% of GDP. But because Swiss ODA is capped at 0.5%, the funding of international climate contributions by 2020, as you portray it, would come at the expense of food, education, health or other traditional development aid projects.

Yes this may be the case. But what does "traditional development aid" mean anyway? ODA priorities are constantly being reset in cycles. The focus has been on gender, decentralization or promoting democracy in the past. At the moment climate is in the centre of attention. And it was decided that climate finance would fall under ODA. Besides, this is entirely in the interests of the poorest, as they are the hardest hit by the consequences of climate change.

We look forward to hearing the SDC's view of your interpretation of ODA and what it should pay for.

People in the world of development cooperation are a community that will learn to comply with these new tasks. They have to, because this is the duty, because that is the policy direction. It’s a reasonable policy, and why should this community resist being an instrument of a positive development in the long-term?

Bruno Oberle, thank you for these elaborations.

The interview has been carried out by Jürg Staudenmann (responsible for climate policy at Alliance Sud) and Daniel Hitzig (responsible for media relations at Alliance Sud).

Replica to the interview by Peter Niggli, Director Alliance Sud