Share post now
Investigation
Switzerland in the dense fog of carbon offsetting
20.11.2024, Climate justice
With the purchase of new cookstoves, Ghana is expected to save more than 3 million tonnes of carbon emissions, thanks mainly to women – as a substitute for emission mitigation in Switzerland. Alliance Sud criticises the project's glaring lack of transparency and highlights controversial details that project owners attempted to hide from public view.
Delia Berner
Expert on international climate policy
A girl cooks with her mother in her home in Tinguri, Ghana.
© Keystone / Robert Harding / Ben Langdon Photography
Grace Adongo, a farmer from Ghana's Ashanti region, is happy with her new and more efficient cookstove. Instead of cooking on an open fire, she now places the pot on a small stove. She needs appreciably less charcoal, which both saves money and mitigates carbon emissions. This testimonial comes from the latest Annual Report of the Ghana Carbon Market Office and coincides with many others that are reporting on the numerous cookstove projects throughout the global carbon market. These projects supposedly help provide poorer population groups with cookstoves that are more efficient and less harmful to health than traditional stoves or fireplaces, which generate large amounts of smoke. This reduces wood consumption and carbon dioxide emissions (how much is highly controversial – but more on that later).
The principle involved is always similar. The cookstoves are sold cheaply. This entails customers transferring to project owners their rights to the emission mitigation outcomes. The emissions saved by the new stoves are then calculated over the ensuing years and sold internationally by the project owner as carbon certificates. The proceeds from the certificates are needed to subsidise the cookstoves.
From the personal standpoint of people like Mrs. Adongo, what sounds like a good thing is also precisely that. But the system as a whole is much more multilayered and contradictory. The case mentioned at the start, the Transformative Cookstove Activity in Rural Ghana, which Alliance Sud examines in detail in this paper, revolves around the government carbon offset market in which Switzerland imputes the emission mitigation outcomes achieved in Ghana to its own climate goals. A surprising number of venues also come to light in the process, and also warrant critical assessment from the standpoint of climate justice. Switzerland's cooperation with Ghana is also a good example of why the trade in certificates under the Paris Agreement is not conducive to attaining the ambitious climate goals.
Carbon certificates from this and many other projects are being paid for with a 5-centime tax assessed on each litre of fuel at Swiss petrol pumps. Owned by motor fuel importers, the Foundation for Climate Protection and Carbon Offset KliK provides the money for mitigation projects in Switzerland and abroad. Through carbon offsetting abroad, Swiss lawmakers aim to compensate for climate mitigation actions not taken in Switzerland, so that they are still able to meet the climate goals of the Paris Agreement.
Under the 2015 Paris Agreement, Switzerland undertook to halve, by 2030, its greenhouse gas emissions compared to 1990. With the CO2 Act, however, only about 30% of emissions can be mitigated in Switzerland – barely more than before the law was revised in the spring of 2024. The remaining 20% must be offset abroad. Under the Federal Council's savings package announced in September 2024, climate mitigation activities in Switzerland are also expected to diminish. The inevitable consequence is that Switzerland will need more carbon offset certificates if it is still to achieve the climate goals. That is not the meaning of Article 6 of the Paris Agreement, under which the transfer of emission mitigation outcomes to other countries should lead expressly to "higher ambitions". To achieve this, Switzerland will have to ensure that the climate goals of both countries are consistent with the goals of the Paris Agreement. Switzerland has promised net zero by 2050. Because net zero is to be achieved globally by that same year, Switzerland therefore expects other countries also to set their net zero target at 2050. Measured against this yardstick, there are substantial gaps in Ghana's national contribution, up to 2030, towards the realisation of the Paris Agreement. Ghana has announced only a non-binding net zero target for 2060 and excludes oil production from its climate goals. When contacted in that regard, the Federal Office for the Environment (FOEN) writes: "The requirements of the Paris Agreement apply", and points towards the unilaterally set climate goals based on the principle of common but differentiated responsibilities and respective capacities. "In the process, climate goals must encompass the highest possible ambition and subsequent goals must be even more ambitious." However, there are no other criteria for the climate goals of a partner country.
A year ago, Ghana announced the expansion of oil production, adducing the lack of financial support for climate protection as the reason. This illustrates the fundamental problem: the countries in the Global South lack the international climate finance that should be forthcoming from the Global North by way of support. The upshot is that they opt for what they see as their second-best solution for raising funds, that of selling the outcomes of their climate mitigation activities as carbon certificates. The difference with climate finance is that Switzerland obtains the "right" to postpone its climate mitigation measures. On balance, ambitions for effective climate mitigation are being lowered, not raised.
Dense fog in February
Ghana and Switzerland approved this cookstove project in February 2024 under the bilateral market mechanism of the Paris Agreement (Art. 6.2). It is being implemented by the Amsterdam-based company ACT Commodities (project owner, see Box 2) and is projected to record a 3-million tonne reduction in carbon emissions by 2030. It is therefore incumbent on both governments to ensure that the project fulfils and maintains high quality requirements, which it promises to do. The Federal Office for the Environment (FOEN) verifies the relevant project documentation and publishes them upon authorization.
The project owner is ACT Commodities, an international conglomerate headquartered in Amsterdam. On its website, the company describes itself as the leading global provider of market-based sustainability solutions that is driving the transition to a sustainable world. ACT is a major player in emissions trading. But the company prefers to avoid too much transparency – its own website fails to mention that the conglomerate also has oil and fuel trading in its portfolio (through its sister company ACT Fuels, which has no website). This comes to light thanks only to a perusal of the Dutch commercial register. Since July 2023, ACT Commodities has also owned a company that supplies marine fuels, the dirtiest of all fuels. The conglomerate is therefore one of a growing group of commodity traders doing business with fossil fuels and simultaneously "greenwashing" themselves as players on the carbon market.
But the very first look at the documents reveals a lack of transparency: the project is as opaque as dense fog. Extensive passages in the project description are redacted, including virtually the entire analysis that is meant to prove that the project will lead to additional emission mitigation (see chart). But many other relevant facts and figures were also concealed. And the document containing the calculations showing why the CO2 reduction should amount to 3.2 million tonnes was not even published in the first place. That is not what transparency looks like.
Alliance Sud requested publication of the unredacted documents and calculations pursuant to the Freedom of Information Act (FoIA) – and had to wait four months owing to the project owner's initial refusal. Much, though not all of the project documentation was released thereafter. The passages that were still redacted were supposedly business secrets. It is now also becoming clear that in the original document, many places had simply been arbitrarily concealed.
Excerpt from the analysis of the project's additionality, originally redacted altogether.
Emission mitigation is being overestimated by up to 79%
The calculation methodology whereby the project in Ghana is expected to save 400,000 tons of carbon emissions annually over eight years is a key piece of information regarding carbon offset projects. Reputable certifiers in the voluntary carbon market require project owners to disclose these calculations. These data must be made available for scientific analysis – especially since a growing number of studies are identifying cases of over-crediting of emission mitigation through carbon certificates, including for cookstove projects.
In this case, however, the project owner is reluctant to do so – an unacceptable lack of transparency. Alliance Sud submitted an FoIA request and obtained a PDF copy of the calculation tables. Without being able to view the integrated Excel formulas, verifiability remains limited.
But the figures now available offer surprising revelations. The PDF document containing the calculations shows that for the years 2025-30, emission reductions for the same stoves are being calculated at almost twice as much as for the years 2023-24. The underlying reason is obviously a planned increase of the most key metric, namely, the fraction of non-renewable biomass (fNRB). This is an estimate of the amount of wood biomass by which the harvesting of fuelwood exceeds its natural rate of regeneration. Only reduced use of non-renewable fuelwood can be regarded as a reduction in carbon emissions. The metric is multiplied directly by the other factors and is therefore crucial to calculating emission mitigation. The overstating of the fraction of non-renewable biomass (fNRB) is the main reason for the sometimes-scathing criticism elicited by cookstove projects launched to date for emission mitigation purposes.
For anyone keen on the details, the project documentation showed an fNRB set at 0.3, which is more conservative than for many previous cookstove projects. According to the official UNFCCC reference study dated June 2024, this is an appropriate standard value, as it avoids massively overstating emission mitigation and is also consistent with the country-specific value contained in the study for Ghana, which is 0.33. However, the project now has a clause enabling Ghana and Switzerland bilaterally to adjust the fNRB retrospectively (upwards). The fact that concrete calculations are already being done, from 2025 onwards, on the basis of an fNRB of 0.7629 only comes to light from the PDF document containing the calculations, which was not originally published. The project description fails to mention that plans are already being laid using a higher value, even though it is still to be validated. The value 0.7629 comes from the outdated "CDM tool 30" which is deemed by the FOEN itself to be insufficient as a basis. In the spring of 2024, Ghana invited tenders for an independent study to determine a country-specific fNRB value for Ghana – obviously in the hope that a markedly higher value can be validated. If Switzerland is also to accept it, the study must pass the peer review by UNFCCC bodies. In the light of the aforementioned widely accepted reference study which calculates a country value of 0.33 for Ghana, that is likely to be an uphill task.
A look at the calculation document shows that as of 2025, calculations are to be based on an fNRB – the most important metric – more than two times higher (line in yellow). According to Alliance Sud calculations, this means that between 2025 and 2030, emission mitigation will be overestimated by up to 92%. All told, the overestimation is up to 79% (using the correct calculation for 2023 and 2024).
If a baseline fNRB value more than twice as high is applied, with no basis whatsoever, emission mitigation is being overestimated from the outset. According to Alliance Sud calculations, the project would reduce carbon emissions by 1.8 million tonnes at the most, if the fNRB value is held constant at the more realistic level of 0.3. But the project promises a reduction of 3.2 million tonnes of carbon emissions. It thus overestimates overall mitigation by up to 79%.
Some research lifts the fog…
The absurdity of attempting to describe half of the project documentation as "business secrets" (in the first version of February) is clear from the fact that much of the concealed information is publicly available in other places. If few more minor items of information that had originally been concealed are even available elsewhere in the same document. Further information can be gleaned from Ghanaian Government documents, or can be deduced from other sources.
For example, from an online article by the Ghanaian authorities about a visit by the KliK Board of Directors, we learn who is the project's main distributing partner in Ghana – a Ghanaian company called "Farmerline". Farmerline facilitates access for farmers to agricultural inputs, thereby opening up the global agricultural industry to many new clients from Ghana. The project owner also attempted to conceal this connection. Several references to partnerships in the agriculture sector had originally been hidden in the project documentation, and specific cooperation is still redacted. There are reasons, as a closer look will show.
...lingering pesticide spray
In June 2023, Farmerline announced its cooperation with Envirofit, the cookstove producer and the project owner's implementing partner. The project documentation also describes plans to sell 180,000 stoves to rural dwellers within a short space of time, and notes that the stoves will be available at more than 400 businesses for agricultural inputs. But some posts by Farmerline on the "X" platform do arrest the attention of readers. This year, Farmerline conducted an "Agribusiness roadshow" across various regions of Ghana in cooperation with Envirofit – and with the crop protection company Adama, a member of the Syngenta Group. On each day of the roadshow, farmers were presented with the efficient Envirofit cookstoves and Adama pesticides, both being put up for sale. Adama products are identifiable in the Farmerline videos, including three insecticides and one herbicide containing active substances banned in Switzerland and the EU because of their toxicity to the environment and human health. They are atrazine, diazinon, and bifenthrin. Atrazine pollutes groundwater, hampers photosynthesis in plants and is virtually impossible to remove from the environment; it is also classified as a carcinogen. Diazinon attacks not only the pests being targeted but all insects and can also be highly toxic to humans if it comes into contact with the skin. Bifenthrin poses a danger mainly to aquatic animals but should also not be inhaled by humans (see the Pesticide database maintained by Pesticide Action Network).
Sample photo from a Farmerline roadshow video in which the herbicide Maizine 30 OD containing the active substance atrazine – banned in Europe – is also being sold alongside cookstoves.
Furthermore, none of the videos contains a demonstration or the sale of appropriate protective clothing. According to various studies (Demi und Sicchia 2021; Boateng et al 2022; and others), the growing use of pesticides in Ghanaian agriculture is leading to considerable health problems for farmers. In the absence of instructions from dealers, many either do not know how to use the pesticides properly and protect themselves in the process, or they lack sufficient funds to be able to afford protective clothing. Besides, they obtain expert information mostly from their personal circles or from some dealers, but no independent agricultural advice is available. In their study, Imoro et al. 2019 found that 50% used no protective clothing at all and another 40% were not sufficiently protected. Asked whether protective clothing was also being sold at the roadshows, KliK replied that the highest standards of sustainability were of course a prerequisite for their cooperation partners. KliK writes that the issues raised by Alliance Sud with this question lie outside the scope of its discretion.
Thus, attempting to obtain a clear statement regarding the benefits of this offset project for sustainable development is still akin to stumbling around in the dark. Cookstove customers will indeed save money and, as there is less smoke, also hopefully improve their health. Yet, they are simultaneously being urged to spend the money saved on pesticides, the increased use of which is damaging the environment and also creating new health problems in many instances. From this perspective, KliK's assessment of its cooperation partners' "highest standards of sustainability" is erroneous. It is indeed reasonable to strive for synergies with existing players in the agriculture sector in order to reach rural dwellers. But had sustainability been the uppermost concern, a partnership with organisations that promote agroecological approaches would much more likely have suggested itself.
Eye-watering profits for investors
While the new cookstoves enable customers to make financial savings, the project is financially worthwhile for the investors on a much larger scale. It lacks transparency also from a financial standpoint in that the pricing of the stoves is redacted, and the prices of the certificates are a private matter for KliK and its business partners. Moreover, the FOEN is not reviewing a financial plan or anything similar for the project. Yet, from the additional information released following the FoIA request, it is clear that investors are likely to rake in handsome profits. The investors behind this project are invisible, but according to project documentation, can expect an annual return of 19.75% on their investment. A comparison is being drawn with Ghanaian government bonds in order to justify this absurd return. That comparison holds no water whatsoever, as the one thing has nothing to do with the other. The risks associated with investing in a government bond issued by an already highly indebted country are of an entirely different nature – which accounts for the high yields (although it does not legitimise them, as the high interest rates for poor countries are horrific and catastrophic – but again, that is another story).
What this case involves, in contrast, is a project partly financed and secured with quasi-public funds; this could be classified as blended finance, a mix of public and private financing. This is so because fuel importers collect a levy on fuel, by virtue of the CO2 Act. At a purely technical level, should the proceeds of this levy pass through government coffers – as other levies generally do – before being disbursed for carbon offset projects, that would make them taxpayers' money.
That would give rise to a public interest in ensuring that the proceeds from this levy are used efficiently. The funds must go towards climate mitigation and sustainable development in the country concerned, not towards gold-plated returns for investors.
Conclusion
Efficient cookstoves are an inexpensive way of improving the lives of many people while mitigating greenhouse gas emissions. Yet, there are considerable contradictions lurking in the market mechanism under the Paris Agreement when implementing climate mitigation projects in the Global South. It is meant to promote sustainable development locally, but is conceived as potentially lucrative business for investors. And while some emissions are being reduced in the Global South, the mechanism offers a political pretext for postponing climate mitigation activities in a country as rich as Switzerland.
Transparency in the certificate trade is therefore the key to discovering the multilayered and potentially problematic background to carbon offset projects. Switzerland's carbon mitigation project in Ghana is a telling example of this. Neither the overestimation of emission mitigation, the sale of toxic pesticides nor the exorbitant yields could be gleaned from the documents that were published following the authorization of the cookstove project. It was only through an FoIA request and further investigation that Alliance Sud was able to clear the fog of non-transparency shrouding the project documentation: what came to light was the approval of reckless calculation methods, business practices by implementing partners inimical to the environment and to people, and a questionable interpretation of transparency by the main players. However, the possibility of public scrutiny remains crucial to ensuring that carbon mitigation projects do not endanger implementation of the Paris Agreement.
This case is the second carbon offset project by Switzerland under the Paris Agreement to be looked into by Alliance Sud. A year ago, Alliance Sud and Fastenaktion elucidated the reasons why new E-buses in Bangkok are no substitute for climate mitigation activities in Switzerland.
Climate and Taxes
A duo on a world tour
04.10.2024, Climate justice, Finance and tax policy
Without the polluter-pays principle, international climate policy cannot be funded – without tax justice, it is not feasible. A mini-world tour with an unequal but perhaps soon symbiotic duo.
Dominik Gross
Expert on finance and tax policy
Delia Berner
Expert on international climate policy
More and more activists and multilateral forums around the world are linking demands for tax and climate justice. Protesters at the Fridays for Future parade in Berlin, 20 September 2024. © Keystone / EPA / Clemens Bilan
It is really immediately clear – to be able to afford transitioning away from fossil fuels without major social dislocations, we must raise the requisite funds from those industries that were the first to enrich themselves from them, namely, the fossil fuels industry. Studies show that more than half of all worldwide emissions since 1988 can be attributed to the exploitation of fossil fuels by just 25 companies. No one has ever paid up for the long-term costs being engendered by these emissions, which are causing climate change. At the same time, the profits and dividends accruing to those trading in these fuels have risen continuously. Thanks to the price increases triggered by Russia's invasion of Ukraine, the 2022 profits of oil and gas companies skyrocketed to four trillion dollars
Make polluters pay
It is therefore no surprise that in the context of the urgent need for climate funding for the Global South, and in keeping with the polluter pays principle, the call is growing louder for additional taxation of these companies. This goal has long been present in international civil society under the slogan "Make polluters pay". A current study by the Heinrich Böll Foundation shows that in this very decade, a CO2 tax on the production of coal, oil and gas, called a Climate Damages Tax, would yield 900 billion dollars in OECD countries for managing the climate crisis.
The call for international CO2 taxes is almost as old as the Framework Convention on Climate Change itself. As early as 2006, the then Swiss Federal President Moritz Leuenberger used the Climate Conference to call for a global CO2 tax. Concrete agreement at the UN never stood a chance, however. But in view of the UN negotiations on a new climate finance target at the COP29 this coming November in Baku, pressure is growing for the available funding to be increased. This has recently prompted a range of players and countries to call for international CO2 taxes or other methods of financing based on the polluter-pays principle. The approaches vary widely, spanning national tax on profits from oil extraction, voluntary contributions from the extraction industry, and legally requiring enterprises to accept climate accountability. All approaches to international taxes will, however, require political will at the national level. Switzerland, too, should levy "polluter-pays" taxes on enterprises that profit from the fossil fuels business, in that way increasing its contributions to international climate finance.
The "gilets jaunes" – or how not to do things
Additional funds could be raised for ecologically restructuring our societies not only by levying additional taxes on fossil fuel producers, but also if governments asked their consumers to pay more. However, if the restructuring is to be not just ecological but also social, caution is advised when deciding on the right type of CO2 consumer tax. France, for example, has unpleasant memories of the violent street clashes between the "gilets jaunes" (yellow vests) and the police about six years ago in the middle of Paris. Those protests were triggered simultaneously by an increase in the fuel tax (eco-tax) that the French President wanted to levy on every litre of diesel being dispensed by that country's petrol pumps. By his reckoning, it would have garnered an additional 15 billion euros in revenue for the State. But this tax would have affected everyone equally: rich and poor, including people racing their Porsche TDI along empty French country roads, as well as those living in far-flung, non-metropolitan parts of France badly served by public transport and dependent on their rickety diesel vehicles in everyday life. The "gilets jaunes" movement was therefore supported not only by climate deniers and automobile enthusiasts, but also by many people whose already tight monthly budgets would have been busted by this diesel tax. This toxic mix constituted political dynamite. The liberal French government backed down and also slowed the pace of its climate policy agenda. At the same time, President Macron further renounced the reintroduction of a "solidarity tax" on high net-worth individuals, which had been introduced in the 1980s by the long-standing socialist President François Mitterrand, and which Macron had abolished as one of his first official acts in power. That would possibly have taken the social policy wind out of the sails of the "gilets jaunes".
No climate justice without tax justice
Today there is a highly progressive wealth tax with a social and environmental dimension, among other places, on the agenda of the G20 countries. In a report published in November 2023, the NGO Oxfam International concludes that a global wealth tax on all millionaires and billionaires would raise 1700 billion dollars annually worldwide. An additional penalty tax on investments in climate-damaging activities could bring in a further 100 billion dollars. Combining these measures with a 60-per cent income tax on the 1 per cent with the highest incomes would generate an additional 6400 billion. Depending on business cycle and price trends, an excess profits tax can also generate massive amounts of additional revenue. According to Oxfam, such a tax would have raised another 941 billion dollars in each of the years 2022 and 2023 when inflation was high. These measures therefore have the potential to garner an additional tax take of at least 9,000 billion in a single year.
The premise of the 2024 report on the funding of sustainable development published by the United Nations Department for Economic and Social Affairs (DESA) is that the funding and investment shortfalls in connection with the UN Sustainable Development Goals of the 2030 Agenda amount to 2500 to 4000 billion US dollars. Using just the tools mentioned above, the 2030 Agenda could therefore be easily funded up to 2030 – to say nothing of reforms in other areas of development finance. Unlike Macron's diesel tax, a global wealth tax would certainly be in line with the polluter-pays principle within the meaning of international climate policy. According to Oxfam, in 2019, the world's richest 1 per cent accounted for 16 per cent of all global CO2 emissions. This meant that they produced as much CO2 as the poorer 66 per cent of the world's population, that is to say 5 billion people.
Climate and tax justice on a world tour: an overview of some global approaches and initiatives
- Washington D.C. – Climate Damages Tax: Current study by the Heinrich Böll Foundation on a CO2 tax on coal, oil and gas production. While some of the proceeds would be earmarked for the UN fund to cover climate-related loss and damage, another portion would go towards managing the climate crisis domestically. Producing countries in the Global South could also introduce the tax and use the proceeds in their own countries. Increasing the tax annually would also create an incentive to phase out fossil fuels. Civil society endorses this concept.
- Nairobi – Africa Climate Summit: Already a year ago, African countries called for global CO2 taxes on the trade in fossil fuels, on marine and air traffic, and also for a global financial transaction tax, in order to boost investment in climate protection.
- Baku – Climate Finance Action Fund: As President of COP29, Azerbaijan is keen to build up a climate fund that is fed by voluntary contributions from coal, oil and gas producers. The fund's Board of Directors would decide on the distribution of the monies raised from the participating production industry. The previous COP host, the United Arab Emirates, proved that this is not a good idea. Climate Home News recently uncovered the fact that resources from their newly founded climate fund were being invested in natural gas projects and airports.
- Paris – Task Force for Global Solidarity Taxes: Last year, France, Barbados and Kenya formed a task force to work together with other interested countries on ideas for global solidarity taxes applicable to the fossil fuels industry, financial transactions, as well as marine and air traffic. Civil society observers in France, however, view this as both international image cultivation by President Macron and a diversion from international negotiations on climate finance or the UN Tax Convention.
- London – Excess profits tax on oil and gas production: Following the outbreak of the war in Ukraine, the United Kingdom introduced an excess profits tax on companies producing oil and gas in the UK, and raised 2.6 billion pounds in the first year. The new Labour Government is planning to further increase the tax rate. The proceeds go into government coffers.
- Pari Island (Indonesia) – Lawsuit against Holcim: Pari Island is being flooded with growing frequency and is being swallowed up by the sea, metre by metre. Four residents have initiated litigation in the Zug Cantonal Court against the Holcim cement company over its climate responsibility, and are demanding that the company reduces its emissions, pay compensation for the climate damage they have suffered, and contribute financially towards adaptation to global warming.
- Rio de Janeiro – Global wealth tax: In late June, G20 finance ministers discussed a model for the global wealth tax devised by the French economist Gabriel Zucman. In principle, it reflects what Oxfam proposes in its report (see text). As President of the G20 this year, Brazil raised the idea in the club of the world's 20 leading economies. After much fanfare in the early stages, the summit's final declaration could only produce fine-sounding rhetoric. The project had reportedly been hampered, among other things, by disagreement among participants over the question of whether the UN or the OECD should be tasked with working out such a tax.
- New York – UN Tax Convention: Negotiations between the 197 UN member governments on the Terms of Reference (ToRs) of a Framework Tax Convention concluded successfully in mid-August. From the very beginning, many countries – especially those in the Global South – had come out in favour of including in the ToRs the creation of more effective climate and environmental taxes as an aim of the Convention in its own right. Despite having been highly controversial, this point is now embodied in the text and promises long-term global progress on climate-related taxes with redistributive effects. Elaborating a global wealth tax with a climate-related dimension would be best placed in the hands of the UN, where the prevailing majority dynamics will ensure that such a taxation model would also reflect the specific interests of the countries in the Global South.
- Berne – Initiative for a Future: The Young Socialists wish to impose a 50-per cent tax on inheritances of more than 50 million francs. The Confederation and cantons would then use the proceeds of the tax to "combat the climate crisis in a socially equitable manner and to fund the complete overhaul of the economy that this would require." This is stated in the text of the initiative. As it is well known that the climate crisis cannot be tackled strictly within the borders of Switzerland, the initiative also provides for additional contributions by Switzerland towards the funding of the UN Sustainable Development Goals worldwide.
COP29 – Climate Conference
In November, UN Member States will negotiate a new collective funding target for supporting the countries in the Global South in dealing with the climate crisis. Funding in accordance with the polluter-pays principle is also a part of this discussion. The funding gap is growing dramatically and financial support is simply a necessity if the countries in the Global South are to continue their development using climate-friendly technologies, and avoid more loss and damage thanks to adaptation measures. The pressure for an ambitious funding target is accordingly great, and rich countries are challenged to increase their contributions significantly in the years ahead.
Share post now
global
The Alliance Sud magazine analyses and comments on Switzerland's foreign and development policies. "global" is published four times a year (in german and french) and can be subscribed to free of charge.
Climate justice
No fossil fuel phase-out without climate finance
21.03.2024, Climate justice
Switzerland is not prepared for the burgeoning expectations regarding its future contribution to international climate finance. New funding sources must be found if additional funds are to be allocated for climate protection and adaptation in the Global South.
Delia Berner
Expert on international climate policy
Extraction of fossil fuels in Bakersfield, USA. © Simon Townsley / Panos Pictures
Last December at the climate conference in Dubai, puzzled media representatives asked Swiss Environment Minister Albert Rösti whether he was comfortable with promoting the phase-out of fossil fuels by 2050. He reassured them that he was. The world will have phased out coal by 2040, he added, in line with Switzerland's position in the plenary. What he did not say was that phasing out coal, oil and gas will require several hundred billion dollars in climate funding for the Global South – per year. And another comparable amount will be needed to fund adaptation in least developed countries – which, despite having produced almost no greenhouse gases, are being ever more greatly impacted by the consequences of the climate crisis – and for compensating those affected. That will be several times the current financing target of $100 billion per year. The financing shortfall for climate protection measures in the poorest countries is growing constantly. Despite this, the funds being provided by those – like Switzerland – who caused the climate crisis, still fall short of the 100 billion promised. Besides, the debt crisis and other factors are hampering the self-funding capacity of least developed countries. Many countries in the Global South feel left in the lurch by the North.
Against this complex backdrop, this year's climate conference will be working out a new funding target. The yardstick will be the extent to which it enables the countries in the Global South to implement ambitious climate protection plans and adapt to global warming as best they can. An ambitious and credible new climate funding target is a must if, in the course of 2025, all countries are to submit new five-year climate plans that are in line with the aims of the Paris Agreement. The stakes will therefore be high when delegates gather in Azerbaijan in November for the negotiations, and expectations placed on the rich countries will rise substantially. Switzerland, too, should therefore be encouraging polluter countries to provide much more public funding for climate finance. In a guest article in Climate Home News, the chief negotiator for the Least Developed Countries (LDCs), Malawi's Evans Njewa, called on negotiating delegations from the Global North to cease hiding behind their parliaments: "They stress that they have no mandate, or possibility to scale up funds, as parliaments will not approve. So, as parliamentarian debates about budgets and allocations begin early in the year, they need to act now", he said.
Swiss Government resisting the need for action
This pattern can also be seen here at home. Despite speaking up, during climate negotiations, for the worldwide phase-out of fossil fuels by 2050 in keeping with the aims of the Paris Agreement, Switzerland is dragging its feet when it comes to funding, as it cannot point to any domestic policy decisions to increase funding contributions. In reality, the Federal Council is not even attempting to obtain additional funding from the parliament. Why is this so?
So far, Switzerland's climate finance contributions have come mainly from the International Cooperation (IC) budget, which itself is already receiving insufficient funds for worldwide poverty alleviation, and is now facing the prospect of yet another massive reallocation of funds towards reconstruction in Ukraine. This means that current climate financing is already being double-counted along with poverty alleviation projects. But new, additional money is needed if Swiss climate funding is to effectively help support climate plans in the Global South. The Federal Council should be working at the legislative level to devise alternative funding options so that IC funds can continue to go towards global poverty alleviation, the strengthening of basic education and health services, and towards other key tasks. A year ago, it entrusted the Administration with working out ways in which Switzerland could provide more climate funding in future. At the end of last year, an externally commissioned study was published without comment on the website of the Federal Office for the Environment. In it, experts recommend that Switzerland should tap into new funding sources, for example, proceeds from the carbon emissions trading scheme. Yet the Federal Council has done nothing so far. The new legislature plan indicates that, for the next three years, the Government has no intention of submitting an item of business on climate funding to the parliament. It will be relying exclusively on the new four-year credit line for international cooperation for the 2025–2028 period, which offers no scope for additional climate funding.
If the Federal Council fails to act – which would be irresponsible in this case, as the climate negotiations are within its remit – the parliament can also take the initiative. During the past winter session, National Councillor Marc Jost brought forward a motion to enable the parliament to draft new legislation on international climate and biodiversity funding.
Without finance, there is no action
The Baku climate conference is fast approaching – so what remains to be done? Switzerland must rethink its previous negotiating position on funding and strive for an ambitious goal that aligns with the needs of the people in the Global South and distributes the financial responsibility fairly among rich countries, as the ones accountable for the climate crisis. Only in this way can coal be phased out by 2040 and all fossil fuels by 2050. The international pressure to agree on an ambitious target will therefore be intense.
This will also inevitably mean greater pressure on Switzerland to scale up its contribution many times over. If funds are to be increased quickly enough, Switzerland must begin the legislative work now and find new sources of climate funding.
Evans Njewa puts it as follows: "We must all remember that without finance, there is no action, and without action we will never be able to manage the climate crisis."
Share post now
global
The Alliance Sud magazine analyses and comments on Switzerland's foreign and development policies. "global" is published four times a year (in german and french) and can be subscribed to free of charge.
Article
Carbon offsetting abroad: the illusion of voluntary action
07.12.2023, Climate justice
Pressure from civil society and the media has rightly discredited the carbon markets. The current system is not delivering on its promises and is harming the Global South.
Edited by Maxime Zufferey
Excessive recourse to offsetting instead of a substantial reduction in emissions is in no way sustainable.
© Ishan Tankha / Climate Visuals Countdown
The voluntary carbon market facilitates the trading of carbon credits. It allows a company to continue emitting CO2 while offsetting its own emissions by funding projects that reduce emissions elsewhere. On paper, carbon offsetting is seen as the most effective market-based approach for achieving results in terms of reducing global emissions. The idea is to maximise the efficiency of available resources in reducing emissions by using them where they are most beneficial. For example, once a company has reduced its own emissions as cost-effectively as possible, it could then allocate resources to low-carbon technology projects or reforestation projects to arithmetically offset the emissions it has not yet reduced. In practice, however, the assumption that cheap carbon credits are the answer is much criticised. They are seen as undermining the goal of reducing emissions and helping, counterproductively, to maintain the status quo. More recently, increased scrutiny by civil society has raised doubts about the often-misleading promises of 'carbon neutrality' made by some companies under the guise of offsetting, while their emissions continue to rise.
Carbon markets: taking stock
The carbon market has been controversial since its inception in the late 1980s and especially since the signing of the Kyoto Protocol in 1997. Its development has given rise to parallel markets, namely the 'compliance' market and the 'voluntary' carbon market, which are sometimes difficult to distinguish due to the potential overlap between them. The compliance market involves mandatory emission reductions and is regulated at the national or regional level. The best known of these markets is the European Union Emissions Trading Scheme (EU ETS), which Switzerland joined in 2020. Under this mechanism, certain large emitters – power plants and large industrial companies – are subject to an emissions cap, which they can offset by buying allowances from other members who have reduced their emissions beyond the target. This cap is reduced each year. A laborious implementation process, the system has led to a certain reduction in emissions in the sectors concerned. However, there has been criticism that it has been too generous in allocating free allowances to large emitters, that it has allowed an influx of international credits and that it has not set sufficiently ambitious reduction targets. Furthermore, the price of carbon is still too low; it should reflect the social cost of a tonne of emissions and be gradually increased to USD 200. The voluntary market, on the other hand, currently has no minimum reduction targets and remains largely unregulated. Outdated carbon credits are also frequently used, as are credits whose quality and price vary widely, sometimes even below USD 1.
The limits of the voluntary market
The crisis of confidence that has hit the voluntary carbon market is not only due to its unregulated nature and inadequate framework, but also to the technical limitations of the mechanism. Carbon credits rarely correspond to the exact unit of 'compensation' claimed, and their impact is systematically overestimated. This is due to the use of an unreliable quantification method and the lack of a comprehensive monitoring system that is genuinely free of conflicts of interest. Moreover, it is often unclear whether offset projects meet the additionality criterion, i.e. whether they would not have been implemented anyway, without the financial contribution of carbon credits. This is particularly true for renewable energy projects, which have become the most cost-effective source of energy in most countries. Another major challenge is double counting, i.e. the crediting of carbon credits by both the host country and the foreign company. This practice violates the principle that a credit can only be claimed by one and the same entity. The Paris Agreement has increased the risk of double counting because, unlike the Kyoto Protocol, it also requires developing countries to reduce their emissions.
There are also many doubts about the permanence of registered offsets. The extraction and burning of fossil fuels is part of the long-term carbon cycle, while photosynthesis, and hence the sequestration of carbon by trees or the absorption by the oceans, is part of the short-term biogenic carbon cycle. Trying to offset the long-term accumulation of CO2 in the atmosphere with offset projects limited to a few decades therefore seems illusory. In addition, anthropogenic climate change itself, with the increasing frequency of fires and droughts and the spread of pests and diseases, threatens the storage of carbon in temporary sinks such as soils and forests. There is also the risk of leakage, where a project to protect forests in one region leads to deforestation elsewhere. As for the prospects for technological solutions using carbon capture and sequestration devices, these should not be overestimated. They are currently neither competitive nor available on the scale required in the short term. Even in the future, they are likely to play only a limited albeit necessary role.
Carbon colonialism perpetuates injustice
More fundamentally, over-reliance on offsets rather than substantial emission reductions is unsustainable. As Carbon Market Watch points out in its report (Corporate Climate Responsibility Monitor) on the integrity of the climate change targets of companies claiming to be pioneers, the implementation of these companies' current 'net-zero roadmaps' is highly dependent on offsets. At the current rate, demand for land to generate carbon credits will far outstrip availability, directly threatening the survival of local communities, biodiversity and food security. At the same time, emission reduction projects popular in the voluntary market, such as reforestation and other 'nature-based solutions', are often based on 'fortress models' of conservation, in which protected areas are fenced off and militarily protected – at the expense of the original inhabitants. Far from being "empty spaces" to be planted with trees by polluters, these projects often take place on land inhabited by indigenous communities. The new gold rush for nature-based solutions through the privatisation of natural carbon sinks is exacerbating historic and complex land conflicts and confronting forest dwellers with the real threat of dispossession. This rings even truer when such projects deprive indigenous communities of their right to self-determination and to give their free, prior and informed consent to all projects affecting their territories.
Overall, the current system is woefully inadequate to the urgency of the climate crisis, and is also deeply unjust. It grants pollution rights to the biggest greenhouse gas emitters – mainly large corporations and economies in the Global North. They are allowed to continue with business as usual, while economic systems and lifestyles, mainly in the Global South, are restricted. This carbon colonialism thus shifts the responsibility for combating climate change and corporate deforestation onto local communities that have contributed the least to climate change.
Share post now
global
The Alliance Sud magazine analyses and comments on Switzerland's foreign and development policies. "global" is published four times a year (in german and french) and can be subscribed to free of charge.
Article
A new El Dorado for commodity traders
07.12.2023, Climate justice
In a carbon market that has demonstrated its limitations, an unexpected player has invited itself to the negotiations. Commodity traders have recently stepped up their CO2 trading, without scaling back their fossil fuel business operations.
Emissions trading has also attracted strong interest of the largest emitters, above all commodity traders.
© Nana Kofi Acquah / Ashden
Natural gas labelled "CO2-neutral" or concrete with "net zero" certification: the list of seemingly climate-neutral consumer goods has grown steadily over recent years. The accounting trick behind carbon offsetting is that a greenhouse gas emitter – whether a company, an individual or a country – pays for another player to avoid, reduce or cease their emissions. This enables companies to market themselves as they see fit by presenting themselves to their customers as committed climate protectors, even though they are not reducing their own emissions. The voluntary carbon market has reached a crossroads, oscillating between an outright boom and the crisis of confidence recently triggered by greenwashing allegations.
On the one hand, there is the economic reality of a voluntary carbon market, which quadrupled to USD 2 billion in 2021 alone – and could well reach USD 50 million by 2030 – and which is attracting strong interest from the biggest emitters, foremost among them commodity traders. This exponential market growth is attributable, in part, to the growing number of "net-zero" commitments by the private sector in the face of popular pressure and, in part, to the economic and logistical alternative that offsetting represents compared with reducing carbon footprints. On the other hand, damning reports about the poor quality of voluntary carbon market projects are coming thick and fast. They caution against the unbridled development of a market whose real impacts on climate protection is depicted as ranging from negligible to downright counterproductive. The ETH Zurich and the University of Cambridge have shown, for example, that a mere 12 per cent of all existing credits in fields where most offsetting occurs – renewable energies, cooking stoves, forestry and chemical processes – actually reduce emissions. Reports on the flagship South Pole project Kariba by the investigative journalism platform Follow the Money have told of vastly overestimated figures. The Zürich-based company then cancelled its contract as Carbon Asset Developer for the project in Zimbabwe. As for the NGO Survival International, it denounces a voluntary carbon offset project in northern Kenya, which is taking place on land belonging to indigenous communities. Their investigation uncovered potentially serious human rights violations that are jeopardising the living conditions of local livestock farmers.
What then is the voluntary carbon market? An ill-conceived marketing solution and dangerous distraction from the urgent need for transformative climate protection measures by the private sector? Or a genuine business opportunity to support corporate efforts to tackle climate change and a much-needed multi-billion-dollar cash injection for projects to cut emissions and protect the biodiversity in developing countries?
CO2 certificates – the commodity of the future
As a pioneer in the bilateral trade of CO2 certificates under the Paris Agreement, Switzerland is a key player in the carbon market, including in its voluntary segment. It is home to South Pole, the leading provider of voluntary CO2 certificates, and to Gold Standard, the second largest certifier. Perhaps more surprising is the market positioning of the Swiss and Geneva-based commodity trading giants, admiralships of a commodities sector that is posting one record a year after another. These new investments are explained by the potential of this opaque market to generate substantial margins and prolong business as usual. It is worth noting that this market is unregulated when it comes to prices or the distribution of revenue from CO2 credits. According to Hannah Hauman, Trafigura's Head of Carbon Trading, the carbon segment is now the world's biggest commodity market, having already overtaken the crude oil market.
In 2021, Trafigura – one of the world's largest independent oil and metal traders – decided to open its own carbon trading office in Geneva and to launch the largest mangrove reforestation project on the Pakistani coast. A year later, however, its coal trading volume increased to 60.3 million tonnes. In its 2022 annual report, not only did Geneva-based energy trader Mercuria declare its carbon neutrality, it also disclosed that 14.9 per cent of its trading volume comprised carbon markets, versus 2 per cent in 2021. In early 2023, Mercuria co-founder Marco Dunand announced the creation of Sylvania, a USD 500-million investment vehicle specialising in nature-based solutions (NbS). Shortly thereafter, he launched the first jurisdictional programme with Brazil's Tocantins State to cut emissions from deforestation and forest degradation, with a volume of up to 200 million in voluntary carbon credits. Even so, at almost 70 per cent, oil and gas still make up the company's main business. Vitol, Mercuria's neighbour on the shores of Lake Geneva and the world's largest private oil trader, can look back on over 10 years of experience in carbon markets and is considering expanding its activities in that field. In carbon trading, the company is aiming for a market volume comparable to its share of the oil market. For 2022, that share was 7.4 million barrels of crude oil and oil products per day, which corresponds to more than 7 per cent of global oil consumption. Communication is less transparent from crude oil trader Gunvor, which is also planning to ramp up its CO2 trading volume in the years ahead; the same goes for Glencore, which has a years-long track record in the area of biodiversity-related offset payments, central to its sustainability strategy. For 2022, Glencore estimated its emissions throughout the value chain to be 370 million tonnes of CO2 equivalent, or more than three times Switzerland's total CO2 emissions.
These companies describe themselves as drivers of the transition, and take credit for having accelerated that process by incorporating carbon trading into their portfolios. The fact remains that they are pursuing a two-pronged strategy by investing in both low-carbon and fossil fuels, with the latter still clearly dominating. Besides, none of these commodity traders has yet announced their intention to phase out fossil fuels, which is indispensable if we are to remain below the 1.5°C temperature increase stipulated in the Paris Agreement. The opposite is the case: companies are relying heavily on carbon offsetting to fulfil their climate undertakings, and this allows them to continue pursuing their short-term profit targets while delaying the worldwide phase-out of fossil fuels. Given the absence of regulations to limit fossil fuel investments and climate-degrading activities, it is illusory to think that the commodity trading industry can bring about the transition and that the goals can be attained through the voluntary carbon market. So long as companies fail to do the utmost to lower their own emissions, nature-based solutions will remain greenwashing, and declarations of intent in favour of the transition will be no more than a sham. These companies are pretending to put out a massive fire that they themselves keep feeding.
Dubai as referee
The UN Climate Change Conference (COP28), taking place in Dubai in December 2023, is expected to set the course for the future and the credibility of the voluntary carbon market. Among other things, the negotiations will cover the implementation of Article 6.4 of the Paris Agreement, which could serve as a harmonised framework for a genuine worldwide carbon market. And to this end, the prominent role of COP President Sultan Al Jaber, CEO of the world's 11th largest oil and gas producer, the Abu Dhabi National Oil Company (ADNOC) – which has just opened a carbon trading office – and the massive presence of fossil fuel and commodity multinationals at the negotiating table could well tip the balance. The requirements in respect of transparency, generally applicable rules and effective controls in the voluntary carbon market are therefore likely to be watered down.
While advocates of the voluntary carbon market acknowledge some of the sector's current shortcomings, they remain convinced that the various self-regulation initiatives, such as the Voluntary Carbon Markets Integrity Initiative (VCMI), and the formulation of standards will lead to a clear demarcation of credible carbon credits. Opponents, for their part, do not believe in the transformative power of a voluntary, self-regulating market. They see the discussion around carbon offsetting as a possible diversionary tactic that reinforces the status quo. They argue for a complete paradigm shift. The current carbon offset market based on the "tonne for tonne" principle – i.e., a tonne of CO2 emitted somewhere is mathematically offset by a tonne of CO2 saved elsewhere – should be transformed into a separate market for climate contributions based on the "tonne for money" principle, i.e., a tonne of CO2 emitted somewhere is financially internalised at the true social cost of a tonne of emissions. Thus, by setting a sufficiently high internal price for their residual emissions, carbon credits would become the expression of the environmental and historical responsibility of the private sector, without the latter being able to claim paper carbon neutrality. Only then would this instrument be a useful complement to quantifiable reduction commitments – and never a substitute for them! There is also an urgent need for rigorous due diligence for all carbon projects, including mechanisms to safeguard human rights and the biodiversity, as well as an effective complaints mechanism.
Share post now
Article
Sustainable Finance: a generational project
06.12.2023, Climate justice, Finance and tax policy
In 2015, governments committed to aligning financial flows with the climate objectives of the Paris Agreement. Where do things stand with implementation? What is Switzerland doing? A stocktake.
Laurent Matile
Expert on Enterprises and Development
The financial sector's commitment to climate protection is very contradictory.
© Adeel Halim / Land Rover Our Panet
Signing the Paris Agreement in 2015 the international community committed to significantly reducing greenhouse gas emissions, aiding developing countries in climate change mitigation and adaptation, and directing both public and private finances into a low-carbon economy and climate-resilient development. Article 2.1(c) of the Paris Agreement embodies this goal. The jargon therefore speaks of "Paris alignment".
On 3 and 4 October, government officials, business leaders and representatives from NGOs came together at the 3rd Building Bridges Summit for a two-day workshop in Geneva to explore this orientation and its alignment with Article 9 of the Paris Agreement. This was done with a view to the first "global stocktake" to be conducted at COP28. Under Article 9, developed countries pledged to extend financial support to developing nations for climate change mitigation and adaptation measures. Numerous delegates and NGOs in Geneva have raised concerns that industrialised countries are emphasising private finance alignment while disregarding their commitment to assisting developing countries.
Financial flows for economic activities based on fossil fuels continue to far surpass those meant for mitigation and adaptation measures. The most recent IPCC synthesis report affirms that sufficient capital exists globally to close the worldwide climate investment gaps. The predicament is therefore not a shortage of capital, but rather the ongoing mismanagement and misallocation of funds that is impacting both public and private capital flows. Nevertheless, redirecting financing and investment towards climate action, primarily in the neediest and most vulnerable nations, is no silver bullet. The challenges of a "just transition" go much further, and developing countries also expect financial support from the North.
Responsibility of governments
Businesses, including those in the financial sector, are not bound by the Paris Agreement. Governments therefore have a responsibility to translate climate change commitments into national legislation. Put simply, "Paris alignment" requires governments to ensure that all financial flows contribute to achieving the climate goals of the Paris Agreement. Implementing Article 2.1(c) will require a variety of instruments, and it is primarily up to individual governments to identify the regulatory frameworks, measures, levers and incentives needed to achieve alignment. This will require concrete steps leading to tangible and measurable results for individual companies and financial institutions.
What is Switzerland doing?
By ratifying the Paris Agreement, Switzerland has also committed to making its financial flows compatible with climate goals. The Federal Council is also working with the industry to ensure that the financial centre plays a leading role with regard to sustainable finance. However, it is still relying primarily on voluntary measures and self-regulation.
With the Climate and Innovation Act, the Swiss electorate decided, in June 2023, that Switzerland should achieve climate neutrality by 2050. Interim greenhouse gas reduction targets have been set, along with precise benchmarks for certain sectors (construction, transport and industry). Broadly speaking, all companies must have reduced their emissions to net zero by 2050 at the latest. With specific reference to the goal of aligning financial flows with climate goals, Article 9 of the Climate Act stipulates that: "The Confederation shall ensure that the Swiss financial centre contributes effectively to low-carbon, climate-resilient development. This includes measures to reduce the climate impact of national and international financial flows. To this end, the Federal Council may conclude agreements with the financial sector aimed at aligning financial flows with climate objectives".
The role and responsibility of Switzerland as a financial centre
The facts are clear: the Swiss financial centre is the country's most important "climate lever". The CO2 emissions associated with Switzerland's financial flows (investments in the form of shares, bonds and loans) are 14 to 18 times greater than the emissions produced in Switzerland! It would therefore be logical for the Federal Council to give priority to these financial flows. Given its size – around CHF 7800 billion in assets under management – the Swiss financial centre could make a significant contribution to achieving the climate goals. However, this would require effective measures here at home to help redirect financial flows. This would include credible CO2 pricing, both domestically and – as yet unimplemented – internationally.
Range of measures for Swiss companies and financial market players
From January 2024, large companies – including banks and insurers – will be required to publish a report on climate matters covering not only the financial risks a company faces from its climate-related activities, but also the impact of its business activities on the climate ("double materiality"). The report must also include companies’ transition plans and, "where possible and appropriate", CO2 emission reduction targets that are comparable to Switzerland's climate targets. Like the UK and a number of other countries, the European Union has introduced similar obligations. Thus, for once, Switzerland is not lagging behind.
PACTA Climate Test
Starting in 2017, the Federal Council has recommended that all financial market players – banks, insurers, pension funds and asset managers – should voluntarily participate in the "PACTA Climate Test" every two years. The aim is to analyse the extent to which their investments are in line with the temperature target set by the Paris Agreement. The test covers the equity and bond portfolios of listed companies and the mortgage portfolios of financial institutions. The PACTA is designed to show the portfolio weight of companies operating in the eight most carbon-intensive industries, which account for more than 75 per cent of global CO2 emissions (oil, gas, electricity, automobiles, cement, aviation and steel).
However, participation in the PACTA test remains voluntary and participants are free to choose the portfolios they wish to submit. Furthermore, the publication of individual test results is not (even) mandatory for financial institutions that have set themselves a net-zero target for 2050. The Federal Council recommends rejecting a motion calling for improvements to these aspects, arguing that existing decisions are already sufficient.
Self-declared net-zero targets
Many Swiss financial institutions have voluntarily set themselves carbon-neutral targets under the auspices of the Glasgow Financial Alliance for Net Zero (GFANZ). The Federal Council supports this approach. However, these initiatives raise crucial questions about transparency and credibility. What is the percentage of financial institutions that have set net-zero targets? What is the percentage of assets and business activities that will actually be net zero by 2050? How comparable is the information, i.e., final and interim targets and progress made by financial institutions? To increase the transparency and accountability of financial actors, the Federal Council had originally proposed the conclusion of sectoral agreements with them. This was rejected by the financial lobbies. However, the Climate Act now envisages the conclusion of such agreements, and the Federal Department of Finance is to submit a report on the matter by the end of the year.
Swiss Climate Scores
The Swiss Climate Scores (SCS) were developed by the authorities and industry and introduced by the Federal Council in June 2022 in keeping with GFANZ. The basic idea is to create transparency regarding the Paris alignment of financial flows in order to encourage investment decisions that contribute to achieving the global climate goals. Here too, the approach remains voluntary for financial service providers.
At the Building Bridges Summit, the CEO of the asset management firm BlackRock Switzerland lamented the low uptake of the SCS in her industry. This confirmed the misgivings expressed by Alliance Sud when they were introduced. The daily newspaper NZZ also recently noted the low uptake and inconsistencies in implementation by financial institutions – describing the SCS as a "refrigerator label" for financial products compared to the EU's sophisticated regulatory framework.
Paradigm shift
Implementing Article 2.1(c) of the Paris Agreement will therefore also be a major undertaking for Switzerland. The range of largely voluntary measures adopted so far clearly falls short of the Paris commitments. A paradigm shift is therefore urgently needed.
The Federal Council recently proposed the adoption of a motion calling for the creation of a "co-regulation mechanism" and a commitment that this mechanism would become binding "if, by 2028, less than 80 per cent of the financial flows of Swiss institutions are on track to achieve the greenhouse gas reductions envisaged in the Paris Agreement".
It is now up to the parliament to take the first steps to tackle this generational project.
Share post now
Investigation
New electric buses in Bangkok – no substitute for climate protection in Switzerland
11.12.2023, Climate justice
Switzerland is celebrating the world's first carbon offset programme under the Paris Agreement that will help the country fulfil its own climate goals. Emissions are being reduced in Bangkok through the co-funding of electric buses. A detailed study by Alliance Sud and Fastenaktion reveals that the investment in electric buses in Bangkok would have taken place by 2030 even without an offset programme.
Delia Berner
Expert on international climate policy
Bangkok, Rachadamri road, 11th October 2022.
© KEYSTONE / Markus A. Jegerlehner
Under the 1997 Kyoto Protocol, industrialised countries were already able to offset greenhouse gas emissions through projects in the Global South. The Clean Development Mechanism (CDM) was developed for that purpose. The voluntary offset market developed in the wake of the CDM, for example, allowing companies to promote "carbon neutral" products without actually reducing their emissions to zero. Both mechanisms, the CDM and the voluntary mechanism, have repeatedly attracted criticism. Studies and research papers show that many of the associated climate projects eventually turn out to be largely useless, and in some cases, harmful to local communities.
The Paris Agreement, which succeeded the Kyoto Protocol, redefined the carbon market and made a distinction between an intergovernmental mechanism (Article 6.2) and a multilateral mechanism (Article 6.4). Under the Agreement, all countries are required to pursue the most ambitious possible climate policy. Article 6 provides that the aim of both mechanisms is to allow for higher ambitions through such cooperation. In other words, carbon emissions trading should enable countries to lower their emissions more quickly. In the negotiations, Switzerland did much to promote this bilateral trade in certificates, and is now leading the way in operationalising it. Switzerland has already signed a bilateral agreement with 11 partner countries, and another three agreements are expected to be concluded at COP28 in Dubai.
Art. 6 of the Paris Agreement
1. Parties recognize that some Parties choose to pursue voluntary cooperation in the implementation of the nationally determined contributions to allow for higher ambition in their mitigation and adaptation actions and to promote sustainable development and environmental integrity.
[...]
Domestically, the Swiss government and the centre-right parliamentary majority interpret this possibility as carte blanche not to pursue the country's stated goal of a 50 per cent reduction in emissions by 2030, within Switzerland. In other words, the possibility to buy certificates is not being used to reach higher goals. This is eminently clear from the current review of the CO2 Act, as it provides for remarkably limited emission reductions in Switzerland for the 2025–2030 period. Compared to 1990, the rollover of the measures currently in place is expected to yield a 29 per cent reduction by 2030. Under the government's proposal, the new CO2 Act is expected to produce a mere five percentage point reduction, i.e., -34% vis-à-vis 1990. However, if Switzerland is still to achieve its 50 per cent reduction target on paper, it will have to purchase more than two-thirds of the additional reduction needed (15 per cent of 1990 emissions) in the form of certificates from partner countries. The partner countries must forego including those emission reductions in their greenhouse gas balance. As the first chamber, the Council of States proceeded to further water down the government's already weak domestic ambitions in the CO2 Act, i.e., to a less than four percentage point reduction in five years. In so doing it has intensified the pressure, in the short time remaining until 2030, to produce sufficient certificates in partner countries, and this to very exacting qualitative requirements. That this is no simple matter is borne out, not least of all, by the problems mentioned initially, which have already come to light in the CDM and the voluntary carbon market.
Switzerland has approved three offset programmes since November 2022. Two were developed by the United Nations Development Programme (UNDP). The first is intended to reduce the output of methane from rice farming in Ghana, and the second, to promote the use of decentralised mini-solar panels on outlying islands in Vanuatu. Both programmes are intended to serve the federal administration's voluntary carbon offsetting endeavours.
The third programme approved – the Bangkok E-Bus Programme – is the world's first, under the Paris Agreement, in which emission reductions are to count towards the reduction goals of another country, namely Switzerland. The programme was commissioned by the KliK Foundation and is being implemented by South Pole, in partnership with the Thai company Energy Absolute – which is 25 per cent owned by UBS Singapore. Its purpose is the electrification of publicly licensed buses in Bangkok, which are operated by the private company Thai Smile Bus. The additional funding derived from the sale of certificates to the KliK Foundation in Switzerland is intended to cover the price difference between traditional and electric buses, as investing in new electric buses is not financially viable for private investors and would therefore not happen. Replacing old buses and operating some new bus lines is expected to save a total of 500,000 tonnes of CO2 between 2022 and 2030. The new buses began operating in autumn 2022.
Alliance Sud and Fastenaktion have studied the publicly available documents on the Bangkok E-Bus Programme and identified shortcomings in the additionality aspect, and in the quality of the information provided. They heighten concerns that the purchase of offset certificates is no equivalent substitute for domestic emission reductions. The certificate trading approach is fundamentally at odds with the principle of climate justice, whereby the countries mainly responsible must cut their emissions as quickly as possible.
KliK
The Foundation for Climate Protection and Carbon Offset KliK is owned by Switzerland’s fuel importers. The CO2 Act requires these companies, at the end of each year, to surrender offset certificates to the federal government, whether from Switzerland or abroad, covering some part of their fuel emissions. To that end, KliK develops programmes with partners through which it can purchase certificates
Shortcomings regarding additionality
One key condition for a one-tonne CO2 reduction elsewhere to become an equivalent substitute for one's own reduction is that of additionality. This means that without the additional funding from emission certificates, the emission-reducing activity such as replacing diesel-driven buses with electric ones, would not have taken place. This condition is crucial if a climate benefit is to exist. It is also enshrined in the CO2 Act. This is because a traded tonne of CO2 legitimises a further tonne of CO2 emissions by the purchaser, which is then shown on paper as a reduction.
Those in charge of the Bangkok E-Bus Programme must therefore prove that without the programme, the public bus lines run by private operators like Thai Smile Bus would not be using electric buses before 2030. Various factors must be considered in the process: For one thing, this electrification must not have been part of an already planned government subsidy programme, and for another, this investment may not be undertaken by private parties anyway.
Subsidy programme: The official programme documentation barely explains the government's failure to subsidise the introduction of e-buses to replace the old buses, which also contribute substantially to local air pollution. According to the programme documentation, promoting electromobility and energy efficiency in the transport industry in general is part and parcel of government plans. But subsidies were granted only to public bus operators, not to private ones, in other words, not to the programme's target group. The document does not explain why government subsidies are available only for public operators. Besides, no mention is made of Thai subsidies (mainly tax advantages) for private investors engaged in the manufacture of batteries and E-buses, for instance, and of which Energy Absolute is also a beneficiary.
Investment decision: For additionality to exist, the project owner must demonstrate that no positive investment decision could have been possible without the emissions-related funding. To that end, the programme documentation contains a calculation which is meant to prove that without the additional funding from the sale of certificates, the private investment would not have been profitable and hence would not have taken place. The sales proceeds are expected to cover the cost difference between the new purchase of traditional buses and the new purchase of e-buses, calculated for their entire service life. However, neither the price difference nor the way it was calculated is mentioned in the official documents. When contacted, KliK furnished no detailed information, stating that this was "part of the contract negotiated for financial support of the E-Bus Programme", in other words, a private matter between KliK and Energy Absolute. It is therefore not possible to examine the key argument as to why the funding programme is needed for the e-buses. Consequently, additionality is at best non-transparent, and at worst, non-existent. But the price difference argument is also remarkable, in that as an investment firm, Energy Absolute specialises in green technologies. As such, the firm would hardly have decided to invest in the purchase of buses with combustion engines. On the other hand, it is plausible that a major investment in e-buses would have taken place in the next few years anyway, because, even before the 2022 launch start of the programme, Thai Smile Bus had been operating e-buses on the streets of Bangkok, a fact borne out by several media and a Twitter post with pictures (see Figure below). Hence, there must have been funding pathways for e-buses prior to the Bangkok E-Bus Programme. This clearly contradicts the assertion that e-buses would not have been introduced in Bangkok without the offset programme. At a minimum, the programme documentation should have laid out this problem in detail and explained why, despite this, the programme is deemed to entail additionality.
A Twitter post by a subcontractor dated 13.10.2021 proves that Thai Smile Bus had been operating e-buses one year before the start of the E-Bus Programme.
Lack of transparency and poor quality of the publicly available information
Once a programme is approved by both participating States, the Swiss Federal Office for the Environment (FOEN) publishes the programme documentation. It explains and lays out the methods used to calculate the expected emission reductions and also how additionality is to be ensured. The programme rationale is also explained, and other aspects such as the positive implications for the UN sustainable development goals are also addressed. This is intended to make the programme comprehensible to outsiders. A test report by an independent consulting firm is also made available, confirming the information given in the programme documentation. On the basis of these documents, FOEN and the Thai authorities verify, then approve the programme. Switzerland's approval is also made public.
The Bangkok E-bus Programme lacks transparency around key aspects. First, the programme documents refer to an Excel document in which the expected emission reductions are calculated – but the document containing the calculation is not made public. Alliance Sud requested and obtained it, and sees no reason why it should not be published. Second, key aspects such as the cost of the certificates and the scale of the requisite funding are negotiated in the private contract between Energy Absolute and the KliK Foundation. KliK writes the following in that regard: "The commercial aspects are confidential." The contractual conditions between the programme owner Energy Absolute and the bus operator Thai Smile Bus also remain private. This gives rise to the aforementioned lack of transparency around additionality. Even the FOEN, which must verify the additionality aspect of the programme, is unable to access the information in the private contract for that purpose. Responding to an enquiry from Alliance Sud, the FOEN confirms that the contracts are not part of the project documentation.
Qualitative shortcomings can also be detected in the information published via the programme documentation. The following are some examples:
● The roles and responsibilities of the players involved remain somewhat unclear. The investment is being made by Energy Absolute, although it is Thai Smile Bus that needs the vehicles. There is no mention of the fact that the Energy Absolute group of companies not only produces renewable energy, batteries and charging stations, but also holds a stake in the e-bus manufacturing company – and, as gleaned from internet searches, acquired a stake in the Thai Smile Bus company concurrently with the launch of the programme. The long-term benefits of such an investment for the financially successful Energy Absolute group are not discussed.
● There is contradictory information regarding the scale of the programme. The programme documentation speaks of a maximum reduction of 500,000 tonnes of CO2, for which at least 122 bus lines are being electrified (at least 1900 buses). A few pages on, however, it is stated that funding through the certificates is needed for the first 154 e-buses, which will ply eight routes and account for a fraction of the anticipated CO2 emission reductions. Besides, the investment return is calculated for just 154 e-buses. When contacted, however, KliK writes that the certificate price will cover the funding gap for all e-buses under the programme, not just the first 154.
● Promises are made that are hard to keep. For example, the PM 2.5 air quality level is to be monitored in order to gauge the reduction in the air pollution caused by the old buses. The positive, non-polluting nature of e-buses is rightly mentioned, but even if air pollution were to diminish measurably, it would be extremely challenging to establish a causal link to the activities of this programme. The programme document outlines no such procedure.
● The programme's "pioneering achievement" is being exaggerated, for example, through assertions that “it introduces new technology to the Thai public” – although the same company had previously been operating e-buses on the streets of Bangkok. The Klik website even contains manifestly false statements: "Thailand is currently not using electric buses on scheduled routes as a means of public transport. This is the result of a lacking infrastructure and manufacturing capacity of e-buses & batteries. This programme is therefore to be seen as a first-of-its kind undertaking to push Thailand on its EV journey towards a decarbonised economy."
Busstop at Rachadamri road in Bangkok.
© KEYSTONE/Markus A. Jegerlehner
Conclusion: Offset certificates are no substitute for emission reductions at home
The switch to e-buses in Bangkok is a significant and good thing in itself. Switzerland, however, is a striking example of the failure to use the partnership mechanism under Article 6 of the Paris Agreement for the purposes of higher ambitions and greater climate protection. Switzerland's aim, by 2030, to cut its emissions by 50 per cent from their 1990 levels, is less ambitious than that of the EU (-55%) which, rather than rely on offsets abroad, negotiates political reforms to facilitate rapid decarbonisation in Europe. Following the defeat in the referendum on the CO2 Act in 2021 in Switzerland, the government and the parliamentary majority were all too willing to give up the pursuit of any ambitions within Switzerland. The strong reliance on carbon offsetting is not a reflection of technical challenges in implementing Switzerland's climate policy. On the contrary, Switzerland is delaying possible domestic measures, so that even faster reductions will later become necessary. Offsetting abroad is a political decision taken by the centre-right majority in the government and parliament, even though many additional measures in Switzerland would have been approved by a majority of the electorate. The market mechanism in Article 6 can jeopardise the achievement of the Paris climate goals, as it is the easiest way for a rich country to meet its goals on paper. This therefore makes a mockery of the true purpose of the Paris market mechanisms, that of helping to raise climate ambitions.
From the standpoint of climate justice, this pathway is all the more disturbing, considering that the climate crisis is hitting the world's most vulnerable people the hardest. Switzerland owes it to these people and to future generations to lower greenhouse gas emissions as quickly as possible. The International Panel on Climate Change has underscored that the world must achieve net zero emissions by the middle of the century if the Paris climate goals are to be met. There is no place in a net-zero world for substantial trading in emission reduction certificates. The Swiss policy of purchasing such certificates is therefore unnecessarily and unfairly delaying action that is urgently needed here in Switzerland. This injustice is deplored also by civil society organisations in countries in the Global South.
Lastly, like similar journalistic research on other programmes, this study also shows that offset schemes can offer no real assurance of additional emission reductions. At no level is the purchase of certificates an equal substitute for emission reductions at home.
Share post now
Article
The damage is already there, but not the finance
29.09.2023, Climate justice
The fuss over who should pay for the loss and damage caused by global warming is now decades old. This year, for the first time, the UN Climate Conference in Dubai will be negotiating payment modalities. Results are urgently needed.
Delia Berner
Expert on international climate policy
A national disaster: The drought in Kenya keeps drying up life.
© Ed Ram/Getty Images
"In my country Kenya, we have had six failed rainy seasons, which has led to crop failures, prolonged drought and food insecurity. This has dramatically increased the cost for our farmers." These were the words of Elizabeth Wathuti, spoken loudly into a microphone on 22 June 2023 at the Champs de Mars in Paris in order to be heard by the thousands of people gathered there. Against the backdrop of the Eiffel Tower, the young activist talked about the impacts of the climate crisis and joined other speakers in calling for climate justice. At the same time, French President Emmanuel Macron was receiving guests from all over the world for a banquet at the Palais nearby. Hosted by Macron, and in the framework of an international summit, they had already spent the entire day discussing challenges and ways of scaling up funding for sustainable development in the Global South. The upshot was that their discussions would continue at the next conference.
International climate finance – to reduce greenhouse gas emissions and pay for climate adaptation in the Global South – has for years been bound up with the international legal obligation on the part of industrialised countries to contribute towards the collective finance target of 100 billion dollars per year. However, for lack of political will in the countries that caused the climate crisis, this amount has never been reached.
At the UN Climate Conference of November 2022 (COP27) in Sharm el-Sheikh, the countries of the Global South were able, for the first time, to conduct negotiations on funding for the loss and damage caused by climate change, and this, thanks also to decades of support by civil society organisations the world over. Loss and damage has already been running into the billions for years now – with exact estimates being dependent on the definition used – and it is most severe in places where people have the least resources to prepare for and adapt to it. Furthermore, it is compounding the debt situation of countries that are already highly indebted. The Federal Office for the Environment (FOEN) distinguishes between loss or damage resulting from gradual events (e. g., sea level rise) and from rapid events (e. g., storms and floods). Furthermore, alongside financially quantifiable loss and damage, there is also that which cannot be quantified, such as damage to cultural goods or ecosystems.
At this year's COP28 conference in Dubai, the financing of loss and damage will be one of the main topics of negotiation. This is so because one year ago, the contracting parties set themselves the task of adopting, in 2023, detailed provisions on finance for loss and damage. The discussion is limited to countries that are especially vulnerable to the impacts of the climate crisis. A UN fund is to be constituted, into which polluter countries will pay. Innovative global sources of finance are under discussion in that connection, potentially also involving contributions from private players, based on the polluter-pays principle. "Should such suggestions become reality, even high-emission companies around the world could contribute to this funding", writes Robin Poëll, FAON spokesperson, responding to a question from Alliance Sud. For the time being, however, any such global contribution towards the UN fund is likely to be insubstantial. Meanwhile, Switzerland could take the lead and look into introducing such a contribution, at least by companies in Switzerland that are harming the climate, as a way of raising funds to pay for loss and damage in the Global South.
Loss of trust complicates negotiations
The real bone of contention at the climate conference, however, could well be the question of which countries should pay into the fund and which ones should benefit from it. For this latter category, countries deemed especially vulnerable must be defined, or determined through negotiation. For the even more political question of who should contribute as polluting countries, the historic responsibility for the climate crisis, which can be clearly ascribed to the industrialised countries, comes up against today's country-by-country comparison of greenhouse gas emissions. In it, the biggest emerging countries account for an elevated share. The countries thus far contributing to the climate funding goals were determined in 1992. Switzerland would now like to see more countries being required to pay into the fund. To cite FOEN spokesperson Poëll: "Switzerland would like to see the responsibility being shared by countries contributing the most to climate change and having the capacity to do so. In reality, this would mean that rich emerging countries with high greenhouse gas emissions as well as private players would also make their contribution." So far, however, Switzerland and other donor countries in the North have failed in this respect, owing to resistance from the Global South. The fact is that industrialised countries have so far reneged on their funding promises and are therefore not credible when it comes to climate justice. Switzerland, for example, has calculated its "appropriate share" in climate funding not on the basis of its cumulative climate footprint, but based only on domestic emissions, which are much lower. Its failure to meet its climate target of cutting emissions by 20 per cent by 2020 should also be mentioned. Ultimately, the lack of trust between North and South also complicates negotiations on ambitious climate goals and the move away from fossil fuels. But if the countries of the Global South are to avoid manoeuvring themselves into global marginalisation, they must be able to secure their funding for renewable energy sources.
A compromise proposal for the structure of the new fund has been available since early November. What is striking is that the fund has been placed under the auspices of the World Bank, which is not known either for its pioneering role in the climate crisis or for a fair distribution of power. Naturally, this has led to strong criticism from countries in the Global South and civil society organisations. Besides the clear expectation that industrialised countries will contribute to the financing, other countries are also "encouraged" to participate in the financing. The question of which countries are considered to be most vulnerable and therefore eligible to benefit from the fund is likely to be left open at the conference, and will be up to the board of the new fund to decide. The board will consist of 26 members from all regions of the world (14 from developing countries), who will be able to take decisions by a four-fifths majority. At worst, this could lead to a stalemate in the implementation of the fund.
Time is short, loss and damage is already a reality, and is growing steadily worse. According to the World Climate Report, another factor at work here is the constantly widening gap in the funding available for climate change adaptation. People will not be able to adapt to every change. In the run-up to the 2021 UN Conference in Glasgow, the Foreign Minister of the Pacific island nation of Tuvalu created a lasting impression by delivering a speech with his trouser legs unceremoniously rolled up, standing at a lectern placed in the sea. This was done in order to highlight the issue of sea level rise. In Glasgow, Elizabeth Wathuti told the assembled world audience at the opening of the climate conference: "By 2025, half of the world's population will face water scarcity. And by the time I'm fifty, the climate crisis will have displaced 86 million people in Sub-Saharan Africa alone." No conference can end the climate crisis overnight. But financially covering damage and losses that have already occurred is urgently needed.
© Karwai Tang
Elizabeth Wathuti is a young Kenyan climate protection activist. She founded the Green Generation Initiative and became internationally known with her call for more solidarity at the UN Climate Change Conference in Glasgow 2021.
Share post now
Article
The miraculous increase in Swiss climate finance
06.12.2022, Climate justice
On paper, Switzerland has more than tripled its support to developing and emerging countries for climate protection in the last ten years. – Is that true? A look at the "accounting" of the Swiss Confederation.
Delia Berner
Expert on international climate policy
Muhammad Chuttal Korai outside his family's restaurant in Khairpur Nathan Shah, Pakistan. More than 1,500 people lost their lives and millions their homes in the 2022 flood.
© Gideon Mendel / Drowning World
The disastrous flooding in Pakistan is just one example. With each passing year, the impacts of global warming are becoming more intense and more obvious. Often, it is the poorest countries and the most vulnerable population groups that are the worst affected. They are the ones most in need of adapting to changing climate, whether by protecting their coastlines from storms and floods or adapting their agricultural practices to heat and drought. At the same time, climate neutrality is a must in all countries if global warming is to be limited to 1.5 degrees centigrade. No matter how you look at it, climate change remains a global challenge.
Not only is the Global North responsible for the climate crisis, but it also possesses the most financial resources, both for mitigating and adapting to climate change. As early as 2010, the international community decided that industrialized countries had to make available USD 100 billion per annum to developing and emerging countries as of 2020 to enable them to finance the development of their net zero societies and the required climate change adaptation. The Framework Climate Convention stipulates that this should represent new and additional funds. But political will alone was not enough to ensure that the cost is shared in a binding manner among the countries responsible. It is hardly surprising, therefore, that the global target was missed in the year 2020. According to the Organization for Economic Cooperation and Development (OECD) – optimistically calculated with the official figures from donor countries –- an amount of USD 83.3 billion was reached; 71 per cent of those funds nevertheless consisted of loans, and must be repaid. This raised the debt levels of the receiving countries even further.
Based on a combination of the polluter pays principle and our level of welfare, the Swiss government calculates that Switzerland should contribute between USD 450 million and USD 600 million towards the global funding target. That is too low; the fair share would be 1 billion[1] – taking into account Switzerland's emissions that are generated abroad. The government also states the principal source of the funds, namely, the existing budget for international cooperation, which has not been increased beyond the level of the general federal budget over the years. At the same time, those funds are also intended to ensure compliance with international guidelines on official development assistance (an area in which Switzerland still falls very short). The guiding principle is: report twice, pay once.
In this connection, Switzerland is now placing ever greater emphasis on the climate factor in development cooperation, and is attributing a growing number of projects to climate funding. This explains the doubling of Switzerland's contribution towards bilateral climate projects between 2011 and 2020. The Swiss Agency for Development and Cooperation (SDC) as well as the State Secretariat for Economic Affairs (SECO), both of which bear responsibility for these projects, are of course right to give a more prominent place to climate change in their projects. It is not clear, however, whether all projects were intentionally conceived as climate-relevant, or whether projects are being retrospectively classified as such. They are certainly being counted twice alongside development cooperation.
A second reason for the sharp increase in reported climate funding stems from Switzerland's contributions to multilateral institutions. These include multilateral funds such as the Green Climate Fund (GCF) and institutions that address a broader range of topics, such as development banks. Climate funds were established specifically to implement the Climate Convention. Switzerland's contribution to them is increasing, and rightly so, but in 2020 represented only a third of the country's multilateral climate funding. Two-thirds are being invested through development banks - the World Bank first and foremost. There too, the situation is similar to that of bilateral development cooperation, in that more and more projects previously existing in the portfolio are being imputed to climate funding. With new imputation methods for multilateral contributions, Switzerland's climate funding has repeatedly increased in leaps and bounds over the years.
For the year 2020, for example, Switzerland reported to the United Nations an amount of USD 411 million in climate finance, including USD 106 million in private funds that were "mobilized" thanks to public funds (e .g., through start-up financing or guarantees for high-risk private investments). The Federal Council seems quite satisfied with this. However, new and additional funds for climate financing that were not "pinched" from the development budget represent a tiny fraction. This comprises modest contributions to multilateral climate funds – amounting to USD 68 million. The Confederation's books are sometimes worth a read.
[1] The Swiss government includes Switzerland's domestic emissions only – although the environment report of the Federal Office for Environment (FOEN) shows that 57 per cent of Switzerland's climate footprint consists of emissions generated abroad as a result of our consumption. Based on the overall footprint, Switzerland's fair share would be 1 billion dollars or 1 per cent of the global funding target.
Climate financing in brief
In international climate policy, climate funding means climate-related financial support for developing and emerging countries. The poorest countries are the ones least responsible for the climate crisis and also the least endowed financially for mitigating and adapting to climate change. Climate funding is, however, just one aspect of climate justice. No less important for the Global South is the reduction of CO2 emissions in the North, including Switzerland.
Share post now
Opinion
In the shadow of the volcano
23.03.2023, Climate justice
Sandy beaches, rum and colourful fish. That is the Caribbean from the travel catalogue. What is not mentioned is that the Caribbean islands are especially vulnerable to natural phenomena.
© Karin Wenger
As we sail along Montserrat's west coast, it suddenly hits me – an awful stench. Perhaps a flying fish that jumped on deck without being noticed? No. It stinks of rotten eggs. And then we see them – little clouds of sulphur billowing from the mouth of the volcano and wafting on the wind to us out at sea. The Soufrière Hills volcano is in eruption, and has been for almost thirty years now.
Its 1995 eruption took the islanders by surprise. Having shown no sign of life since the 16th century, the Soufrière Hills volcano suddenly awoke from a deep sleep after 270 years. The volcano began spewing ash and lava, and the capital Plymouth, which lies on the western side of the volcano, had to be evacuated. Most of the 11,000-plus islanders moved away. As Montserrat is still a British Overseas Territory, many went to England, where they got help.
Herself a teenager at the time of the eruption, Vernaire Bass, too, left her homeland back then. "Not only was the infrastructure destroyed, but there was no longer any work or a future for us," recalls Bass, who now heads the island's National Museum, amongst other things. Besides, she says, the volcano was not the only danger. "Starting in June every year, we have to countenance the possibility that a hurricane could destroy all that we have built up. That means living in constant uncertainty. The upshot is that many islanders – not just here, but all around the Caribbean – suffer from PTSD, Post Traumatic Stress Disorder, because of this." In 1989, for example, Hurricane Hugo tore across the Caribbean and caused extensive devastation, including in Montserrat. The capital Plymouth and the island's infrastructure were rebuilt over six years, there were new schools and a new hospital; and when everything was restored, the volcano erupted. "Without the help from England,” Vernaire recounts, “the island might well be deserted today. We simply wouldn't have had the money to rebuild everything."
Montserrat is not the only volcanic island in the region. Here, the Caribbean plate collides with other plates, creating friction and causing repeated earthquakes and volcanic activity. In the region of the Antilles in particular, which includes Montserrat, the interaction between the North and South American and Caribbean plates is such that extreme tensions can build up here. The hurricane season runs from June to November every year. In 2022, 14 major storms and eight hurricanes swept across the Caribbean. They caused major damage to some islands. Cuba, for instance, was hit by Hurricane Ian last September. More than three million Cubans were directly affected and tens of thousands lost their homes. Climate researchers tell us that if the temperature rises by two degrees compared to the pre-industrial era, the probability of hurricanes, storms and severe flooding in the Caribbean would increase fivefold. As a future scenario, that would mean the destruction of habitat and the displacement of millions of people.
Montserrat, too, was hit by a massive hurricane last year. Hurricane Fiona swept across the island on 16 September 2022. The worst affected was Plymouth, the former capital, which the volcano had already destroyed. The volcano has been in constant eruption since 1995. Over recent years, its dome has repeatedly grown by hundreds of metres, only to collapse again. The last dome collapse occurred in 2010. Two thirds of the island, including Plymouth, and a radius of ten nautical miles around the southern part of the island still constitute a restricted zone. It is thanks to special authorisation that we are able to visit what remains of Plymouth. Here, where there was once bustling activity, now lie just ruins, enveloped in an eerie silence. The volcano has literally incinerated and swallowed up the city. Only the top floors of some three-storey buildings are still visible; where a long cruise ship pier once stood, only the tiny rump of a pier can be seen – the volcano has ejected so much material that the coastline has moved a hundred metres into the sea. Where there was once water, there is now new land.
The volcano is currently being monitored around the clock by a group of international scientists from the Montserrat Volcano Observatory. One of them is José Manuel Marrero, a Spanish volcanologist. He says: "The danger of a new and massive eruption is real. We just don't know when it will take place."
Despite this, Vernaire Bass returned to the tiny Caribbean island three years ago, after more than two decades in the UK. "I was longing for my homeland and wanted to play a part in the island's development," she says. But the island has changed. Of its once 11,000-plus residents, only 3,000 now remain. Everyone knows everyone else, corruption is rife, and new ideas often come to nothing, owing to the inflexible attitudes of a handful of powerful and influential families. On occasion, Vernaire regrets having returned home. Yet, she says, the volcano has given her a gift: "It has taught me to be adaptable. I can survive anywhere, provided I have food and shelter. That's perhaps the difference between us islanders and Europeans: the ever-present danger makes us resilient and able to survive."
© zVg
Karin Wenger
Karin Wenger
Karin Wenger was South Asia and South-East Asia correspondent for Radio SRF from 2009 to 2022, based in New Delhi and Bangkok. She published three books about her time in Asia. Since last summer, she has been sailing the Caribbean with her partner and writing about forgotten topics and world regions. More information is available at www.karinwenger.ch or www.sailingmabul.com
Share post now