It’s not just carbon emission targets that will vex developed world governments in Copenhagen at the end of the year. An even more politically difficult issue will also need to be resolved if a global agreement is to be reached: how much assistance to provide to developing countries.
The Australian Government has committed itself — vaguely — to the principle that developed countries who are responsible should assist developing countries in both emissions abatement and adaptation. Wayne Swan has talked airily about “showing that we have a common understanding of the need to boost funding to support adaptation and mitigation action in developing countries.”
Nationals Senator Ron Boswell reckons he’s on a winner, issuing press releases demanding the Government “come clean” on how much it will “give away” to poorer countries, warning of the “spectre of a ‘global green new deal’.” Boswell asked Penny Wong during the week “what extra tax will Australians have to pay?”.
There are a couple of arguments for why Australia and other developed countries should be devoting resources to helping developing countries cope with climate change. There’s the small matter of the moral argument that we caused most of the global warming that has occurred thus far and still cause most emissions. But even ignoring that, assistance to developing countries is necessary for the chances of a genuinely global climate change agreement, which as Penny Wong pointed out is the goal of even the climate recalcitrants of the Coalition.
We also have a direct interest in minimising the disruption that climate change will cause to the countries least able to deal with it, from the point of view of minimising the numbers of climate refugees, the need for more traditional developmental assistance and humanitarian aid and maximising global economic growth. We face all those issues in our own backyard in the Pacific.
The resources needed, however, are massive, and their levels unclear. The EU recently estimated spending of €100-120b would be needed by 2020 for both abatement efforts such as a switch to renewable energy, and adaptation to inevitable climate change. The World Bank thinks nearly US$400b by 2030. This week, Oxfam proposed a starting figure of $50b per annum. That’s at the lower end of figures. Some estimates range up to well over half a trillion dollars.
Current funding is less than a billion dollars in pledges, and about $400m in actual funding.
But in the scheme of things, and particularly after events in the financial sector in the last 18 months, that’s not that huge an impost. Oxfam notes that $50b is 0.1% of developed countries’ GDP, or 4% of military spending. Under a formula proposed by the EU, Australia would be up for between $2.5b and $3.4b. Oxfam proposes $1.7b pa.
But try telling that to politicians who have to find the money when their budgets are deep in the black. There will be a strong temptation to cut from existing aid budgets, which Oxfam strongly warns against. An obvious source is emissions trading schemes The Waxman-Markey “ACES” scheme allocates initially 3% of US revenue, rising to 12% of revenue. Ross Garnaut suggested developed countries commit to a level of GDP-based expenditure on research in emissions abatement technologies either at home or abroad, funded from ETS permit revenue, and adaptation assistance for developing countries.
The emerging consensus is that assistance will have to be funded by a combination of public and private funding – direct allocations from developed world governments, and a special tax mechanism of some kind. An international tax on fuel used in shipping and aviation is regularly suggested. An agreement to re-direct a small fraction of every country’s defence budget might have more interesting consequences.
The Rudd-Wong CPRS, however, makes no provision of any kind for using permit revenue to fund overseas abatement and adaptation assistance. It has all been allocated to big polluters, households and motorists who might have to pay a few cents extra for petrol. The $150m in funding for Pacific Island states to which the Government has committed, for example, to deal with climate change impacts, comes straight from the Budget.
There remain suspicions — denied by the Government — that there is a large component of CPRS revenue unallocated, which is being kept in reserve to ease the passage of the CPRS legislation through the Senate. In the absence of such a magic pudding, provision of Australia’s contribution to the international assistance package that is necessary to success at Copenhagen will have to come from the budget bottom line, unless the Government intends to cannibalise its current development and humanitarian aid.
Funding is only the threshold issue. Once that is overcome, governance has to be dealt with. The disbursement of development and humanitarian aid does not have a strong history of good governance and transparency, or of evaluation and assessment. Entire mechanisms for identifying and measuring performance indicators for assistance will have to be drawn up — possibly integrated with the similar processes that will be required for auditing of carbon permits from developing countries — and external accountability processes established with the agreement of both donors and recipients.
And recipients aren’t the only ones inclined to a lack of transparency in aid. Donor countries, including Australia, have a history of directing aid toward projects and countries where their own companies will benefit. Call it aid protectionism — and given the emphasis on commercialising new technologies as part of abatement assistance, it will probably be rife in climate aid unless nipped in the bud through a strong multilateral allocation mechanism.
There’ll also be critics who argue that economic growth is the best form of aid. The World Bank counters that growth is necessary but not sufficient, and that growth can never be fast enough to meet the cost to developing countries. It notes that an advanced economy like the Netherlands is already planning and funding the relocation of low-lying communities, despite being far wealthier than Bangladesh, which is having to adopt the same strategy on a far bigger scale.
With all those issues to deal with, it’s no wonder the Government is being extraordinarily vague about the “blank cheque” the Nationals are claiming will be taken to Copenhagen. There are no easy political and policy options when it comes to climate aid, especially not with xenophobes ready to take advantage politically.
Listen to yesterday’s Canberra Calling “Bon voyage Kim and Brendan“