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Scaling up the mobilization of long-term climate finance for climate change
action A conversation with the Co-Chairs of the work programme on long-term finance
The workshop was the first of two that are part of the work programme on long-term finance, which governments decided to embark on at the 17th Conference of the Parties in Durban last year. The broad objectives of the work programme are to make progress on the issue and to boost efforts to scale up mobilization of climate change finance after 2012, when the period of fast-start financing for climate change action ends. Its aims are to analyse options for the mobilisation of resources from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources and relevant analytical work on climate-related financing needs of developing countries, taking into account lessons learned from fast-start finance. Tasked with the responsibility of running the work programme are co-Chairs Mr. Zaheer Fakir (South Africa) and Mr. Georg Børsting (Norway), who are due to report to the Conference of the Parties at its 18th session in Doha this November. Both were instrumental in the negotiations that led to decisions on long-term finance and the formation of the institutions set up to deliver it. In Focus caught up with the co-Chairs when they were in town to facilitate the first workshop. In this interview, the co-Chairs discuss their views, impressions and intentions with respect to the work programme and long-term finance. What do you think about the role of the work programme in the greater context of what governments have agreed they need to do in relation to long-term finance? Zaheer: In the negotiations, there’s not really room to accommodate the analytical and technical discussions. The intention of the work programme was to provide an opportunity for making progress on contributions to scaling up of long-term finance and mobilisation of finance. So, the approach that we as co-Chairs have taken was to ask, how can you use a platform that would stimulate political discussions to be able to make that contribution? Georg: It’s been important for us to bring in expertise, civil societies, observers, to the process and discussion, which can help heighten the general understanding among Parties on issues that are really complex. They are politically difficult, but they’re also complex and there’s a huge need for greater understanding. And those are some of the things that have really come out of the workshop— analytical discussions, and the identification of areas where there’s a need for further work to help the political process along on the issue of climate finance. Which brings us to the question, what do you think is the importance of the workshops in the greater context of the long-term finance work programme? Zaheer: I have a radical answer… I would see it as a kind of “therapy”. In the negotiations, it becomes so very intense and complex, dealing with a lot of political issues and so on, and you have a whole range of issues that kind of boils up inside. The workshop is a kind of outlet for you to release those sorts of issues and an opportunity to understand the points of reference from which your colleagues are coming on those issues. So, maybe it’s like therapy— you need to first get everything out in the open before you can deal with the issues. If you want to have a meaningful discussion around long-term finance, it is important for us to have done this in order to move to the next stage. For example, it would have been rather difficult for us to have gone directly into a discussion focusing on detail had we not explored the issue of developing country climate-related financing needs. We want to get people to talk, but we also wanted to get people to transcend from the political to the more analytical. I suppose this first workshop is that bridge, to take you into that second phase. One of the hot issues with respect to long-term finance for climate change is on the role and involvement of the private sector. How involved has the private sector been in the discussions on long-term finance? Zaheer: The presentations by experts within the banking sector showed that the extent to which the private sector was already involved in dealing with climate action was glaring, be it in the form of renewables, or all forms of investment in the climate sector. So clearly, there is a lot of activity taking place in the private domain in terms of climate financing of various kinds of initiative. But, I think the important challenge is: how do we activate greater private sector involvement in the developing world, among the private sector in the developing world? So there clearly is a lot of activity, but how do you get that activity in developing countries to gain traction? How can— and, indeed, should— the private sector be involved in discussions? Georg: It is important to get private sector knowledge and expertise in order to better understand from the private sector’s point of view what’s needed to enhance the environment for climate finance investments. I think everyone realizes that the private sector is, of course, going after returns on investments. That’s how the private sector works. But it is important that we don’t have a split world where you have the public sector on one side and the private sector on the other side. There needs to be proper regulations in place; and sometimes we might need public sector investments in order to leverage private sector investments. The understanding of that dynamic and what’s needed, you can’t really get that without engaging the private sector in that discussion. As for the financial services sector in general, and pension funds in particular— how can or should they be involved? Zaheer: The question, at the end of the day, is “what are the enabling conditions to activate the pension fund to want to make investments in climate finance?” And then, one would say, well, it comes back to what are the conditions you’re dealing with. It’s not a question of whether it’s a source or not, but one would need to look at it in totality. You would need to understand the nature of pension funds. They are more risk averse, so if they’re looking into investing in clean energy, they’re obviously going to go into an area where there is a stable political and policy environment, where there is a clear energy policy that ensures that their investment is secure. But they also tend to be more socially conscious. At the end of the day, it’s about understanding the motivations that determine how each instrument uses or makes their investments, and then deciding on the right mix of instruments for your sources of finance. It’s important that people in the room get an understanding of how these instruments operate and then make their decisions. So, to broaden the question: we’re at an interesting moment in time, because around 1,500 companies in the U.S. and Europe that are rated by Moody’s are sitting on two trillion US dollars of gross cash. Meanwhile, governments in Europe are struggling with finances. How can we get these companies interested and involved in long-term climate finance? Georg: Again, it’s about creating an enabling environment and creating attractive environments for investments, and that’s the only way you can really attract this type of investments. I would think, the situation in Europe now should actually open up some doors, not least for developing countries who are able to make themselves attractive. One of your goals from the outset has been to make this work programme and the workshops as inclusive, open and transparent as possible. Are you satisfied with the engagement of the various stakeholders, or would you wish for certain actors to get more involved or to receive more inputs on certain areas? Zaheer: I was pleasantly surprised at the number of people following our discussions on the webcast, similarly, by Twitter and Facebook. I was also very pleasantly surprised at the number of people who managed the trek to the workshop! Georg: I was really pleased with the attention that the workshop and the work programme received from way beyond just the Parties. I think it’s been reflected in the interest we received by webcast and social media. I would certainly like to learn from how we’ve done this in order to be as inclusive as possible, and also improve on it, if possible. That also goes for participation in the meeting itself, which I think has been quite good. In terms of where we would like to see more participation in the rest of the work programme, it might be from the private sector side. We have a few representatives here. I would certainly like to see more, not only as panelists and resource persons, but also as participants in the discussions. Zaheer: May I be controversial? My concern is not with the lack of stakeholders. My question is: do we have the right mix of stakeholders? For example, I would like to see more involvement of NGOs who are implementers on the ground. We really have a lack of NGOs and stakeholders that are actually doing physical projects on the ground. They are at the coalface of delivery, of having to deal with finance and the challenges it comes with. They would have the experience to know what the capacity challenges actually are, whether there are burdensome reporting requirements or not, for example. I’d really love to get feedback from them But I don’t know how you get more of those people into the room. You have to report to the COP in Doha in December. What do you hope to tell them? What do you hope to have achieved by then? Zaheer: If you look at the decision, the report is just one element of our process. The aim of the work programme is to make a contribution to the on-going efforts to mobilise climate finance from multiple sources, from 2012. At the end of the day, the success we will be measured on is, have we made a contribution or not? That’s what we are focused on: making a contribution. The workshop in itself is making a contribution, merely by expanding people’s knowledge on these different options. And that is going to have a ripple effect. It may be outside the UNFCCC process, it may be something that somebody takes back home, and we may never hear about it. But it’s already making that contribution. I suppose, we never stepped in here with any aspirations or illusions that we were going to do something that was going to radically change the landscape, in that sense. We were going to be bold and ambitious… Georg (smiling): We ARE… Zaheer: We ARE going to be bold and ambitious in the sense that we are going to produce a report that would not pull any punches, so to speak. Ultimately, at the end of the day, we’re doing the report based on how we saw the workshop and what we’ve heard and seen. It would mirror the approach, effort and energy we’ve put into the workshops. Georg: The work programme has a clearly defined aim of contributing to on-going efforts to scale up the mobilization of climate change finance after 2012. I think, as co-Chairs, we want to run a work programme in a way that we can say that we’ve achieved that aim. I think the report that we’ll be writing is part of this effort. So, while it’s up to Parties how they want to welcome or consider the report, we hope it will make a good contribution, and that it can help facilitate discussions among Parties when they receive it. About the Co-Chairs
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