Luxembourg, 23/07/2015 (Agence Europe) - EU environment ministers expect a strong signal to be given by their economy and finance colleagues on climate financing after 2020 to build confidence and contribute to the success of the Paris climate conference (COP21, 30 November-11 December).
That was the message coming from the informal meeting of the Environment Council in Luxembourg on Wednesday 22 at which a working session was devoted to this key issue on the road towards Paris.
Ministers made it clear that the discussion will not stop at Paris. Mobilising $100 billion per year in public and private funding in the Green Climate Fund by 2020, as the industrialised nations pledged in Copenhagen in 2009 to support the efforts of developing countries, will require on-going discussion. Ministers underlined that this fund, of which the EU will contribute around 50%, is only one among several instruments to provide climate financing but it must work before Paris.
“How to finance the transition to economies with low emissions of greenhouse gas and that are climate-change resilient is crucial for the Paris agreement. With €9.5 billion paid in 2013 - half for prevention of climate change and half for adaptation assistance for developing countries - the EU is the world's largest contributor to the Green Climate Fund. We discussed the need for a credible methodology to demonstrate that climate financing is guaranteed. This kind of transparency will create confidence that the EU will abide by its commitments”, said Carole Dieschbourg, president in office of the Environment Council (our translation). In return, she stated, developing countries will have to adopt good practice in order to facilitate investment flows.
Ministers debated instruments and approaches for gathering public and private funding at European and international levels. This exchange of views allowed discussion among the countries of what could be included in the finance toolbox to structure and select instruments needed to mobilise climate finance. Each delegation gave examples of financing in its own country and consensus developed on the need for further discussion and exchange on existing instruments, such as ETS revenue, green bonds and favourable credit terms. Reducing subsidies to fossil fuels and carbon charging were often raised by delegations as ways of creating an environment that encourages investment in clean technologies.
Some delegations pointed out that it was more difficult to find private investment for adaptation than for mitigation (that is, reducing greenhouse gas emissions), the latter offering stronger prospects of profits for investors.
Héla Cheikhrouhou, head of the Green Climate Fund, announced that the first programmes and projects should, in principle, be approved in November. Jonathan Taylor, European Investment Bank (EIB) vice-president, said that the EIB is already working in the energy sector and could put its expertise to good effect as a catalyst for climate financing.
The message sent to Ecofin is clear: “There is a financing shortfall. We all know that to ensure success (Ed: in Paris), we really need to succeed in finance efforts”, Estonian minister Marko Pomerants told EUROPE. Climate financing will be on the agenda of the Ecofin Council's informal meeting in September and conclusions are likely to be adopted in November at the formal meeting of EU economy and finance ministers. (Aminata Niang)