It is raining in Copenhagen — the normal watery stuff, but also finance proposals, albeit of the non-official, imaginary „non-paper“ variety. But these are sometimes helpful to test the depth of the negotiation waters, to stay with the H2O analogies.
Just yesterday, the „non-paper“ of the UK, Mexico, Australia and Norway made the rounds in the Bella Center with the proposal for a new global Climate or Green Fund.
And today, Mr. „I-know-a-good-deal-in-finance- when-I-see-it“ George Soros, the legendary billionaire investor, who know heads the Open Society Institute, rushed through the Copenhagen Conference Center (flanked by a security detail that would make some heads of state blush with envy) to present to the delegates and the world a proposal to generate an additional $100 billion for climate change relief, just like that.
Both proposals, in substance, provide not too much that is entirely new, but — in the green spirit — recycle and repackage some ideas tossed around during the past year or so of global discussions about climate finance to maximum effect and best re-use. And they aim to stir up the finance debate in Copenhagen at a critical time in the negotiations by showing some innovative thinking and daring that official submissions up to now lack.
The joint non-paper by four countries, attesting to what could be an emerging consensus by a larger number of countries, uses elements of prior individual proposals for new innovative climate financing instruments by the UK, by Mexico, and by Norway. It contains elements of a Norwegian proposal on auctioning allowances to be issued under any Copenhagen agreement, picks up on an earlier Mexican proposal for a Global Green Fund, and throws in, for good measure, a proposal for the use of maritime and aviation levies to generate the revenue needed to fund developing countries‘ mitigation and adaptation efforts.
The paper proposes at least 50% of all money in a new global green fund to be spent on adaptation measures and recommends direct access for countries to these funds — where fiduciary standards allow it. But it also suggests the use of existing bilateral, and primarily multilateral channels in order to fast-track funding, including a reformed Global Environment Facility (GEF), but also the World Bank and multilateral development banks.
The Soros proposal wouldn’t even think up new taxes for a new global green fund, but work with existing global financing arrangements — albeit better known from the world of the financial, not the climate crisis. These resources, hough technically not funds in the traditional dollar-and-cent-sense, are already committed, collected and set aside in the form of the Special Drawing Rights (SDRs), the global reserve asset created and managed by the International Monetary Fund (IMF).
Just a few months ago, the IMF issued some $283 billion worth of SDRs as one of its measures to deal with the global financial crisis. According to Soros, $150 billion of these sit largely unused in the treasure chest of the 15 largest developed economies and could be donated to a new green fund.
Sounds…..good? Well, the devil might be in the detail…. (not all of which have been studied yet). Under the Soros proposal, SDR-financed climate funding would be largely in form of loans with projects heavily focused on the carbon market. The four countries‘ non-paper proposal at least allows for some grants in addition to concessional loans. And both fund proposals assign an important role for the International Financial Institutions — a suggestion which, at least for the G77 + China, and many climate justice activists from around the world, sounds more worrisome than encouraging….
Picture used under creative commons license; source: www.infowars.com/images/soros2.jpg