On the 12th of December, 195 countries achieved what many regarded as the impossible by agreeing on a framework to tackle climate change.
The 21st session of the Conference of the Parties (COP21) committed to a deal to limit the rise in global temperatures to 2 degrees Celsius. The countless rounds of negotiations that failed to achieve universal approval magnify the significance of this agreement. Therefore COP21 is a major victory for multilateralism and especially the United Nations Framework Convention on Climate Change (UNFCCC). However, as the saying goes, “the devil is in the details” – which appear thin for now about its implementation. This blog post briefly discusses the political-economy challenges and opportunities presented by the Paris Agreement, with particular emphasis on developing countries.
Ratification
The eventual success of any international agreement depends on what Robert Putnam regards as the “two-level game” – interlink of domestic politics with international diplomacy. To achieve a successful conclusion to the simultaneous negotiations that occur on the domestic and international fronts, however, some common ground should exist between the parties involved. Climate change has, over the years, been a divisive issue in American politics and common ground is few and far between. The division was highlighted most clearly when the Clinton Presidency failed to ratify the Kyoto Protocol. Similar to COP21, the Kyoto Protocol was also heralded as an important “first step” in tackling climate change.
The Obama administration is likely to face similar challenges in ratifying the Paris Agreement through a Republican Congress, especially with a Presidential election cycle currently taking place. Whereas President Obama has consistently advocated for a proactive climate change policy, the Republican controlled Congress has been much more sceptical about Climate Change. In fact, Republicans have already moved to undercut President Obama’s climate change policies in Congress. Some important developments since Kyoto could, however, provide some hope of ratification. Crucially, since Kyoto, the body of scientific evidence on climate change and its effects have grown substantially. Despite some scepticism among a minority in leadership roles of the American political establishment, politicians are finding it more difficult to ignore scientific evidence and consequently, climate change. Secondly, unlike with Kyoto, developing countries such as China and India have taken increased responsibilities to curb their levels of pollution – a factor strongly advocated for by the US.
Thirdly, the rise of civil society organisations has created a more vibrant dialogue on climate change in the United States and has created a more favourable domestic platform for climate change policy. Failure for US ratification will be catastrophic to implementing the Paris Agreement and developed and developing countries alike will be keenly observing the process.
Financing
Developing countries will require significant technological upgrades in order to pursue their respective growth agendas in an environmentally friendly manner.
The UNESCAP estimates that closing infrastructure gaps and expanding social protections while addressing climate mitigation and adaptation would cost the region (Asia and the Pacific) between US $2.1 trillion and US $2.5 trillion per year. Recognising the necessity for financial resources to enhance the implementation of climate change policies, the Paris Agreement establishes a Green Climate Fund with contributions from developed nations for the benefit of developing nations amounting to $100 billion per year by 2020.
In spirit, the fund is supposed to act separately from existing international aid mechanisms – especially the commitment by OECD countries to provide 0.7 percent of GNI as international aid. However realistically, it appears that developed nations are likely to simply divert funds from existing aid allocations to the Green Climate Fund. In fact, the UK government has already confirmed that its contributions to the fund will come from the existing international aid budget. This will undoubtedly curtail the successful implementation of the Paris Agreement in several ways and create considerable challenges to developing countries.
Firstly, developed countries have historically failed to uphold their foreign aid commitments. Tellingly, among 28 OECD countries only three countries fulfilled the commitment to provide 0.7% of GNI as aid in 2014. Therefore, the financial resources available for developing countries are inherently limited in scope. Secondly, within the scope of limited finance and the decision of developed countries to divert money from existing aid budgets for climate change, developing countries are faced with particularly harsh opportunity costs. Developing countries will have to choose between using available funds to address issues such as poverty and healthcare or technological upgrades to promote sustainable development.
This situation is unfortunately not unique to this context. In 2005, the WTO announced the Aid for Trade programme that attempted to direct financial resources to specifically address trade-related issues in developing countries. Similar to that of the Green Climate Fund, the Aid for Trade programme was also, in spirit, meant to be outside the scope of existing foreign aid allocations. However, in practice, the programme has received funds from overall international aid budgets in developed countries. During the Fifth Global Review for Aid for Trade held in Geneva, attended by the author, several representatives of developing countries bemoaned the need for governments to choose between trade and poverty. Given the choice, the delegates noted that governments could not suitably justify using available resources for trade related projects when a vast majority of their citizens were in hunger.
If the Green Climate Fund continues in the same vein, a similar trend is likely to occur and the efficacy of the Paris Agreement will be constrained. Therefore, it is vital that state and non-state actors involved in drafting the agreement hold developed countries accountable to their commitments.
Opportunities for local entrepreneurship
In the absence of dependable financial resources from developed countries, developing nations will require to be somewhat self-sufficient in pursuing a sustainable development agenda. In doing so, significant demand is created for low-cost technological upgrades suitable for developing countries.
Sri Lanka could potentially benefit by taking an initiative to promote research and development into technological innovations that facilitate sustainable growth – this could include industrial technologies as well as tools to respond to effects of climate change. As a developing country, innovations that come from within would be better suited to other developing countries with similar levels of technological advancements, rather than complete upgrades needed for technology from the developed world. Therefore, given recent measures to spur an outward-looking economy, the government should encourage public-private partnerships to make best use of the opportunity. A combination of government support and private sector initiative will likely spur a culture of entrepreneurship in affordable, environmentally friendly technology using local knowledge.
(Kithmina Hewage is a Research Assistant at the Institute of Policy Studies of Sri Lanka (IPS); with research interests in International Political Economy, which include WTO issues, Trade and Development, Export Competitiveness, and Foreign Direct Investment. He holds an MSc in International Public Policy from University College London (UCL) and a BA with University and Departmental honours from the Johns Hopkins University, USA.
Talk with Kithmina - [email protected])
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