Who Will Fund the Climate Change Agreement?
By Isla Lamont
The 2015 United Nations Climate Change Conference (COP21) is being held in Paris from November 30 to December 11. The objective of the global summit is to form a legally binding agreement among all nations on how to eventually eradicate global warming. The most notable previous conference was in 1997 when a legally binding agreement was struck, known as the Kyoto Protocol.
Now, the tone is more urgent than previous multilateral assemblies between nations. In an interview with the Associated Press, Marcia McNutt, former United States Geological Survey Director and head of the National Academies of Sciences, noted, “At the time of Kyoto, if someone talked about climate change, they were talking about something that was abstract in the future. Now, we’re talking about changing climate, something that’s happening now.”
With a resolve for stronger policies at COP21, it is important to consider how the new agenda will be funded.
Last year, U.S. President Barack Obama’s administration pledged $3 billion in both public and private money to the Green Climate Fund. The fund was launched in 2009 by international climate delegates with the goal of “providing $100 billion a year in financing by countries by 2020” and is intended to assist “poorer nations prepare for climate change,” according to The Hill. The U.N. funded the first round of projects, which took place in early November.
However, the Republican Party, which holds the majority in the U.S. Congress, continues to block the approval of climate change funds. President Obama requested $500 million for the fund in his 2016 budget request, but it has yet to be fulfilled. Lawmakers have until December 11 to finalize the spending plan. The Hill reports that Republicans intend to deny Obama the first portion of money he needs to strengthen the initiative.
In an open letter to Obama, 37 Republican senators wrote, “We pledge that Congress will not allow U.S. taxpayer dollars to go to the Green Climate Fund until the forthcoming international climate agreement is submitted to the Senate for its constitutional advice and consent.”
A major basis for Republican dissent is that President Obama oversteps his constitutional powers by promising funds or negotiating global deals without congressional approval, regardless of subject matter. Those in opposition to the GOP argue that lawmakers do not vote on deals, but on treaties, which require Senate ratification.
Outside the American government, there are actors in the private sector who are willing to fund the cause. According to the Wall Street Journal, Google declared in 2007 that it will purchase a 12.5 percent stake of Kenya’s Lake Turkana wind park, Africa’s largest wind energy project. The amount is undisclosed and will be officially invested once the project is complete.
Google’s Vice President of Energy John Woolard stated in reference to the investment, “It has the potential to have a massive impact on Kenya’s grid, helping to spur the deployment of renewable energy in one of the world’s fastest-growing countries.”
Google has committed $2 billion to 22 clean energy projects in its corporate history, building a reputation as one of the world’s most socially responsible companies.
The United Nations also published a report in July on new avenues for investment in green practices entitled “Scaling Up Finance for Sustainable Energy Investments.”
Four broad “investment themes” proposed are developing the Green Bond market, using the de-risking instruments of the developmental finance institutions to mobilize private capital, exploring insurance products that focus on removing specific risks, and developing aggregation structures that focus on bundling and pooling approaches for small-scale projects.
Sustainable Energy for All (SE4All) CEO Kandeh Yumkella admits the call to action is ambitious, asking for investments in both private and public sectors around the globe. The goal is to reach $1 trillion in a year to combat the intensifying results of climate change, which most scientists agree is even direr than was estimated ten years ago.
Yet, from a venture capitalist perspective, Yumkella advises in a U.N. News Center article, “A trillion-dollar investment need is also a trillion-dollar investment opportunity.”