Confronting the Climate Financial Crisis

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climate crisis.jpg
(photo credit)
This is a guest note by Nancy Soderberg and Francesco Femia.
Nancy Soderberg is a former US Ambassador to the United Nations and President of the Connect U.S. Fund, a consortium of six U.S. foundations promoting key foreign policy goals. Francesco Femia is a Program Officer at the Connect U.S. Fund, where he focuses on climate and development issues.

Confronting the Climate Financial Crisis
There’s another financial crisis on the horizon — the climate financial crisis. Working towards the global meeting in Copenhagen this December, the UN’s climate negotiations are teetering on the brink of failure. The elephant in the room of these negotiations is how to pay for a global agreement — and who will pick up the tab.
If the administration does not get ahead of Congress and commit now to financing a global deal on climate change, negotiations will fail. And the cost of inaction and certain failure will be much higher than the cost of action. Once a tipping point is reached, we will face a human and financial catastrophe that will make this recession seem like a golden age of prosperity. And unlike our economy, once the damage is done, the climate will not rebound with a bailout package.
The challenge boils down to this: the developed world — responsible for today’s crisis — must help pay the costs for the developing world to do the right thing. Those catching up to us — China and India — will have to participate too, but developed countries need to lead. The good news is that for $150 billion, the world can get far ahead of the problem. While the long terms costs are likely to be higher, this investment now will set the world on the right course.
At the September G-20 meeting in Pittsburgh, leaders recognized the need to get the financing right by directing their Finance Ministers to report back at the next meeting in November with a range of possible options for climate change financing. They should recommend a global target for climate finance of at least $150 billion annually by 2020 – and commit the United States to funding 30% of that target, or $50 billion, through public financing. Roughly a third of this would be used to help the developing world adapt to the current effects of climate change, another third for helping poor nations adopt clean technologies, and the remainder for other mitigation objectives, such as energy efficiency and forest protection.
To be sure, in the wake of the current financial crisis, such funding will be politically difficult to obtain. Yet, we managed to find $15 trillion for bank bailouts and stimulus plans, $1.3 trillion in tax cuts, and one trillion dollars for the wars in Iraq and Afghanistan. The investment in saving our planet is no less urgent a challenge.
The risks to our national security (pdf) are real, including natural disasters, political upheaval, and further instability in states that could harbor the next Osama Bin Laden. And again, there is some good news. It costs billions, not trillions, and possible sources of public financing already exist, including revenues from the auctioning of allowances under cap-and-trade mechanisms, current climate and energy legislation, bunker fuel mechanisms, and international carbon and currency transaction levies.
But perhaps the most cost-effective way to help the world adopt clean energy and adapt to the effects of climate change is to stop propping up the very industry we should move away from fossil fuels. The world’s richest G20 economies spend an estimated $300 billion a year to subsidize the industry most responsible for global emissions. In other words — we have the money, we’re just using it the wrong way. Re-directing this money would generate double the amount needed for climate financing — and it wouldn’t cost us a dime. At the September G20 summit in Pittsburgh, leaders asked for a plan to phase out those subsidies, but they won’t consider it until June of 2010.
That is too leisurely a pace.
President Obama should press for a plan to be in place before the Copenhagen meeting this December — preferably by the end of the G20’s Finance Ministers and Central Bank Governors Meeting on November 6 and 7. In the meantime, he should move to end our own subsidies and instruct the U.S. agencies that currently provide fossil fuel subsidies internationally to do so, including the Overseas Private Investment Corporation, the U.S. Export Import Bank, and the Treasury Department which works through the World Bank.
According to the Environmental Law Institute (pdf), this step alone would save us $72 billion, well more than what the United States needs to commit for its fair share of climate financing. Such transfers could break a major deadlock in the negotiations, and bring the developing world on board.
These are all ways to pay for a climate deal now – and at a much lower cost than doing it later. And such a move may be the only way to salvage the faltering Copenhagen negotiations. Should President Obama take the lead, the world will follow. And Congress just might as well.
— Nancy Soderberg & Francesco Femia

Comments

13 comments on “Confronting the Climate Financial Crisis

  1. ... says:

    johnh – that is perhaps an even more stark way to put it… thanks –

    Reply

  2. David says:

    samuelburke,
    Reality is settled. Always was, always is, always will be. The pertinent questions are: What is actually happening to the planet and its ecosystems, and What changes offer correlatives? It matters not a whit whether the questions regarding global warming or the role of elevated levels of CO2 are settled to Howard Hayden’s satisfaction. Nor are those who see these issues as both critical and interrelated lacking in either scientific understanding or the requisite skills and knowledge base for legitimate scientific inquiry.
    Simple realities: CO2 is a greenhouse gas; CO2 levels are elevated; humankind has been burning fossil fuels at an ever-increasing rate, and CO2 levels are going up; the planet is warming up; ice caps are melting; a whole host of other phenomena associated with global warming are being observed.
    I hope Hayden is happy in his little bubble. I also hope political leaders are a bit more attuned to general reality than is Hayden.
    And finally, thank you Nancy Soderberg and Francesco Femia for this superb commentary. You are correct that if we fail to act, and act swiftly, all of the other crises which are absorbing our time, energy, and resources will become moot points.

    Reply

  3. JohnH says:

    It’s not even really about economics–unless the pocketbooks of the top 0.1% of Americans is what you call economics. Never before in America have so few benefited at the expense of so many.

    Reply

  4. ... says:

    call me naive…
    what will it be – a focus on economics, or the environment? so far the present politics is all about economics… the environment is just their to be raped in order that people have ”jobs”’… see how fucked up things are? now we are creating jobs to clean up all the shit we and previous generations have created, but the next generations are either going to inherit a ghetto planet, or have their work cut out for them thanks to these same short minded politicians who are always focused on money and jobs… we are being screwed over by an obsession with money and power…too bad their are no politicians willing to stand up to the corporations rape of the planet, as they are getting their election money from the same source… what a vicious circle…

    Reply

  5. Fazzolari says:

    I agreee with Mr. Femia 100%. Actions need to be taken today because the costs and damage will only be higher in the future. Now is the time to plan ahead.

    Reply

  6. JamesL says:

    There’s some technical or intentional problem with your site Steve.

    Reply

  7. JamesL says:

    First time that captcha actually dumped my post.
    **********
    samuelburke: Hayden’s letter is impressive but his argument is ‘My science is better than yours’. He’s not wrong but he’s not beyond criticism. All science models are simply models: tiny, flimsy little approximations from which we hope to obtain predictability. Few will be left standing intact 300 years hence. Our best theories now will be naive and laughable then, even if all that remains globally are a few subsistence farmers who will say of the great human crash: “They thought they were so smart”. B
    Many other factors suggest insufficiently accounted correlations: increased desertification; urbanization proportion; dropping water tables; increased area under monoculture; average food-to-market and product-to-market distance; human overpopulation; decreased bio-diversity; increased global bio-exposures; massive loss of agri-soil bio-diversity; inertias of time, and both personal and national capitalizations for next stage technologies (if there are to be any); continued numeric and volumetric growth of industrial and medical chemical and biological compounds; continued proliferation and production of nuclear materials along with continued inaction on the safe sequestering of nuclear waste; non-surplus economic policy; the direct short and long term effects of mechanized war, and the direct loss of new technology in favor of war efforts. The list is very long.
    CO2 levels are a clue, not a magic bullet. One doesn’t achieve victory, truth, or a coherent path into the future by winning a fencing match with CO2 theory. We should remain vigilant against the distraction of arguing too intently about the name of the train bearing down on us.

    Reply

  8. JamesL says:

    samuelburke: Hayden’s letter is impressive but his argument is ‘My science is better than yours’. He’s not wrong but he’s not beyond criticism. All science models are simply models: tiny, flimsy little approximations from which we hope to obtain predictability. Few will be left standing intact 300 years hence. Our best theories now will be naive and laughable then, even if all that remains globally are a few subsistence farmers who will say of the great human crash: “They thought they were so smart”. B
    Many other factors suggest insufficiently accounted correlations: increased desertification; urbanization proportion; dropping water tables; increased area under monoculture; average food-to-market and product-to-market distance; human overpopulation; decreased bio-diversity; increased global bio-exposures; massive loss of agri-soil bio-diversity; inertias of time, and both personal and national capitalizations for next stage technologies (if there are to be any); continued numeric and volumetric growth of industrial and medical chemical and biological compounds; continued proliferation and production of nuclear materials along with continued inaction on the safe sequestering of nuclear waste; non-surplus economic policy; the direct short and long term effects of mechanized war, and the direct loss of new technology in favor of war efforts. The list is very long.
    CO2 levels are a clue, not a magic bullet. One doesn’t achieve victory, truth, or a coherent path into the future by winning a fencing match with CO2 theory. We should remain vigilant against the distraction of arguing too intently about the name of the train bearing down on us.

    Reply

  9. JohnH says:

    More on the US military’s contribution to climate change–
    http://www.energybulletin.net/node/13199
    It’s significantly less than the 10% of US consumption that I cited above. Nonetheless, “DoD is the largest oil consuming government body in the US and in the world.” Reigning them in would have significant environmental benefits.

    Reply

  10. JohnH says:

    “The world’s richest G20 economies spend an estimated $300 billion a year to subsidize the industry most responsible for global emissions.” And this figure does not even include the roughly $Trillion that the US spends on its energy protection racket (the Pentagon). If I recall correctly, DOD alone burns 10% of the oil consumed by the US. And this may not include the air transport, helicopters, tanks and humvees rattling around the world’s various battlefields for no particular reason,at least any reason that official Washington will publicly acknowledge.
    Reducing the US carbon footprint begins with reigning in the energy security complex–oil companies and defense contractors joined at the hip to the Pentagon.

    Reply

  11. John Robert BEHRMAN says:

    Climate change modeling is not necessary or sufficient to global resource management or to conservation of energy and … of water, for Pete’s sake.
    Exigency can prompt a clear and effective response … by the US Marine Corps, for instance. Check out their “Ten by 10” plan. “Strategy” is not just an inside-the-beltway buzz-word where the moral, mental, and physical planes are “squared away”.
    Finance, or “monetary policy” as it is called in the bogusphere, may not be as important as supposed, unless it is used as a political pretext to do nothing of a sound economic, engineering, or agricultural nature, just spin, hype, and flim-flam.
    On the Texas-Louisiana Gulf Coast, for instance:
    We have experienced a century of global warming: starting from semi-tropic and ending up tropical.
    We have also experienced considerable subsidence, which mimics rising sea-levels.
    And, we have undergone large-scale industrial development and redevelopment of land and water resources — often hasty and perverse.
    So, most of what we now live with today was driven after 1952 by military-industrial policy that has involved leveraging public with private finance, but — in the case of Enron, for instance — increasingly perversely as “Military Keynesianism” has been replaced by Free Market Utopianism masking crony capitalism.
    Now missing are …
    Responsible organs of political-economic or of military-industrial policy formation, …
    Trustworthy planning bodies, and …
    Popular standard-setting authorities.
    If we restored and refurbished these, — vestiges of them remaining from earlier eras — we could modify existing patterns of development and realize rapid, large-scale adjustment based on traditional principles of international commerce and national industry.
    Republican democracy and national economy, a fusion of Jefferson and Hamilton, actually work when stripped of elite predation, mass fear, and intermediary criminality.

    Reply

  12. samuelburke says:

    “Physicist Howard Hayden, a staunch advocate of sound energy policy, sent me a copy of his letter to the EPA about global warming. The text is also appended below, with permission.
    As noted in my post Access to Energy, Hayden helped the late, great Petr Beckmann found the dissident physics journal Galilean Electrodynamics (brochures and further Beckmann info here; further dissident physics links). Hayden later began to publish his own pro-energy newsletter, The Energy Advocate, following in the footsteps of Beckmann’s own journal Access to Energy.
    I love Hayden’s email sign-off, “People will do anything to save the world … except take a course in science.”
    Here’s the letter:
    ***
    Howard C. Hayden
    785 S. McCoy Drive
    Pueblo West, CO 81007
    October 27, 2009
    The Honorable Lisa P. Jackson, Administrator
    Environmental Protection Agency
    1200 Pennsylvania Ave., NW Washington, DC 20460
    Dear Administrator Jackson:
    I write in regard to the Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, Proposed Rule, 74 Fed. Reg. 18,886 (Apr. 24, 2009), the so-called “Endangerment Finding.”
    It has been often said that the “science is settled” on the issue of CO2 and climate. Let me put this claim to rest with a simple one-letter proof that it is false.
    The letter is s, the one that changes model into models. If the science were settled, there would be precisely one model, and it would be in agreement with measurements.
    Alternatively, one may ask which one of the twenty-some models settled the science so that all the rest could be discarded along with the research funds that have kept those models alive.
    We can take this further. Not a single climate model predicted the current cooling phase. If the science were settled, the model (singular) would have predicted it.”
    http://www.lewrockwell.com/blog/lewrw/archives/41453.html

    Reply

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