The EU’s €15bn for developing countries: A turning point, or just more of the same?

Developing countries have repeatedly voiced demands for financial assistance to reduce their greenhouse gas emissions ahead of an agreement in Copenhagen. But apart from a peep out of the UK back in June, the developed world has remained fairly mute on the subject, especially when it comes to hard numbers.

However, a new draft proposal suggests the European Union might pay €15bn a year to help developing countries reduce their greenhouse gas emissions.

The figure is worked out like this: take an amount in the realm of $100bn a year, which according to a briefing prepared by G20 officials is the minimum amount of assistance the developing world might need to help transition to low-carbon economies.

Divide it in half, on the assumption that only 50 per cent needs come from the public sector. The other half will be coming from the private sector, of course – via carbon trading schemes, that will see them invest in developing countries’ carbon offset projects.

Then divide that $50bn by a third, which the EU thinks is what it should have to contribute out of the rest of the world, and you have something in the region of €15bn.

Okay, so there’s obviously a big difference if the overall transfer is €100bn a year or $100bn a year – but to say the numbers are rough at this point is an understatement – at this stage, they’re really points for negotiation, rather than actual commitments.

Either way, what the EU is floating falls well short of what China is asking for: it wants developed countries to pay between 0.5 and 1 per cent of their GDP to developing countries. For the EU alone, even the lower end of such a figure would be about $90bn a year.

Despite this, it’s a sign of progress at least that any figure is being talked about (although UK and Danish ministers pointed out yesterday that progress is happening too slowly). China is not the only country demanding financial assistance – India broadly supports this goal, has insisted that finance must be talked about before it commits to curbing carbon emissions, and some other countries have mentioned figures as high as 5 per cent of developed GDP.

So the EU is the first big player to mention numbers at all, albeit in draft form, and with the suggestion that some of that money might come from existing commitments for development aid. Meanwhile in the US, where the climate change bill setting out emissions reductions targets and a cap and trade scheme is taking a back seat to heated debate over healthcare reforms, the topic of giving money to other countries looks fairly low down the list.

At least the Democratic Republic of Congo’s senior climate negotiator, Tosi Mpanu-Mpanu, was somewhat positive about the EU’s numbers, calling the €50bn number for total public funding “a good start”.

The big question, though, is whether it gets other developed countries making similar commitments, and whether it will be seen as a fair amount by poorer countries. And all this with less than 13 weeks to go until the big Copenhagen meeting.

Related links:

Rich countries face annual $100bn climate change bill (FT, 04/09/09)
Asia hits back on climate change
(FT, 24/08/09)
Climate talks: What China, India and Brazil want (FT Energy Source, 29/04/09)

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