The great climate-change money debate is picking up momentum and has emerged as the most serious threat to the success of the Copenhagen summit.
Making a summit appearance Thursday, billionaire financier and philanthropist George Soros said the yawning gap between what the poor countries need to protect them from climate change and what the rich countries have offered to pay them "could actually wreck the conference."
Mr. Soros's remark did not seem an exaggeration. Said Alden Meyer, an energy economist who is director of strategy and policy for the Union of Concerned Scientists in the United States: "If the only money on the table is $10-billion, then the summit won't have a deal, end of story."
The $10-billion (U.S.) he referred to is the amount that the Commonwealth countries, Canada among them, have proposed as a "quick start" fund. Starting in 2010, the amount would be paid out every year for three years to fund climate-change adaptation and mitigation, including green-technology transfers, in the developing world. So far it is the only amount on offer and there is no credible proposal yet for a larger, long-term fund to replace it once it expires.
It is possible to substantially increase the amount available to fight global warming in the developing world. All that is lacking is the political will. George Soros
The Group of 77 poor and developing countries (a misnomer, because the G77 in fact has 135 members, including China) has turned the funding gap into a war cry. At a summit press conference Thursday, Lumumba Di-Aping, the Sudanese diplomat who acts as the G77's spokesman and negotiator, said hundreds of billions of dollars will be required to fight the effects of climate change and urged the United States to pony up. "Financing is an obligation of the developed countries," he said.
Rumours that the G77 will walk out of the summit unless a far bigger number is negotiated were dismissed by Mr. Di-Aping. "We will not walk out of summits," he said. "We will continue negotiating."
The negotiations promise to be tense and heated, nonetheless. The developing world and the poorest countries argue that the rich countries, being primarily responsible for the man-made greenhouse gases in the atmosphere, should bear the cost of slowing the rate at which they are being added. The rich countries argue that emissions in many developing countries are soaring, and those countries must be responsible for reducing them. Plus, the rich countries aren't so rich any more, thanks to the recession.
Still, the $10-billion is a non-starter as far as the G77 is concerned, even if the G77 itself will not say what a fair and just number might be.
The World Bank has estimated that the cost of adapting to climate change in the developing world will range from $75-billion to $100-billion a year between 2010 and 2050. Various United Nations estimates are similar. The European Commission's estimate for adaptation, mitigation and the preservation of forests (which act as a carbon sink) is somewhat less, but is limited to the cost of public financing - private financing will also come into play.
The main obstacle to negotiating a far bigger financing package in Copenhagen is the United States. Washington has said nothing about a long-term contribution to the costs of adapting to climate change in the developing world, and President Barack Obama, who joins the summit late next week, is unlikely to formally commit to a financing package that delivers a fortune to China, whose carbon-dioxide emissions now exceed those of the U.S.
Mr. Meyer, of the Union of Concerned Scientists, said the United States cannot make a formal financing commitment before the Senate approves legislation establishing a carbon cap-and-trade market some time next year. The legislation is crucial to any climate-change financing, since about 7 per cent of the total value of the carbon credits that are to be traded, potentially worth as much as $5-billion a year, would be funnelled to developing countries.
"Obama has to assure Japan and Europe and the others that if they go ahead with their financial commitments, the U.S. will make good later," Mr. Meyer said.
Mr. Soros has come up with his own proposal that, he said, would help fill the gap between short- and long-term financing plans. His idea is to divert the International Monetary Fund's unused foreign-exchange reserves, known as special drawing rights (SDRs), into a green fund. The value of the idle SDRs is so big that the fund would be able to inject as much as $100-billion into projects in developing countries, such as rain forest preservation and the development of clean energy sources, aimed at reducing greenhouse gas emissions.
"It is possible to substantially increase the amount available to fight global warming in the developing world," said the 79-year-old financier. "All that is lacking is the political will. Unfortunately, the political will [is] difficult to gather because of the mere fact that it requires congressional approval in the United States."
Greenpeace and other environmental groups praised the suggestion. Canada's chief climate-change negotiator, Michael Martin, would not comment on Mr. Soros's proposal specifically, but said he "welcomes the contributions of ideas."
The proposal will probably go nowhere because, as Mr. Soros noted, Congress would have to approve it and Congress is focused on its own climate-change legislation, not finding work for the International Monetary Fund. That, Mr. Meyer said, leaves the success of the financing package, and the Copenhagen summit itself, up to Mr. Obama.
"He has to say, 'I'll pay you later,' and get the other rich countries to believe him," he said.