The new global climate agreement nations hope to reach in Copenhagen this December is different from many international agreements the United States is accustomed to negotiating. It will not be simply a reciprocal exchange of similar commitments by developed and developing nations (as with trade or arms control deals). Rather, to provide incentives for developing nations to make international climate pledges—and ensure a level playing field for U.S. manufacturers—the United States and other developed nations must provide funding for adaptation and mitigation, and allow developing countries some say in how this money is spent through existing or new international institutions. Aside from the issue of institutions, which can be dealt with later, this type of negotiation raises several key questions. How much funding is needed globally? What is an equitable U.S. share? What is included in current legislation, and how do these figures all match up?
While my last post dealt primarily with the third question, as debate moves to the Senate it is important to analyze how these funding levels compare to projected global needs, and thus how they will be perceived by the international community in the context of negotiating a new climate agreement. An initial analysis of the American Clean Energy and Security Act allowance allocations reveals several insights.
(1) The ACES is a good start, but even using conservative estimates of global needs the overall funding level in the bill is likely to be lower than the world is expecting, especially since some countries do not “count” private sector financing through offsets as a legitimate contribution. Although the U.S. State Department undoubtedly informed discussions in the House about the level of funding they need to secure an agreement, it may not have been politically possible to secure this level of allowance value and the Senate should consider alternative funding approaches.
(2) Financing for international forest conservation is much closer to the equitable U.S. share than adaptation or clean technology deployment. This is not surprising given the substantial expected cost-containment benefits from forests, and the United States’ strong bipartisan tradition of support tropical forest conservation.
(3) Financing for clean technology deployment in particular falls drastically short of what the world is expecting. Although this pool of funding has the potential to create U.S. jobs through clean energy export promotion, critics have pointed out that it could also be seen as paying other countries to become more competitive. How this funding is distributed and managed will therefore be critical, and increasing support will require innovative new programs or institutions better aligned with the interests of U.S. policymakers.
Potential 2020 Public and Private Financing Compared to Global Needs and U.S. Share (in millions)
| Global Needs | U.S. Share [1] | Included in H.R. 2454[2] | |
| Adaptation | $10,000-30,000[3] | $2,000-6,000 | Public: $721-914
Private: $0 Total: $721 |
| International Forest Conservation | $17,000-33,000[4] | $3,400-6,600 | Public: $3,243-4,580
Private: $4,680-11,636 Total: $7,923-16,216 |
| Clean Technology Deployment | $75,000-110,000[5] | $15,000-22,000 | Public: $721-914
Private: $1,560-5,818 Total: $2,281-6,732 |
[1] U.S. share is assumed to be at least 20% of the global total, based on past contributions to multilateral initiatives or institutions.
[2] Ranges for private sector financing are calculated based on estimates of offset price, supply, and source in 2020 from EPA, the Congressional Budget Office, and Project Catalyst.
[3] Project Catalyst, Towards a Global Climate Agreement, Synthesis Briefing Paper, 2009. page 17
[4] Johan Eliasch, Climate Change: Financing Global Forests, UK Office of Climate Change, 2008. page 76
[5] Project Catalyst, 2009. page 17
