What role should finance play in Katowice?
Finance issues are set to take centre stage in Katowice: one of the key desired outcomes of COP24 is ensuring increasingly just and equitable access to climate finance. For instance, Visa has set up an innovative crowdfunding installation at COP24 to make donations for climate action using a new digital platform. Viewers will see images of the ecosystem slowing degrading and can help ‘halt the degradation of the environment’ by tapping an electronic reader with a Visa contactless card. For every tap that is made, Visa is donating €3 to the World Bank Adaptation Fund. The World Bank has made a $200 billion pledge over five years to help countries move toward a low-carbon, climate-resilient future.
However why is it taking a conference for institutions to make these landmark gestures? Are these simply just token gestures detracting from more important outcomes of the agreement? To date, the necessity of avoiding ‘double counting’ has been mentioned but is not clearly defined.
Double counting is using the same money to report in different fora that you have achieved different objectives. For example, a project developer could sell credits to an international buyer to claim their emissions have been reduced. However those credits may have already be counted as reductions in the host country’s commitment. No framework has been formulated to increase transparency in Nationally Determined Contribution-related inventories, and there is no set of standards relating to double counting in Article 6 of the Paris Agreement. This is a pressing issue that must be addressed, as double counting of financial flows could reduce the total amount of support from developed countries to developing countries and the subsequent emission reduction. Increasing the transparency of financial transactions will also help to instil uncertainty and risk confidence in the private sector, encouraging further donations.
I am not denying the importance of pledges in boosting support for adaptation and resilience and sending an important message for the global community to do the same. However debates about climate finance should not be limited to a game of numbers. Instead, we must ensure that this does not instil complacency and divert our attention from achieving the bigger picture of achieving clear rules and a common international transaction-tracking regime.