Hope of a climate change finance deal seems to be disappearing
ST ANDREWS, SCOTLAND – In the grounds of St Andrews’ famous Fairmont hotel there are some acclaimed championship golf courses. I doubt very much that the G20 finance ministers and central bankers arriving here tonight will be teeing off.
Having “saved the world economy” in Act 1, Act 2 appears to be the no less thorny task of saving the world itself.
The Chancellor has forced climate finance to the top of the agenda at breakfast tomorrow. The UK/EU plan is for finance worth $100bn per year from 2020, half of which will be raised from the private sector through carbon market mechanisms.
The controversial bit is the other half. Which governments should pay for carbon abatement, mitigation, and percolation of green technologies to fast-growing economies so that they may prosper and grow using the least carbon possible?
The existing developed countries, AKA ‘the North’, AKA ‘the rich’, are responsible for 75 per cent of historic carbon emissions on this planet.
They are by far the cause of the current climate change challenge.
However, as the Chancellor will point out in a speech tonight, 90 per cent of future emissions will come from the emerging and developing countries, such as Brazil, Russia, India and China. The EU plan calls for some sharing of the burden of this 50 billion per year between historic and future polluters.
But here at St Andrews the Chinese in particular are saying No. There had been an attempt to do the heavy lifting work here in preparation for the Copenhagen summit.
The Danish prime minister will gatecrash this meeting alongside the British one. But tonight, all hope of a climate change finance deal here appears to be disappearing. We’ll know more after breakfast.
* The Chinese know all about breakfasts at these summits. When it was the G7 rich man’s club that ruled the roost, and many were complaining about China’s exchange rate policy, they did invite Chinese officials to attend as an observer.
But they were booted out after breakfast whilst the G7 crafted communique after communique that criticised the Renminbi policy. On climate change and elsewhere the BRIC countries are making their voice heard loud.
Brazil’s current policy of taxing capital flows would have been laughed out of a G7 meeting, but will politely accepted tomorrow.
The other major agenda item is building a sustainable world economic system.
Mervyn King has called the global imbalances, which I reported on from China using a dim sum table, the fuel behind the fire of the credit crunch.
The hope from G20 leaders is that the next leg of world growth will be sustainable and balanced, that North American won’t consume 30 per cent of the world’s output and will stop borrowing so much.
And that surplus countries like China will start spending more and stop accumulating three trillion dollar mountains of Forex reserves.
Very very interesting, but slightly academic.
A cynic might say that having “abolished boom and bust” in Britain, this is a rather lofty attempt to abolish boom and bust across the world. But it is heartening that one of the key geoeconomic lessons of this crisis is being learnt at the highest levels.