“For the Pacific, the impact of climate change will remain as the greatest threat to our Pacific people in the longer term. You can quarantine COVID-19, but climate change cannot be quarantined.”
That’s Exsley Taloiburi, climate change finance adviser at the Pacific Islands Forum Secretariat in Suva.
This month, the annual Forum Economic Ministers Meeting (FEMM) went online, to discuss the regional response to the coronavirus pandemic. The meeting focussed on the social and economic effects of border closures, increased health spending, the collapse of tourism and associated job losses. But Forum Secretary General Dame Meg Taylor was quick to acknowledge the region was dealing with compounding and interconnected challenges: “Today, we are now faced with three crises: a health crisis, an economic crisis and the ongoing climate crisis.”
The final FEMM outcomes statement agreed: “We recognise the three-pronged crisis currently facing the region – the impact of COVID-19, the devastating effects of climate change and natural disasters, and the fragile economic health of the region as a consequence of inherent vulnerabilities.”
Tuvalu’s Minister of Finance Seve Paeniu was chair of FEMM 2020. Speaking to journalists after the meeting, Paeniu stressed that these combined crises affect states like Tuvalu, that do not have any confirmed cases of coronavirus: “Even though we are COVID-19 free, we are already feeling the flow-on impact in terms of the financial drain on our resources, in terms of our health systems, to ensure that our capacity to be able to respond in the event that there is a COVID-19 outbreak in Tuvalu. On top of that, we are very much vulnerable to natural disasters. At the beginning of this year we were hit by Cyclone Tino and then a few weeks later we had the COVID-19 pandemic.”
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Despite all the international pledges for climate adaptation, Pacific governments and civil society want more action on reducing greenhouse gas emissions. As the host of the 2019 Forum leaders meeting in Tuvalu, then Prime Minister Enele Sopoaga put it bluntly: “No matter how much money you put on the table, it doesn’t give you the excuse not to do the right thing – that is, cutting down your emissions, including not opening your coal mines.”
The Pacific Islands Climate Action Network (PICAN) has more than 130 member organisations across the region. Earlier this year, the network issued a list of demands to Forum leaders, asking them “to call for a commitment to transforming the public and private financial system, at the domestic level and globally by 2030.”
PICAN advocates changes to climate funding mechanisms that ensure “financial flows are compatible and in line with a 1.5-degree pathway, climate-resilient development and just recovery efforts, which includes ceasing financing of fossil fuel projects and investing in 100 per cent renewable energy projects.”
For many years, civil society organisations in the Pacific have campaigned for increased community access to bilateral and regional climate programs, calling for increased funding for grassroots climate adaptation and renewable energy. But even as governments are working to increase flows of climate finance for adaptation, advocacy groups are focussing on another financial angle, seeking to turn off the taps! They’re lobbying donors and financial institutions to end their financial support for new emissions-intensive projects proposed by coal, gas and energy corporations.
Civil society groups lobbied Forum economic ministers before FEMM 2020, with Joseph Sikulu of 350.Org calling for re-allocation of subsidies and grants: “The work that’s going on, especially in our community groups, is to shift financing away from fossil fuel projects, especially at a time when we need finance to be flowing to ensure a just recovery for our community in this time of COVID. We want to ensure that governments aren’t funding the bail-out of some of these big projects.”
As a climate advocacy network, 350.Org Pacific has joined counterparts in Australia and New Zealand to target major projects such as the Carmichael coal mine in Queensland, managed by the Indian corporation Adani. The Adani mine has just begun construction, but coal mined in the inland Galilee Basin must be transported to the coast for export. Environmental activists are seeking to hit the finances of the Adani-owned Abbot Point coal export terminal, fearing damage as coal ships transit the Great Barrier Reef, a UNESCO world heritage site.
Last year, two Korean financial corporations Samsung Securities and Hanwha Securities purchased $120 million of debt in the Abbot Point terminal, which has total debts nearing US$1.5 billion. Now, after community campaigns, environmental activists have secured commitments from the two Korean financiers to refuse re-financing of Abbot Point’s debt when it falls due for repayment before December 2022.
Patricia Mallam from 350.Org says: “We’re training Pacific Climate Warriors how they might intervene at Annual General Meetings, to ensure financial institutions seriously consider moving away from financing the coal industry and looking at renewable options.”
The slogan of the Pacific Climate Warriors is “We’re not drowning, we’re fighting!” The resources needed for that fight will be high on the regional agenda in coming months.
By Nic Maclellan in Funafuti, Tuvalu.
Most Forum island countries have already accessed funding from the Green Climate Fund (GCF), the global climate finance mechanism created under the UN Framework Convention for Climate Change. It’s a crucial source of funding for developing countries, operating under the Paris Agreement on Climate Change.
Around the world, Small Islands Developing States (SIDS) already have 24 approved GCF projects, with 11 already under implementation. So far, US$5.2 billion has been programmed from the fund, with $830 million (16 per cent) going to SIDS – and half of this amount has gone to Pacific island states.
Now there’s a need to replenish the US$10.3 billion fund, for future grants after 2020. Starting from October, the GCF is seeking to replenish the fund with significant pledges from OECD countries and voluntary contributions from large developing nations.
Jerry Velasquez is Director of the GCF’s Mitigation and Adaptation Division. He attended this week’s Sautalaga Climate Dialogue in Tuvalu, and met with a range of Pacific delegations at the Pacific Islands Forum to discuss future co-operation with the GCF.
Velasquez told the Sautalaga that Pacific governments need to address three core issues for future GCF funding. The first is easing access to the GCF, through the Readiness Fund (a GCF mechanism that provides preliminary finance for preparation of the technical and scientific studies required to make a full bid to the fund). There’s also a need to increase country capacity to manage and implement programs.
Velasquez called for a strategic plan to increase financing for Pacific SIDS. With more funding available in coming years, there will be growing competition for the proportion of GCF funding specifically allocated to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
“It would be useful for governments to raise their ambitions and articulate their priorities,” he said. “Some are already clear, some are not, but we need to understand the common issues. There are ideas for low-emissions shipping, most countries have problems accessing water, they have a lot of countries with coastal protection issues and some would like to increase the percentage of renewable energy
Accessing the fund
In recent years, there have been significant debates on the GCF Board between developed and developing countries on how to improve access to the fund. The GCF Readiness Fund provides resources to hire or deploy technical staff to prepare for a major bid to the GCF. It’s a crucial mechanism for Smaller Island Developing States that often lack the staff to deal with the complex international bureaucracy.
Exsley Taloiburi is Climate Change Financing Adviser at the Pacific Islands Forum Secretariat in Suva. Taloiburi told Islands Business: “We have ten of our Forum island countries that have already had access to the GCF Readiness Fund. Although countries are eligible to access US$1 million per year, a number of our countries have not fully utilised that cap. Countries that have accessed funds from the GCF envelope have accessed well below $1 million a year.
“But it’s not a prerequisite – they can just go and apply for project funding instead of accessing GCF readiness funds. Some of these countries feel that they have the enabling environment to absorb the funds that the GCF is offering, not only the scale of funding, but the reporting requirements and other requirements for Forum Island countries.”
Despite these successes, the GCF Secretariat has recently approved changes to further cut back the bureaucracy.
Jerry Velasquez noted: “The debate is not just the size of the Readiness Funding but how we deploy this funding more easily. One innovation that’s already been approved is three-year readiness grants. Instead of applying each and every year, you apply for it once for three years, up to a maximum of US$3 million. This cuts the bureaucracy by one third and allows for some stability in hiring staff and capacity building.
“The other thing that’s an innovation here that could be applied elsewhere is the regional readiness, because you cannot do everything by yourself. You cannot hire a technical expert on water and fisheries and everything in each and every country. So, you could draw down resources regionally.”
Forum host Enele Sopoaga, Prime Minister of Tuvalu, welcomed the notion of regional readiness systems.
“I’m welcoming the GCF’s presentation saying there’s the capacity for readiness resources to be packaged and bundled for a regional facility,” Sopoaga said. “I can see there could be a way forward for this to be approved, dispersed and housed in the Pacific from which island countries can draw from as readiness resources. That could be an innovative way of moving forward. But it’s not only access, but also implementation and disbursement – for funds to be disbursed as soon as possible in order to help the island countries survive.”
Battle over replenishment
At the global climate negotiations in 2010, OECD countries agreed to an annual global target of US$100 billion in public and private funds by 2020, to support developing country efforts to adapt to climate change and cut greenhouse gas emissions. As they signed the Paris Agreement in 2015, industrialised countries reaffirmed this objective, and made a series of recommendations about the effective use of these resources.
In Paris, countries pledged to review the global US$100 billion climate funding target by 2025, but this commitment comes in a separate “decision text” rather than the binding agreement.
The GCF began operations in 2015, but is about to launch a replenishment round, to increase OECD pledges beyond the current level of US$10.3 billion.
However, the Morrison government in Australia has now joined the Trump administration in refusing to commit further funding to the GCF replenishment. In 2014, former US President Barack Obama pledged US$3 billion to the fund. Trump administration however has refused to commit the remaining US$2 billion, a significant hole in the GCF’s budget. The chaos surrounding Brexit has also complicated the delivery of funding pledges from the UK government, given possible fluctuations in the value of the British pound.
Throughout this week’s Pacific Islands Forum in Funafuti, there’s been growing concern over Australia’s position. Despite an Australian announcement that A$500 million of re-badged aid will be directed at climate infrastructure and resilience projects across the Pacific, some island leaders are concerned that the refusal to commit more funds to the GCF will undercut international efforts to reach and increase global financing targets.
Jerry Velasquez welcomes the news that some European countries are increasing their support.
“What’s happening now is that some of our donors are doubling their pledges,” he said. “Germany and Norway have just announced doubling their funds – Germany to 1.5 billion euros. The question is, what will happen with the rest? It’s up to the countries of the Pacific to call for a strong replenishment. The more money that gets into the replenishment, the more money they will get.”
That call was taken up in this week’s Tuvalu Declaration on the Climate Change Crisis, which welcomes “the significant role that the GCF plays in supporting developing countries in their efforts to address climate change. We call for a prompt, ambitious and successful replenishment of the GCF.”
Partners in implementation
Velasquez noted: “We also need to get the partners in place, because more often than not, the limiting factor is the partners. We need more different kinds of partners. Some entities like the Ministry of Finance of the Cook Islands is limited to project management for up to US$10 million. Obviously, that limits the type of things they could do.
He encouraged greater private sector involvement in leveraging resources: “Ideally, we should have a commercial bank that have a larger ability to program money so they could access concessional loans. Fiji has the Fiji Development Bank that is larger, but you have very few entities here in the Pacific that can channel non-grant instruments, such as concessional loans, equity and guarantees. That’s where you can leverage private sector finance.”
International climate finance is managed through National Implementing Entities (NIE) – often government departments, development banks, technical agencies or other organisations that can manage public finance or implement projects.
Exsley Taloiburi explained that national and regional bodies around the region had already achieved GCF accreditation: “In the Pacific, the NIEs we have with the GCF are the Cook Islands Ministry of Finance and the Fiji Development Bank, while the Regional Implementing Entities (RIEs) we have at the moment are the Pacific Regional Environment Program (SPREP), the Pacific Community (SPC) and the Micronesian Conservation Trust.
“The Cook Islands Ministry of Finance obtained accreditation to the Kyoto Protocol Adaptation Fund initially, and they applied through the fast-tracking process and they were able to get GCF accreditation as well. Tuvalu’s Ministry of Finance has just been granted NIE status to the Adaptation Fund, and I think that puts them in a very good position to be able to apply for fast-tracking for NIE status to the GCF.”
In recent years, regional organisations like PIFS and SPREP have expended a lot of effort to share success stories between Forum member countries, to see what works best in accessing funding or implementing successful projects.
“There can be good South-South learnings, where Forum Island Countries can learn from each other,” said Taloiburi. “One way to do this that we’ve been working on is South-South attachments between different countries that allows countries to explore and understand other options.
“I think information sharing is really critical for Forum Island Countries. We’ve undertaken National Climate Finance Assessments in 11 of the 14 FICs and there are a lot of very good lessons that can be shared. A number of countries have established national sustainable funding mechanisms, such as the Tuvalu Climate and Disaster Survival Fund, or Fiji’s Green Bonds.”