Footing the world’s bill for a green transition

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This article is part of our special report Rio+20: Charting a green future?.

SPECIAL REPORT / World Bank President Lewis Preston called on rich donors to back a $5-billion (€4 billion) fund to help the world’s poorest nations protect their environment and make economic development more sustainable.

The year was 1992, just six months after the collapse of the Soviet Union and when the ink was barely dry on the European Union treaty.

Preston’s “Earth increment” – unveiled at the Earth Summit in Rio de Janeiro that June – was to provide low-cost environmental loans through the bank’s International Development Association, a complement to the billions in aid promises made to help heal the economic and environmental rifts left by the Cold War.

But Preston’s plan would – like other commitments to help the ecology of disadvantaged nations in the two decades since the Earth Summit – never saw the light of day.

With the UN Conference on Sustainable Development being held this week in Rio, there are constant reminders of the promises of the past fading with memory.

Recycling cash

“Our politicians are recycling the same amount of money for different new thematic proposals, depending on the moment and depending on the international negotiations, with no additional thought at all,” said Olivier Consolo, who heads the CONCORD charity confederation in Brussels.

“You now have a kind of momentum on the environment, on energy and a lot of promises, but always with the same money – money that was already committed to other things,” he said.

Several European countries and the United States have turned aside calls dating to the early 1990s for a tax on world finance transactions to fund development aid. A modest proposal for a financial levy to finance EU operations and to raise domestic revenue is mired in opposition led by Britain.

The International Energy Agency and Organisation for Economic Cooperation and Development (OECD) have called for scrapping fossil fuel subsidies to help encourage a worldwide shift to clean energy and to lift development economies. Such recommendations have mostly gone nowhere.

Missing the mark on aid

The European Union offers a good example of failed expectations. Charity groups say that with few exceptions, the 27-nation bloc is failing to meet aid promises and – in some cases – countries inflate their contributions by counting debt relief or trade financing as aid.

A report last year by CONCORD – whose members include Oxfam, Caritas and ActionAid – showed that EU countries were on course to miss their 2015 aid pledges: 0.7% of gross national income for the 15 older EU nations, and 0.33% for the 12 nations that have joined the bloc since 2004.

The current overall rate is 0.43% and CONCORD, which is expected to release its 2012 aid review this week, warns that at current levels of spending will barely move beyond that by 2015. OECD statistics largely back up those estimates.

A new OECD report released ahead of the Rio conference shows that development assistance for environmental protection has grown fourfold since 2001, to $5.1 billion in 2011. That is the same amount proposed 19 years earlier by Preston, who took over the World Bank in 1991 and led it until shortly before his death in 1995.

Forecast for Rio

Aid and EU officials attending the Rio conference this week expect more rhetoric than bold commitments to emerge from the UN sustainable development conference.

But European officials have defended their turf, pointing out that even in an era of financial turmoil, overseas aid grew to a record €54 billion in 2010 and several countries – including Sweden, Luxembourg, Denmark and the Netherlands – have already exceeded their 2015 commitments.

The European Commission has also proposed an overhaul of aid – called the “Agenda for Change” – to focus their scarce resources on the neediest nations and on financing a greener future.

On the eve of his departure for Rio, Environment Commissioner Janez Poto?nik said the 27-nation bloc would keep its word to needy nations.

“The European Union remains the biggest donor of aid in the world,” he told journalists in Brussels, “and we will stick to our promises despite the financial crisis.

“The EU countries recently reaffirmed their commitment which would translate into important additional development aid by 2015, including for project which will be related to the Rio outcome,” he said.

But Rio observers like the president of the European Environmental Bureau, a Brussels campaign group, say meeting those commitments will be tough. He also said donors could help by setting a better example in how they treat the planet.

“One of the key things that the G77 and the South want is either money or technology transfer – they want support to make this transition the North in particular is telling them we all have to make,” said EEB Secretary-General Jeremy Wates.

“I think they really want a clear signal from the North that we in the EU recognize we need to substantially reduce our ecological footprint,” he said. “We are living way beyond our means in terms of looking at the planetary resources and what constitutes a fair share of those resources.”

Simon Upton, environment director at the Organisation for Economic Cooperation and Development, told EURACTIV in an interview:

“Government transfers will only be a relatively small part of the solution. You simply can’t ever imagine tackling an issue like climate change, or water or biodiversity loss, simply by throwing public money at it.

“It needs public money, absolutely, but that public money has to be leveraging private money and that public money has to be affecting the behaviour of every citizen of the way they consume.”

Development Commissioner Andris Piebalgs has proposed sweeping changes to how the EU parcels out overseas aid – the so-called Agenda for Change. It would focus more attention on the neediest countries while gradually reducing aid to middle-income nations.

The EU is collectively the largest aid donor, providing €54 billion, or 56% of the total in 2010, according to the Organisation for Economic Cooperation and Development.

EU leaders have traditionally seen overseas aid as an extension of their “soft power,” agreeing a decade ago to provide annual development aid equivalent to 0.7% of gross national income by 2015. Though it is on track to fall well short of that goal, it is well ahead of the United States’ $30.2 billion (€22.4 billion) in 2010, or 0.21% of GNI.

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