A New Dawn for Climate Finance as Climate Investment Funds Sunset?

Petra Kjell, Guest Blogger

Petra Kjell is the Programme Manager for Environment, Human Rights, and Social Impacts at the Bretton Woods Project.

This week, the Green Climate Fund (GCF) gathers in Barbados for the eighth meeting since its inception. Established in 2010 under the UN Framework Convention on Climate Change (UNFCCC) as the primary vehicle to deliver much needed climate finance, the GCF still has a number of issues to resolve until it becomes fully operational. Slow in motion, the fund received a much needed boost with some pledges during the September climate summit organised by UN Secretary-General Ban Ki-Moon.

As the new financial structure for climate action rises, another funding mechanism is due to sunset. The World Bank-hosted Climate Investments Funds (CIFs) were set up in 2008 in the shadow of the ongoing UNFCCC process as an interim measure to provide new and additional climate finance to pilot “transformational” actions in selected developing countries. Led by developed countries and implemented by multilateral development banks (MDBs), four funds were set up: the Clean Technology Fund (CTF), the Pilot Program for Climate Resilience (PPCR), the Forest Investment Program (FIP) and the Scaling up Renewable Energy Program for Low Income Countries (SREP).

The CIFs were quickly criticised by civil society groups as undemocratic and unaccountable, potentially undermining the official UN process. The leading role of the World Bank, tarnished by its reputation on many fronts, including for its funding of fossil fuels, also created a widespread mistrust of the funds. A few years down the line, civil society has complained about lack of consultation, misguided projects, and a heavy private sector focus. In Indonesia, for example, civil society groups have repeatedly raised concerns about the CIFs, such as lack of consultation on the FIP country investment plan and the risk of deforestation linked to CTF geothermal projects, but with little impact. With CIF-funded projects ranging anything from energy efficient fans in India to airport development in the Caribbean, CIF donors have also repeatedly raised questions on the legitimacy of projects for CIF funding , but few projects have gone back to the drawing board, let alone been stopped.

Read the rest of this entry »

What We’re Reading/What We’re Writing

What We’re Reading

Juan Carlos Moreno-Brid and Stefanie Garry, Forget Me, Forget Me Not: Productivity and the Minimum Wage in Mexico (Originally published in Spanish by El Financiero).

Rania Antonopoulos, Sofia Adam, Kijong Kim, Thomas Masterson, Dimitri B. Papadimitriou, Responding to the Unemployment Challenge: A Job Guarantee Proposal for Greece (Levy Economics Institute of Bard College; Observatory of Economic and Social Developments, Labour Institute, Greek General Confederation of Labor).

Global Development and Environment Institute, 2015 Leontief Prize: Duncan Foley and Lance Taylor.

What We’re Writing

Kevin P. Gallagher and Daniela Magalhães Prates, Financialization and the Resource Curse: The Challenge of Exchange Rate Management in Brazil (GEGI Working Paper #8, Global Economic Governance Initiative, Boston University)

Kevin P. Gallagher, Jose Antonio Ocampo, Min Zhang, and Yu Yongding (Co-Chairs), Capital Account Liberalization in China: The Need for a Balanced Approach (Pardee Center Task Force Report, Boston University).

Jayati Ghosh, Gujarat Model: The Real Story (The Frontline).

Matias Vernengo and Kirsten Ford, Everything Must Change so that the IMF Can Remain the Same.

What We're Reading/What We're Writing

What We’re Reading

Juan Carlos Moreno-Brid and Stefanie Garry, Forget Me, Forget Me Not: Productivity and the Minimum Wage in Mexico (Originally published in Spanish by El Financiero).

Rania Antonopoulos, Sofia Adam, Kijong Kim, Thomas Masterson, Dimitri B. Papadimitriou, Responding to the Unemployment Challenge: A Job Guarantee Proposal for Greece (Levy Economics Institute of Bard College; Observatory of Economic and Social Developments, Labour Institute, Greek General Confederation of Labor).

Global Development and Environment Institute, 2015 Leontief Prize: Duncan Foley and Lance Taylor.

What We’re Writing

Kevin P. Gallagher and Daniela Magalhães Prates, Financialization and the Resource Curse: The Challenge of Exchange Rate Management in Brazil (GEGI Working Paper #8, Global Economic Governance Initiative, Boston University)

Kevin P. Gallagher, Jose Antonio Ocampo, Min Zhang, and Yu Yongding (Co-Chairs), Capital Account Liberalization in China: The Need for a Balanced Approach (Pardee Center Task Force Report, Boston University).

Jayati Ghosh, Gujarat Model: The Real Story (The Frontline).

Matias Vernengo and Kirsten Ford, Everything Must Change so that the IMF Can Remain the Same.

Green Growth

Robert Pollin, Heidi Garrett-Peltier, James Heintz, and Bracken Hendricks, Guest Bloggers

This is a summary of the report “Green Growth: A U.S. Program for Controlling Climate Change and Expanding Job Opportunities” by researchers at the Political Economy Research Insitute (University of Massachusetts-Amherst) and at the Center for American Progress. A longer article based on the report is available at The Boston Review, here. The full report is available from the Political Economy Research Institute, here.

The question for policymakers, and all other citizens, is no longer whether humans are changing our climate. The question now is, how we can stabilize an already-changing climate in a way that promotes economic prosperity? While recently established domestic policies have made strides toward a lower carbon future, such measures are stepping stones. They prescribe the initial path but will not lead to the final goal of achieving the reductions in greenhouse gas emissions necessary to help stabilize global temperatures. Effectively mitigating climate change requires identifying exactly how the United States will transform its energy economy to attain international goals to help protect our climate.

This report quantifies the level of investment required for the United States to align emissions reductions with international goals in an economically beneficial and technically feasible manner. The specific emissions-reduction goal we explore in this study is what the Intergovernmental Panel on Climate Change, or IPCC, has proposed for the world as a whole: reducing greenhouse gas emissions by 40 percent from 2005 levels by 2035. To do its part to meet this goal, the United States must reduce its carbon dioxide emissions from energy-based sources by 40 percent, to 3,200 million metric tons, or mmt, over roughly the next 20 years. The proposals in this report put the United States on this track to effectively mitigate global climate change.

Read the rest of this entry »

Feeding the World: The Ultimate First-World Conceit

Timothy A. Wise

Since the food price spikes of 2007-8, global hands have been wringing over the question, how will we feed the world? Population keeps growing, food-producing resources like land and water become more scarce, climate change introduces a dramatic uncertainty.

The images are downright Malthusian. The urgent recommendation is to produce more food, quickly. It is the theme of this year’s World Food Prize.

The question is fundamentally flawed, as is the Malthusian panic. There is no “we” who feed the world. There are, mostly, hundreds of millions of small-scale farmers. And there is no abstract “world” out there needing to be fed. There are about one billion hungry people, nearly all in developing countries. The majority are some of those same small-scale farmers. The rest are poor because they are unemployed or underemployed.

Increasing the industrial production of agricultural commodities does almost nothing for these people. Oddly enough, it can even make them hungrier.

Read the rest of this entry »

The Myth of Green Building

Sunita Narain

There is no question that India and other parts of the still-under-construction world must build green. The building sector is a major contributor to climate change and local environmental destruction because of construction materials used; energy expended for lighting, heating and cooling; and water consumption and waste discharge. This is the threat. There is an opportunity as well. Most of India is still unbuilt—over 70 per cent of the building stock is yet to be constructed—so unlike the rest of the already developed world, India can build anew in efficient and sustainable manner. But how?

This is an issue that has been troubling us at the Centre for Science and Environment. Over the past few years the idea of green buildings has gained popularity—everybody, it would seem, has turned a new leaf. Across the country large and small constructions are advertised as the greenest of green. To prove that they are indeed environment-friendly, the business of certification has also grown. There are agencies that now rate and award stars to individual buildings based on certain parameters. Many state governments are making these same standards of “greenness” mandatory. Some are even providing incentives, like exemptions on property tax, to those buildings that qualify as environment-friendly.

All this is important but do we know what green means?

Read the rest of this entry »

How Much has the IMF Changed in Response to the Global Crisis?

Matías Vernengo

Following the 2008 Global Crisis the notion that the International Monetary Fund (IMF) has moved away from orthodox views on a range of issues, but particularly regarding the need for austerity, has been pervasive. For example, Paul Krugman has argued, in his influential blog, that Olivier Blanchard, IMF’s director of research (or economic counselor) is “helping make at least one international institution less austerity-mad than the others.”

So what is this new view, exposed by Blanchard? For example, in the preface to the last World Economic Outlook, Blanchard tells us that:

Potential growth in many advanced economies is very low. This is bad on its own, but it also makes fiscal adjustment more difficult. In this context, measures to increase potential growth are becoming more important—from rethinking the shape of labor market institutions, to increasing competition and productivity in a number of nontradables sectors, to rethinking the size of the government, to examining the role of public investment.

Note that in neoclassical (or mainstream) economics speak, potential growth is supply-side determined. That’s why the reforms would be less regulation of labor markets (to allow firms to hire workers for a lower wage), reduced regulation (to generate incentives for firm entry to increase competition), and reduced size of the public sector (that’s what “rethinking” means; nudge, nudge, wink, wink). These policies are needed to boost the supply capacity of the economy, its “potential” or “natural” output. Demand expansion, in the form of more spending and fiscal deficits cannot be pursued, since the growth of potential output is “very low.”

These are, in fact, the same neoliberal reforms that the IMF has always supported, and that since the 1990s have been referred to as the Washington Consensus.

Read the rest of this entry »

Ask Mark Blyth: “Austerity Doesn’t Work, Period”

Kevin Gallagher

“Austerity doesn’t work. Period.” This quote is the punch line of Mark Blyth’s Austerity: The History of a Dangerous Idea, second edition just out. If that quote was made into bumper stickers and t-shirts it would have been icing on the cake for what was an amazingly well placed and marketed book. As just about every review in the popular press has noted, Blyth’s book is well researched, accessible to a broad array of readers, and right.

For academics and critical thinkers however, there is more to it than that. This is not only a book where an established academic engages with a broader audience and “gives” that audience the tools to understand a contemporary problem. Blyth should be praised for that in and of itself. During this crisis and many others most academics have not been bold enough or too dis-incentivized to enter the fray beyond the water cooler. But Blyth also makes key contributions to the academic literature in international political economy as well. Blyth shows how and why the idea of austerity keeps on living in our politics.

The book starts with an accessible discussion of how the crises in the U.S. and EU were banking crises, not the sovereign debt crises (especially in the European case) that they and their aftermath have been described of in the financial press and media. In two crisp chapters, he shows how banks created the messes in the United States and in Europe—and how government debt became a big issue only after governments bailed out and propped up banks.

Read the rest of this entry »