news room/in focus/2010/Climate change

14 June 2010

Press Release
Defining climate governance
What’s at stake?
Corruption risks

Climate change is a defining issue of our times and the importance of how it is managed, cannot be underestimated. It is increasingly clear that there is a need for mechanisms to ensure accountability and transparency to reduce corruption risks in decision-making processes and financial flows, in efforts to reduce global warming and climate change.

Climate governance has been referred to as “the sum of organisations, policy instruments, financing mechanisms, rules, procedures and norms that regulate the processes of climate change” (IISD). Broadly, this concerns public and private sector actions and approaches to mitigate climate change by reducing greenhouse gas (GHG) emissions and to adapt to climatic impacts such as severe weather, flooding, droughts and the extreme deterioration of land referred to as desertification.

The costs of these developments are estimated to reach hundreds of billions of dollars annually in the next decades. To date more than US$45 billion has already been spent. Without good governance, these huge sums will be prone to corruption and many citizens, particularly the poor, will see their lives and livelihoods jeopardised. Major efforts taking place now seek to prevent and stop climate change’s potential damage.

Mitigation actions largely focus on solutions to promote energy conservation, efficiency and renewable energy sources. This includes the long-term storage of carbon dioxide known as carbon sequestration, through forest protection and planting new forests or afforestation, an initiative known as the Reduced Emissions from Degradation and Deforestation Plus, or REDD+.

Climate adaptation encompasses a wide range of actions including natural disaster emergency relief, “climate proofing” such as constructing barriers to prevent against flooding, and capacity development for people, particular women, to cope with climate change.

A key climate governance component is the Measurement, Reporting and Verification (MRV) process in relation to setting and achieving goals to reduce greenhouse gases through national programmes for mitigation. MRV is also to be applied in relation to the issuance of carbon credits and emissions allowances, and to the allocation and disbursement of public climate financing.

In order for MRV to be efficient and reduce corruption risks, these processes must be:

transparent
accountable
involve public participation or consultation
be subject to public oversight

The credibility and legitimacy of climate governance relies on these factors.

The quick answer is the future of the planet. Not surprisingly, the costs for climate change adaptation and mitigation are estimated at tens of billions of dollars annually over the next decade.

An overview of the money:

Adaptation costs may account for up to US $86 billion by 2015.
Mitigation costs are expected to rise to US $210-250 billion annually by 2030.
In the December 2009 Copenhagen Accord developed countries collectively committed to “provide new and additional resources, including forestry and investments through international institutions, approaching US$30 billion” from 2010 to 2012.
The 133 governments party to the accord also committed to mobilising US $100 billion dollars by 2020 to address the needs of developing countries.

Global leaders are clear that the costs of climate change cannot be met by public funds alone. Climate financing must also leverage private sector investments and include concessional loans. With government subsidies, and other incentives linked to carbon-trading, the World Bank estimates today’s global carbon market at US$144 billion.

Corruption risks in climate governance include the potential for conflicts of interest, bribery, the misappropriation of funds, embezzlement and even fraud. These risks could apply to:

the allocation and expenditure of climate financing through multilateral and bilateral funding mechanisms
the setting of public policies and laws aimed at climate mitigation including cap and trade systems, carbon-tariffs, and other regulatory measures
the issuance of public subsidies to support industrial conversions to “clean” and “green technologies and solutions”
the public procurement, licensing and concessions related to adaptation and mitigation projects
the issuance of and trade in carbon credits and emissions allowance
the market development, advertising and supply of “climate-friendly,” “clean” and “green” products and services affecting consumer choice
the promotion of avoidance techniques such as the relocation of businesses to less or more loosely regulated markets (carbon leakage) and other regulatory loopholes

Coping with extreme weather conditions will be essential to soften the impact of climate change, yet disaster relief and reconstruction efforts that rely on the quick deployment of resources can all too easily end up lining the pockets of corrupt officials.

Likewise, reducing the vulnerability of those most affected by climate change will require vast amounts of money to be poured into infrastructure upgrades and building resilience in local communities, yet health, water and other sectoral and local development projects can be extremely prone to corruption, if adequate checks and balances are not put in place.

TI’s nascent work in addressing climate governance challenges draws on general principles we apply to all areas prone to corruption, be they in the public or private sectors, in formulating legislation or developing procurement contracts. This means advocating mechanisms to assure accountability, transparency, and oversight and anti-corruption measures. It also includes public participation in all aspects of climate governance from the allocation and monitoring of financing to the drafting of national laws and international accords.

Green technologies are being publicly encouraged and financially supported by several Group of 20 governments as a result of growing concerns around climate change. TI has recommended that the G20 take actions to ensure that technology selection, actual distribution of financial incentives and verification of impact remain free of corruption, state capture and conflicts of interest.

The 14th International Anti-Corruption Conference (IACC) co-organised by TI aims to place climate governance and corruption in natural resources at the heart of the debate and bring contributions on accountability and anti-corruption to the next global climate change conference to be held in Cancun, Mexico in November 2010.

In an effort to contribute analysis and constructive solutions to the challenge of climate governance, TI’s next Global Corruption Report will focus on corruption and climate change. The report is a yearly comprehensive assessment of corruption advances and challenges worldwide with a focus on current issues in corruption.

The United Nations Framework Convention on Climate Change (UNFCCC)
The Global Environment Facility (The GEF) coordinates the UNFCCC financial mechanism.
The Clean Development Mechanism (CDM) certifies climate change mitigation projects.
The Adaptation Fund, established by the Parties to the Kyoto Protocol, finances programmes in developing countries and is funded by a percentage of the CDM proceeds.

On adaptation: Oxfam
Climate Change Adaptation report

On mitigation: AccountAbility
Climate Competitiveness Index April 2010

On financing and mechanisms: World Resources Institute
Accounting for results

Dag Hammarskjöld Foundation
Carbon Trading How it works and why it fails

On accountability and transparency: One World Trust
Accountability challenges in global climate governance