The Prime Minister recently said that a plan to unlock public and private sector financing in low carbon industries will be critical to the global deal in Copenhagen. He said, “what must be discussed sooner rather than later, is what are the options for what is called within the debate, climate change financing arrangements, for the poorest economies. … It has to be dealt with.”

Last Friday at a halfway point in the current Bangkok climate talks, Australia’s top climate envoy said negotiators needed to move from “walk in the park” speed to a “sprint”. While Australia continues to take small steps forward, many observers and other delegations eagerly await for our political leaders to break into a stride.

The international negotiations currently underway in Bangkok have again highlighted that the issue of financial support for developing countries is one of, if not the, main hurdle for Australian and other diplomatic efforts to produce a new and more ambitious global deal on climate change.

With just over 60 days until the Copenhagen climate summit (and seven formal negotiating days left) the issue is how the post-2012 climate agreement will unlock the hundreds of billions of dollars of public and private money needed to support developing countries to reduce emissions and adapt to the adverse impacts of climate change. Unless the finance question can be resolved, there will be no agreement in Copenhagen.

Australia is well aware that the finance issue is crucial, and on Monday during the negotiations the government provided a taste of what it has in mind. In essence, Australia has proposed establishing a “facilitative platform” to link developing countries’ needs with financial support. This is not a bad idea, but is only one step on a long track and will not help build the political momentum needed to achieve a deal that is in Australia’s national interest.

Most notably, Australia hasn’t stepped forward on the scale of finance that is needed by developing countries and the mechanisms that can be put in place to generate this finance. Australia’s failure to adequately address these two big issues that are crucial to the trust building process within the negotiations did not go unnoticed, with Bangladesh politely responding to the facilitative platform proposal as one which “reflects some elements [of a finance package] but misses most of them”.

Australia’s continued stalling on the scale of finance needed and mechanisms to raise the money is disappointing and is holding back progress in other areas. Meanwhile, other countries are being more proactive. This includes a statement by the UK Prime Minister, Gordon Brown, recognising that around US$100 billion of public and private money will be needed annually by 2020. The European Commission has arrived at similar figure and has signalled the need for €22 – 50 billion globally from international public sources by 2020.

The finance question is also being tackled head on in the US through the Waxman-Markey Bill, which proposes to set aside 7% of permit allocations for activities in developing countries, including to support clean technology, protect forests and adapt to unavoidable climate impacts. According to one estimate, these provisions would generate around US$5 billion a year by 2020. Unfortunately no such provisions are included in Australia’s CPRS – a matter that The Climate Institute and others have consistently pushed for.

The CPRS is just one of the mechanisms available to Australia to generate finance for developing countries. Specific proposals that should be explored are the Mexican proposal, the Norwegian proposal, the allocation of domestic emission trading auction revenue and market mechanisms for international aviation and shipping emissions.

There are three full days left in Bangkok for Australia to find its feet on finance and break into a sprint towards Copenhagen. Ideally this would include:

  • A clear and unambiguous statement on the scale of public and private finance that will be needed annually
  • Recognition of the principles that must underpin efforts to mobilise international climate finance
  • A statement of support for one or more of the possible mechanisms to generate predictable climate finance, for example recognition that that revenue from mechanisms to reduce emissions from international shipping an aviation will be used for climate change financing.

On finance, the echoes of the starters gun have long since gone but Australia and other developed nations are not far down the track. It’s time to break a sweat.

Will McGoldrick is from The Climate Institute.