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No Money for China — No Problem

By Climate Guest Contributor  

"No Money for China — No Problem"

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A Stern warning?

[U.S. climate envoy Todd Stern addresses the U.N. Climate Change Conference in Copenhagen on Wednesday.]

This guest post is by CAP’s Julian L. Wong.

The media headlines are screaming “U.S. Won’t Pay China to Cut Emissions” and “US Rules Out Climate Aid to China.” Todd Stern, the U.S. Special Envoy for Climate Change, made clear in a press conference on Wednesday in Copenhagen that the war chest for the initial fast track funds being considered now for climate change adaptation for developing countries would not be unlimited:

China, with a $2 trillion reserve and a revved-up economy, won’t be a recipient. “I don’t envision public funds, certainly not from the United States, going to China,” Stern said. “There’s inevitably a limited amount of money. The amount ought to be as high as it possibly can be, but it’s necessarily going to be limited. That’s just life in the real world.

Financing would instead be prioritized for the most vulnerable and least developed countries.  While a price tag in the neighborhood of $100 billion per year is what the likes of British PM Gordon Brown and UNFCCC General Secretary Yves de Boer are proposing for the long term (some developing countries are seeking as much as $300 to 400 million a year), there is also an emerging consensus to reach agreement in Copenhagen for fast-start financing of $10 billion for the near term, i.e. 2010 to 2012.  U.S. President Obama has already indicated that he is on board with this idea, agreeing to “mobilize $10 billion a year by 2012 to support adaptation and mitigation in developing countries.”

But Stern frames the constraints of such limited financing in frank terms:

“We would intend to direct our public dollars to the neediest countries, and China to its great credit, has a dynamic economy that has led it to sit on trillions of dollars in reserves,” he said. “So we don’t think China would be the first candidate for public funding.”

While some media outlets would like to play on the image of geopolitical drama here by pitting two mighty superpowers against “”Eagle versus the Dragon””there is really nothing to Todd Stern’s comments because China is completely on the same page.

Earlier in the year, China and the Group of 77 were at the forefront of making demands on developed countries to contribute generous sums to aid developing countries’ adaptation and mitigation challenges to the tune of 0.5 to 1 percent of their collective GDP.  But yesterday at a press conference,  Yu Qingtai, China’s special envoy for climate change, made clear that China has never thought of itself as a “first candidate,” and that their main goal is to guarantee financial backing for an agreement to actually take effect.  Yu’s comments support statements by Liu Yuyin, Climate Advisor of the Chinese Mission to the UN, that China is pressing primarily for funding that will support other developing countries (see previous post “China in Copenhagen Day 3: Tuvalu Raises the Bar, China Reacts“).

One wrinkle to this stance is that China has been very consistent in saying no to subjecting domestic climate actions that are undertaken unilaterally without international technological or financial support to international reporting and verification procedures.  So China realizes that if it is eager to accept international financing, it would have to start “opening its books.”  The negotiations on measurement, reporting and verification (MRV) will be an important issue to watch over the remaining 8 or 9 days in Copenhagen.

While China is a tough negotiator, sticking to its guns with respect to seeking more ambitious developed country commitments and the principle of “common but differentiated responsibilities” (see previous post “”China in Copenhagen: Su Wei gets tough on the developed world“), it is also pragmatic and increasingly savvy about its emergence as a pivotal power in the international stage.  Last month, China pledged by itself $10 billion in general assistance to African nations, part of which would go into developing 100 clean energy projects.  While it is now clear that China does not expect to be the first recipients of international climate financing, one key question remains: In light of the governments of UK, Australia, Norway and Mexico proposal for a new set of principles for a global climate fund, can the discussion of whether China should be a potential recipient of such funds be shifted to whether China can be a significant contributor?

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One Response to No Money for China — No Problem

  1. Darren says:

    Given the state of the federal budget, the US is likely to have to borrow money (print money and sell T-bills) to make large donations to other countries for climate mitigation purposes. Right now, we are financing a lot of our deficit spending by selling treasury bonds to China. So if we give funds to China, it would effectively involve us borrowing money from China so that we could loan it back to them. That would be insane. The Chinese are smart enough to know that there is nothing to be gained from that. It would just accelerate the devaluation of the dollar, and damage the worth of the dollar reserves that they already hold.