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Climate action: why developed countries should track imported emissions, and how to make certification and labelling work for developing countries

13. September 2019 - 8:36

Climate action: why developed countries should track imported emissions, and how to make certification and labelling work for developing countries

 

By Aarti Krishnan and Simon Maxwell

Developed countries are making progress in reducing carbon emissions – and Government regulation of the private sector is playing its part. In the UK, for example, and alongside other measures, the requirement to report energy and carbon emissions has recently been extended to a wide range of quoted and unquoted companies and limited liability partnerships. This is intended to help improve energy efficiency, support companies in cutting costs, and at the same time reduce carbon emissions. Many hundreds of companies have signed up to measurement and certification, and sometimes offset, schemes, like the footprint label from the Carbon Trust, the carbon neutral label from Natural Capital Partners, or Carbon Smart certification from Carbon Smart. The scope and coverage of such schemes is expanding, as indirect emissions and life cycle issues are recognised.

Missing in current policy: imported emissions

There is, however, a large gap in current policy: it does not take account of the emissions embodied in imports, and thus of total consumption emissions. These have been growing in size and relative importance in most developed economies. In the UK, once again, the latest figures show that between 1997 and 2016, territorial emissions fell by over a quarter but imported emissions rose by 20%, with the net result that the UK’s total carbon footprint fell by only 9%. Imported emissions now account for 45% of the UK’s footprint (Figure 1). Policy-makers are paying attention. For example, the Science and Technology Committee of the UK House of Commons recently concluded that ‘the Government should do more to increase the prominence of consumption emissions’. The incoming President of the European Commission, Ursula von der Leyen, has also highlighted the issue.

 

 

 

 

 

 

 

 

 

 

 

Source: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/794557/Consumption_emissions_April19.pdf

Rising consumption is the main cause of rising greenhouse gas imports

It is important to emphasise that the main driver of rising imported emissions is increased consumption, itself driven by rising population and income. Deindustrialisation and the shift of industrial production to developing countries may also play a part in some cases. That suggests a priority is to manage consumption and consumer behaviour, a big topic in itself, and one with important implications for developing countries. For example, if the Oxfam campaign to buy only second-hand clothes in September were to succeed in curbing long-term demand, that would impact on jobs in exporting countries like Bangladesh or Vietnam. Similarly, if long term demand for imports of extractives from Africa to the EU were reduced, African countries could stand to lose over 20% of their total export value.

And energy efficiency needs to improve

Independently of action on developed country consumption behaviour, however, action is also needed to reduce the carbon intensity of imports – as also of domestic production in both developed and developing countries. Energy efficiency is a key element. The carbon intensity of production has been falling fast in countries like India and China, but is still significantly higher than in OECD countries: not surprising when coal still plays such a large part in many emerging economies.

Certification and labelling can play a part

An important question remains. Should reporting, certification and even labelling be extended to imports? And if that were to happen, what would be the impact on developing countries?

Certification and labelling might well be thought to be plausible and popular drivers of carbon reduction in developing countries. In addition to the internal benefits, companies can benefit from external validation and reputation enhancement. Consumers can also benefit if carbon certification and labelling help them make better choices. Fair Trade certification is an example of a scheme which delivers benefits to both consumers and producers - via guaranteed prices, premium payments which can be used to improve productivity, and support to producer organisation.

Overcoming the pitfalls

There are pitfalls in implementing certification.  Experience across many sectors shows that certification can be costly and time-consuming, especially for poor producers and countries. Further, these groups can find themselves as having standards or reporting requirements imposed, with little scope for participation or ‘voice’, and often with different priorities to those they themselves would choose. There is a risk of a top-down ‘green squeeze’ on the suppliers in low and middle income countries. From a consumer perspective, an additional risk is ‘label overload’, with labels for different aspects crowded onto packaging. And from a trade perspective, certification can cause trade distortions and over-burden trade agreements. It may also, in some cases, be incompatible with WTO rules.

If the pitfalls are to be avoided, reporting, certification and labelling of developing country production need to be planned in such a way as to maximise the participation of those involved upstream and downstream in the value chain, and harmonised so as to reduce costs and a multiplicity of reporting and labelling requirements. Certification at the company level will be more straightforward than trying to tie emissions to particular and highly heterogeneous products. It will also be important to tailor certification to the specific circumstances of different sectors. In the UK, for example, the construction industry is an important source of emissions, but one less suited to consumer-facing certification than some other sectors.

And reaping the benefits

There will be benefits. The UK, along with some other developed countries, has committed to net zero carbon emissions by 2050. Many developing countries will need to follow suit if global warming is to be kept to the level agreed in Paris in 2015, well under 2 degrees, and if possible 1.5 degrees. At present, the world is very far from being on track to meet those targets. Indeed, the national plans submitted in Paris promised only about a third of the reduction needed to reach 2 degrees, and only about 10% of the reduction needed to reach 1.5 degrees. The plans themselves are not always being implemented: half of G20 countries have more work to do if they are to come close to meeting their 2015 pledges. New pledges are required by the UNFCCC in 2020, for the period to 2030. Certification could play a part in helping all countries identify carbon hot spots and take decisive action to reduce emissions.

Certification and labelling: better than restricting trade

Certification is not the only option. Technology transfer offers important possibilities, including within companies as a result of foreign direct investment. Overseas aid can also be a useful incentive. In these cases also, however, there are benefits in measuring and reporting on carbon emissions. The Greenhouse Gas Protocol, developed by the World Resources Institute and the World Council for Sustainable Business Development, is used by companies and certification bodies, and by Governments, including the UK. It provides a global framework, alongside ISO and other standards.

If no action is taken, and as the carbon constraint begins to bite, there will be pressure to enforce carbon intensity standards, for example by imposing new tariffs, so-called border carbon adjustments. Indeed Ursula Von der Leyen has proposed BCAs, //medium.com/@teamwarren/trade-on-our-terms-ad861879feca">as has Elisabeth Warren in the US. These will be problematic, adding to trade tensions at a time of increasing protectionism. Better by far for developing countries and their development partners to launch the progressive, step-by-step adoption of new standards and certificates.

Aarti Krishnan is a Senior Research Officer at the Overseas Development Institute

Kategorien: english

India in Africa: serving both profit and wider purpose

16. August 2019 - 10:05

India in Africa: serving both profit and wider purpose

 

 

 

A version of this article was first published in August 2019 in India Global Business Magazine, published by India Inc. See here.

Gather Indian private sector leaders together in one place and it is easy to be impressed: by the size of the businesses, the pace of innovation, and the speed of growth.  This was certainly the case at the India Inc Leaders’ Summit, held in the UK in June.

The traditional theory of the firm sees business as existing mainly to reduce transactions costs or manage uncertainty: in short, to make money. In the best cases, however, the Indian private sector can serve wider objectives: to create jobs and secure livelihoods, support social action, and protect the environment.

These benefits are of value to India. Can they be cemented into best practice? And, as Indian business takes an increasingly global perspective, can there also be benefits for other regions? India, after all, is a large recipient of foreign direct investment, but also, these days, a large provider:  $US 11bn in 2018, according to UNCTAD.

Africa can provide a test bed of Indian business commitment to both profit and wider purpose. It is rich in people and natural resources, and home to several of the world’s fastest growing economies, including Ethiopia, Rwanda, Ghana, and Cote d’Ivoire, all growing at more than 6% per year. At the same time, Africa has the largest current and prospective shortfall in basic development indicators: more than 400 million people living in absolute poverty, a third of children stunted by malnutrition, and a disproportionate share of the population affected by conflict, climate stress and natural disaster. Achieving the Sustainable Development Goals by 2030 is a challenge which needs all hands on deck.

India is already the tenth largest investor in Africa. Much of this turns out to be in Mauritius, for complex tax reasons, apparently; but careful work by Malanka Chakrabarty for ORF shows that total investment in other countries during the period 2008-16 amounted to $US 5bn. She estimates that nearly 600 companies are involved.

The potential to grow is large, not just in the natural resource sectors which currently dominate, but also in manufacturing and services. Africa is undergoing economic transformation, offering many new opportunities. However, what principles should govern Indian investment in Africa? And what should Africa ask of Indian partners? There are three options.

The first option is just to hope for the best. African countries should encourage Indian investment, and hope that a sense of corporate social responsibility will drive a commitment to the SDGs and to high social and environmental standards. Maybe. But experience around the world suggests that is a high risk strategy. Not all businesses hold themselves accountable for taxes paid, safety standards maintained, or the environment protected.

The second option, then, is for Africa to set standards it expects its foreign investors to uphold. Perhaps it can work with Indian and other foreign investors to set these standards? Or, Africa and India can use existing frameworks as a starting point.

For example, the UN Global Compact is described as the world’s largest corporate sustainability initiative, with 10,000 company participants from 161 countries. They all subscribe to ten core principles (Box 1), including the protection of human rights, the elimination of discrimination in employment, and a precautionary approach to the environment. There is also a strong injunction to work against corruption in all its forms. The Compact has 315 active business participants in India, compared to 282 in China, 827 in Brazil, and over 1000 in large European economies like France and Spain. 

 

 

 

 

 

 

 

 

Other possibilities include adopting the Equator Principles, used by 97 financial institutions in 37 countries to manage social and environmental risk in project finance: the IDFC First Bank is the only Indian signatory. Or Africa could encourage inward investors to become B-Corps (Box 2), committed to the principle that ‘all business should be conducted as if people and place matter’ and that ‘through their products, practices, and profits, businesses should aspire to do no harm and benefit all’. There are only three Indian businesses so far that currently subscribe to the B-Corps standards for accountability and transparency.

 

 

 

 

 

 

 

The third option is for Africa and India to work with others in developing new business opportunities, and simultaneously set high standards to which all will adhere. This might be of particular interest to a country like the UK, with strong historical and economic ties in both India and Africa, a strong focus on inclusive economic development in its overseas programmes – and in search of new global partnerships in what looks increasingly likely to become a post-Brexit world. Interestingly, the new UK development minister, Alok Sharma, wrote in 2016 that

‘ . . . liberalism and globalisation . .  have lifted millions out of poverty, broken down barriers between nations and people and strengthened the rules based international system on which we all depend for our security and prosperity. . . (But) while the tide of globalisation has carried many with it, it has also left others trailing in its wake. . . (So) we must also recognise that some things have to change. . .  to support successful businesses while at the same time encouraging them to support a successful society. A society that works for everyone.’

Governments indeed have a role: to set and oversee the rules and standards, but also to provide the public goods which underpin a successful and inclusive private sector: infrastructure, property rights, an effective legal system, well-functioning markets, and, importantly, support to the research and development which underpin innovation.

A partnership between India and Africa, with the involvement of the UK, could deliver all of these. The partnership could support investment, for example by investment promotion agencies working together, or by facilitating credit. There could be new research, linking universities, research centres and think-tanks in different countries.  There could be joint political initiatives, for example on trade facilitation or climate targets. Indeed, the UK’s Department for International Development is supporting an India-UK Global Partnership Programme along these lines.

Renewable energy could be a focus, building for example on the impetus of the International Solar Alliance, launched by Narendra Modi in 2015. 

More generally, climate change could be a candidate, covering mitigation efforts like solar, but also adaptation and wider economic transformation: an approach we have termed climate compatible development. It is notable that the UK Government is leading on climate resilience at the climate summit in September 2019 – and that the UK is hoping to host the landmark climate talks in 2020.

There are other candidates: a personal favourite is development of the food industry, to secure healthy and sustainable diets in rapidly urbanising environments. Delhi, for example, already has a population of around 24 million, enough to make it the 55th largest country in the world, and with a food system ready for rapid modernisation. African cities face a similar challenge, and the UK has extensive experience.

The Kigali Global Dialogue, an annual discussion forum jointly hosted by Rwandan and Indian partners, also identifies public health, education and technology as sectors of future cooperation.

Kategorien: english

Dear Europe

7. August 2019 - 12:22

Dear Europe

 

 

 

This article was first published in June 2019 in Great Insights magazine from the European Centre for Development Policy and Management. See here. It has been lightly edited to reflect the change of administration in the UK.

Dear Europe,

The Brexit Party won the election to the European Parliament in the UK. And we have a new administration for whom ‘hard’ or no deal Brexit features prominently. Many commentators think that the political situation in the UK bodes ill for future collaboration with the EU, never mind future membership. Our partnership in international development could be a victim.

On the other hand, there is a silver lining in the Brexit mess. It is that our collective national breakdown has revealed a hitherto hidden well of emotional attachment to Europe and to the EU. Over a million of us marched in London at the end of March, in favour of Remain. Over six million signed a petition in favour of revoking Article 50. And pro-Remain parties performed well in the election. Certainly, at the march, there were enough EU flags, and enough blue and gold face paint, to suggest a real affection.

That is a bit of a surprise. It has often been argued that the UK differs from other Member States in its attitude to the EU.

For the Continental Members, and no doubt for Ireland, membership has been seen as a matter of values, a matter of culture, a question of identity. This is deeply rooted in memories of war and dislocation, in physical proximity, in family ties, and now in shared institutions. The EU is often the default.

For the UK, membership has been seen as more instrumental, a question of calculus, part of a complex web of international alliances, in which political capital is deployed according to the objective being pursued. In that vision, the EU is not always the right answer: sometimes, NATO might be the better option, or the UN, or the Commonwealth. And sometimes, including with respect to aid, it is better to act bilaterally.

Certainly, calculus has been strongly in evidence in the UK’s approach to working with the EU on international development, including after Brexit. In a succession of policy papers and ministerial statements during the past year, the UK has been keen to explore in what areas the EU Institutions might have comparative advantage, compared, say, to the World Bank or the UN. Humanitarian aid has featured, and peace-keeping, and migration. The UK has consistently emphasised value for money. It has also wanted to make sure it has a seat at the table and a voice in decision-making.

Probably none of that will change if the UK leaves or stays. Indeed, nor should it. Comparative advantage, value for money and voice are all important. But might the pendulum shift gently towards culture, and would it make a difference if it did? Of course, the popular mood is one thing, and the political process is, or can be, quite another. But there may be some interesting options.

Development cooperation cannot stand still. The recent foresight study published for the EU by ESPAS, the European Strategy and Policy Analysis System, points clearly to a world well on its way to a ‘new geopolitical, geo-economic and geo-technological order‘: demography, urbanisation, technical change, and environmental pressure will all play their part.

In this context, the Sustainable Development Goals provide an inspiring vision of ‘the world we want’, but not necessarily a high resolution road map. Development leaders will need to step away from ticking off individual, aid-funded SDG programmes. They have already begun to do so.

The EU’s Global Strategy, for example, already in 2016, emphasised the importance of integrated approaches. In the UK also, new cross-Government funds have been created, for example to deal with conflict and security, and with climate change. Both the EU and the UK have supported the institutions of global governance, for example on climate change. Both have invested heavily in global research. In both cases, poverty reduction is enshrined in law as the ultimate goal of development policy; and will need to be achieved in new ways. These common interests provide the foundation for a productive future partnership.

If the UK leaves the EU, at least with a deal, there will continue to be aid payments to the EU of something like £1.5 bn a year into the mid-2020s, reflecting past commitments to the current Multi-Annual Financial Framework and European Development Fund. A shift in the narrative might see those used as a platform to build further cooperative relationships, either in parallel or by means of direct contributions to Trust Funds and similar instruments. Maybe Ministers will be found looking for ways to strengthen the EU’s voice as a major pillar of the development system. After all, the EU institutions spend more on aid than the World Bank, and almost as much as the whole of the UN. 

If the UK stays, a more ambitious landscape opens up. A new Commission will be appointed in 2019, able to set a new course – and equally important make a new case to the public. The Multi-Annual Financial Framework will be agreed, setting spending limits, including for external action, to 2027. New trade negotiations will begin. More ambitious climate targets will be set. New partnerships will be put in place, not least with Africa. The UK has a track record in all these areas.

A UK motivated by a bit more ‘culture’ as well as its traditional ‘calculus’ could lead the EU in shaping this exciting agenda. At the London march, and also at two marches in 2018, I wore a tee shirt and carried a placard with the following slogan: ‘Global Britain Needs EU Needs Global Britain’. Calculus – and culture.

 

Image: https://www.123rf.com/stock-photo/pen.html?oriSearch=letter+writing+man&sti=nzhvo4vfx5hib4q3bw|&mediapopup=25244549

Kategorien: english

A DFID response to the ‘climate cataclysm’

7. Juni 2019 - 13:29

A DFID response to the ‘climate cataclysm’

 

  

 

(This short blog turned into a 5,000 word paper! A pdf may be easier to read and can be downloaded here)

 We are facing a climate cataclysm’, according to Rory Stewart, at the time of writing Secretary of State for International Development in the UK, and a candidate for leadership of the Conservative Party (and therefore Prime Minister): ‘We need wholesale change . . . I am going to make tackling climate change increasingly central to DFID’s work’.

This commitment is extraordinarily important, and marks a major departure in the language and priorities of DFID ministers. It comes at a time when alarm about climate change is growing fast, and when the objective evidence amply underpins public concern: growing emissions, record levels of CO2 in the atmosphere, and increasing frequency of extreme weather events. The UK Committee on Climate Change has called for a new target of Net Zero emissions by 2050. No wonder Parliament has declared a ‘climate emergency’.

As an initial step, Rory Stewart has announced that investment in climate and the environment is to be doubled over the next five years. But this can only be a first step. Here, I review some options and make ten suggestions, including five big shifts in DFID’s approach (Figure 1). The suggestions include revising the Single Departmental Plan, and writing a new Strategic Objective on climate compatible development. This is in Figure 2.

Figure 1

An action plan for DFID

 

 

 

 

 

 

 

 

 

 

 

 Figure 2

A new Strategic Objective on climate compatible development

 

 

 

 

 

 

A starting point for discussion is the mildly critical report earlier this year on climate finance, by the Independent Commission on Aid Impact, and the much more critical review, by the International Development Select Committee in Parliament, of UK Aid for Combating Climate Change. The IDC Report said that

‘It is . . .  disconcerting that there does not appear to be an active strategy underpinning the Government’s International Climate Finance spending. It is further alarming that climate change does not appear to be fully integrated across other aid strategies. This is not the response that a crisis of such magnitude demands. We recommend that the Government designs and adopts a clear, robust strategy for spending climate finance. The strategy should be outcome-oriented, time-sensitive, and based on the latest climate science. At the same time, climate change needs to be recognised as a cross-cutting strategic priority in the UK’s aid spending and should be comprehensively integrated across all development assistance strategies.’

From this perspective, doubling spending on climate and the environment is a good start, but there is obviously more to be done: strategy, policies, programmes, projects, climate diplomacy, and cross-Government initiatives are all in play. The IDC Report contains many good ideas, ranging from revised sector strategies, to longer planning cycles, greater policy coherence across Government, and major scaling up of DFID’s capacity. But there is more to be done. Remember, the Comprehensive Spending Review is coming up: DFID will need high-level engagement on its future priorities.

Adopting the concept of climate compatible development

First, it is especially pleasing that the IDC Report picks up the concept of ‘climate compatible development’ (CCD) that we pioneered in CDKN from 2010 onwards. This is a concept that covers both mitigation and adaptation, as well as responding to changes in the world economy. See the CDKN book on ‘Mainstreaming Climate Compatible Development’ for a summary of learning, globally and in 70 countries. Read my Introduction for an overview of the seven main themes. And follow the current incarnation of CDKN for further insights.

The IDC is right to recommend the ‘explicit adoption’ of the CCD concept by DFID. This is because the concept allows for both mitigation and adaptation, as the IDC notes. There is also another reason, however, disappointingly neglected in much of the discussion. Our Venn diagram has three circles, not two.

The overlooked circle is that climate action needs to take account, not just of national circumstances, but also of what is happening in the rest of the world. That means thinking about mitigation options for a country, and adaptation options, but also the likely changes in global markets and prices which will impact on the economy. Some export markets may open – for solar panels, say, or lithium, to make batteries. Other export markets may close – for coal, perhaps. The range and availability of imports will change. Prices also.

We can say for sure that action on climate change will be highly disruptive of the world economy, with major impacts on developing countries. That puts industrial policy at the heart of the climate change debate, with a strong emphasis on innovation and on dynamic competitive advantage. There will be losers as well as winners, as between regions, genders, ages, sectors and occupations: managing transition is at the heart of climate compatible development policy, and is why social policy is also an essential component. On this, by the way, see the news about a leaked letter from the UK Chancellor to the Prime Minister, expressing alarm about the cost of transition.

A new Strategic Objective on Climate Compatible Development

To make the more comprehensive approach operational, the place to start is with DFID’s high-level strategy, embodied in its Single Departmental Plan. This was revised in May 2018 and has five high level Strategic Objectives, viz

  1. Strengthen global peace, security and governance
  2. Strengthen resilience and response to crisis
  3. Promote global prosperity
  4. Tackle extreme poverty and help the world’s most vulnerable
  5. Deliver value for money and efficiency

Note that climate change is not mentioned in this list, though it does appear further down the hierarchy of objectives, under the heading of resilience. The text here says that DFID will provide ‘support for efforts to mitigate and adapt to climate change and prevent environmental degradation’, by means of its work to

  1. Provide support to enable low carbon growth and greater country resilience to shocks (contributes to SDG 13)
  2. Continue to lead international action against climate change with BEIS and Defra (contributes to SDG 13)
  3. Work to prevent catastrophic environmental degradation, and tackle degradation of habitat and loss of species, including action to address marine plastic pollution with Defra (contributes to SDG 14)
  4. Help deliver a doubling of global public funding of clean energy Research, Development and Demonstration under the Mission Innovation Initiative (contributes to SDG 7)

There is no mention of climate change under other headings, though it obviously has links to growth and to poverty reduction, never mind peace and security, and value for money.

This is awkward, not least because DFID’s reporting, including in its Annual Report, is structured around the five objectives. The 2017-18 Annual Report, for example, has a chapter on each of the Strategic Objectives. There are four paragraphs on climate change in the resilience chapter, pasted in at the end for ease of reference, and just a couple of references in the prosperity chapter. It is notable that the IDC reported considerable criticism of the lack of attention to climate change in DFID’s economic development strategy; this is a point I have also made.

The Annual Report is published in the summer, so the 2018-19 edition has probably already gone to press. It is unlikely to have a different structure. However, there is an opportunity for next year. The Single Departmental Plan is supposed to be revised every year, and although no announcement has made to that effect in 2019, it would be possible to change the objectives and then reshape the Annual Report.

If climate change is to be taken seriously, as Rory Stewart decrees, then a new Strategic Objective for a revised Single Departmental Plan could read as follows:

‘Support climate compatible development in and for poor countries and people:

  • Help develop and implement climate compatible development plans in poor countries;
  • Work with middle income developing countries to develop and share climate compatible solutions;
  • Build global climate compatible development regimes and finance mechanisms; and
  • Collaborate across Government on domestic and international climate compatible development policy.’

Many changes could follow: from having an objective of this kind; from developing a logical framework for each sub-objective; and from thinking about a theory of change to achieve each. All the key questions need to be asked: Who? What? Where? Why? When? How much? This probably needs a task force or an independent commission. DFID would also benefit from a single, strategic Climate Change Advisory Committee: this could replace a series of project-specific advisory bodies.

Building climate compatible development into national plans and country diagnostics

Because climate compatible development is wide-ranging, it cannot be siloed in Ministries of Energy or Natural Resources. CDKN experience was that climate action only took off when Ministries of Finance committed to the area.

An obvious approach is for countries to produce ‘Climate Compatible Development Plans’, but our view was that countries did not need multiple plans, and that the priority was to build climate change into current planning processes. In this we drew on the experience of trying to mainstream issues like nutrition, food security, gender, or the environment.

A diagnostic tool can be useful, however. DFID has worked in the past with growth diagnostics, as pioneered by Hausmann, Rodrik and Velasco. An ICAI review in 2017 found mixed experience in applying the lessons from diagnostic exercises, but described the effort as ‘an important learning tool’.  A new wave of country diagnostics has also been rolled out, as reported by Devex, focused on  “the underpinnings of economic transformation alongside state capability, resilience, human capital, governance, and conflict, so that country offices can make choices about their economic development priorities’ Perhaps climate should be on this list?!

DFID note the use of country diagnostics in the latest iteration of the Smart Rules Manual, published in April 2019, but without giving details on the methodology. If climate is not already prominent in the exercise, it needs to be, in relation to all three circles of the Venn diagram - mitigation, adaptation, and transformation. The diagnostic methodology also needs to be in the public domain.

Working with middle (and low) income countries to develop and share climate compatible solutions

There is a debate to be had about whether the fact of climate change means that DFID should spend more money in middle income countries, perhaps particularly on adaptation, and on crisis response. This became a live debate following the impact of repeated hurricanes in 2017 in middle income countries of the Caribbean which had graduated from the list of aid recipients, and resulted in a change of rules to allow ‘reverse graduation’.

It was also interesting, in this context, to see the Select Committee pick up the controversial issue of Loss and Damage, which applies to both low and middle income countries. The Select Committee concluded that

‘The issue (should not be) subsumed into a wider conversation on resilience, which fails to discuss loss and damage directly. The Government cannot rely on co-benefits from other streams of work on resilience to address loss and damage. As part of its leadership on resilience at the Summit in September, the Government should explicitly open a conversation around loss and damage and how it can best be addressed, by developed and developing countries in partnership.’

That issue apart, and ‘controversial’ is a mild term, given the open-ended commitment implied, development agencies have good reason to engage with countries that might not otherwise receive support, in the pursuit of climate action as a global public good. This can mean investment in mitigation in such countries, valuable for its own sake; and joint programmes with middle income countries, which help to develop and share technical or institutional innovations.

DFID offers many examples of such work: for example in China, where a joint UK-China Strategy for Science, Technology and Innovation Cooperation includes climate-related areas among its strategic goals; or in India, where a new UK-India Knowledge Partnership has climate change as one of its key priorities.

There are also global initiatives, like the International Solar Alliance, originally launched by India in 2015, and now with over 120 member countries, including the UK. In all these cases, DFID is contributing to South-South Cooperation – the topic of a recent High-Level UN Conference in Buenos Aires, BAPA + 40. The outcome document, of course, called for more support for this area from traditional donors. 

The strategic question for DFID is how much to earmark for such work. I once proposed segmenting 0.7, so that 0.5, say, an arbitrary figure, was available for poverty reduction and human development in the poorest countries, and 0.2 for global public goods, of which climate change action would be one. Middle income countries would not receive all of this, but the amount of money could be significant. DFID spent £14.5 bn in 2018, amounting to 0.7% of GNI, so 0.2% would be some £4.15 bn.

Probably, form should follow function. The Grand Challenge approach has been adopted by the UK Industrial Strategy, with a list of ‘Missions’, including clean growth and zero carbon industrial clusters. One option for DFID is to identify the Grand Challenges which will benefit climate action, and fund them appropriately.

Building climate compatible development regimes and finance mechanisms

The Select Committee ran through many of the issues related to climate regimes and finance mechanisms. It touched on climate diplomacy, when to activate the sunset clause of the Climate Investment Funds, the need to strengthen the governance and operations of the Green Climate Fund, and the role of the MDBs. There are three areas, however, that the IDC did not discuss.

The first is whether DFID should have a view on how to translate the concept of a ‘climate cataclysm’ into mitigation objectives. This is an urgent question, given the need for all countries to submit revised Nationally Determined Contributions in time for the 2020 Conference of the Parties of the UNFCCC. Is zero carbon by 2050 the right answer, as the UK’s Committee on Climate Change has recommended? Or should 2025 be the deadline, as demanded by Extinction Rebellion? What are the implications for different developing countries, some of which have ambitious climate plans and some of which, according to Climate Action Tracker, do not?

I have been writing about this, in the context of the UK’s embedded emissions in imports, which account for 45% of our global footprint. Common but differentiated responsibility remains a guiding principle. But the UK, with DFID in the lead, needs to Encourage, Incentivise, and Enforce more ambitious action across the world.

The second issue is whether a focus on climate change implies a different balance of spending between bilateral and multilateral channels. This is an old chestnut, with which successive DFID bilateral and multilateral aid reviews have failed to grapple, and which ICAI has not really addressed. For example, in looking at the Conflict, Security and Stability Fund, I asked why ICAI had not carried out a comparative analysis of other ways of spending money to reach the same objectives, via UN, EU or World Bank instruments. The same question could be asked of the CDC: its climate spending is favourably assessed in the IDC report, but is it really better than, say, the IFC?

ICAI reported that two thirds of the Government’s climate finance for low-carbon development (i.e. excluding adaptation) had been spent through multilateral or multi-donor channels. This is a higher share than for the aid programme as a whole.  ICAI listed some advantages of the multilateral spend, in terms of aid effectiveness, and the UK’s international position, but did not explicitly comment on the share. Would the advantages have been even greater if the share had been even larger? DFID and its external auditors need to focus more on comparative analysis.

The third issue is that talk of a ‘climate cataclysm’ exposes the need for a better narrative around the SDGs. I am on record as saying that the SDGs provide an excellent vision of an eventual destination but a poor road map (e.g. here) – partly because choices, trade-offs and sequences are not addressed. Of course, all SDG shortfalls are ‘cataclysms’ of a kind, especially when disease and deaths result, but the new narrative around climate and environment implies the need for prioritisation.

Collaborating across Government on domestic and international climate compatible development policy

In this area, climate compatible development policy is a special case of policy coherence, a topic much discussed in development circles. The IDC reviewed it in 2015, in its report, Beyond Aid. It concluded that DFID’s record was ‘patchy’ and recommended that

‘DFID make policy coherence for development (PCD) a higher priority and make improvements to reporting and accountability. DFID needs to put PCD at the heart of its work, co-operating closely across Whitehall, and not treat it as an add-on. The National Audit Office and the Independent Commission on Aid Impact should give a higher priority to PCD.’

The IDC Report reviewed the experience of other countries, and of the EU, many of which offered lessons for the UK, including legislation and the establishment of specific PCD Committees. It noted that the International Development (Reporting and Transparency) Act of 2006 required the Government to report on policy coherence, but said that reporting was currently poor, and that policy coherence should be incorporated more systematically in the DFID Results Framework. The latest DFID Annual Report, for 2017-18, does not seem to have made much progress on these matters. Policy coherence is not mentioned. There is, however, a section on ‘Our Work Across Government’. This does not mention climate change specifically, but does say that

‘DFID is collaborating ever more closely with other UK government departments on a range of issues to address today’s complex global challenges. In many instances, the drivers of poverty alleviation are also ‘beyond’ aid, including financial flows like foreign direct investment and remittances as well as changes in international trade, tax and other policies. To ensure that the UK’s expertise and value is fully utilised, we are therefore taking an increasingly government-wide approach to development.

As a member of the Cabinet, the National Security Council (NSC) and a number of Cabinet subcommittees, as well as co-chair of the cross-government Official Development Assistance (ODA) Ministerial Meeting, the Secretary of State has ensured that development priorities are fully considered as part of the government’s wider policy making.’

There does seem to be an opportunity to make climate change more visible in this process. There is no Cabinet Committee on climate change, for example. And perhaps the independent Committee on Climate Change needs a remit which specifically refers to developing countries, including their contribution to the UK’s global footprint. Its recent report, Net  Zero, published in May 2019, has a chapter on ‘Supporting Increased Global Ambition’, with a review of collaboration options covering: governance and capacity building; diplomacy and negotiations; technology development and sharing; climate finance; and carbon markets. There is no discussion of the role for DFID.

Practical issues

What does all this mean for DFID in action? It is hard, and probably inappropriate, to be definitive from a top-down perspective. There are big debates on topics like green growth versus de-growth (Jason Hickel)  or ‘regenerative growth’ (Kate Raworth); on the scope for a Green New Deal, as in the UK or the US; on population growth as a driver of emissions; and on the necessary links, as Andrew Norton and Dilys Roe have just emphasised,  between the climate emergency and wider biodiversity crises.

Most important, it is necessary to locate the climate debate within the wider context of global re-thinking about the future of capitalism, and its response to global disruptions, including climate change, but also automation and unequal globalisation. I write about these issues all the time, as do others. See, for example, three books I have recently reviewed: the Report of the IPPR Commission on Economic Justice; Paul Collier’s on Facing the New Anxieties; and Joseph Stiglitz on Progressive Capitalism for an Age of Discontent. Dealing with the climate is one piece in solving a complex puzzle.

Let me try, however, to stimulate a reaction, by proposing five big shifts that might follow for DFID from Rory Stewart’s pivot to climate change. The big shifts are undeniably provocative, by design. They also recognise that doing more of something (e.g. climate change) means doing less of something else. The five are

  1. From the SDGs to Grand Challenges

If the SDGs offer a vision of the destination rather than a road map of how to get there, an alternative approach is to specify the Grand Challenges or Missions that will trigger transformation. The Apollo Mission is a much-cited example. The German Energy Transition, the US SunShot and the Clean Energy Materials Innovation Challenge are all examples in the climate arena: all are described in the UN Environment Emissions Gap Report for 2018, in a chapter written by Mariana Mazzucato and Gregor Semieniuk. Of course, innovation requires strong policy support – an innovation systems approach is needed. The authors say that

‘Innovation policy requires attention to be paid to the entire innovation chain: from the supply side (from basic and applied R&D to demonstration) to the demand side (regulations, subsidies and taxes, procurement, and significant changes in consumption patterns) . . . In low-carbon sectors, in addition to grant funding, an important share of research, development and venture capital funding comes from public sources . . . and almost half of the investments into demonstration projects originate in public innovation institutions . . . Similarly, governments are highly active on the demand side with subsidies — whether set administratively (such as feed-in tariffs) or through auctions — loan guarantees and significant direct investment . . . Public procurement can also help spur innovation by favouring low-carbon technologies . . . and regulation must be conducive to innovation, which includes avoiding over-regulation while new business models are still forming.’

This already implies quite a shift in the aid programme. More science and technology, for example; more investment in universities and research centres in developing countries; more collaboration with the private sector; more support to reform of fiscal policy; and, importantly, more spending in middle income countries.

What would be the next Grand Challenges, the next round of Mission-oriented innovation initiatives? There are many options; clean transport, by road, rail, sea and air; sustainable afforestation; urban redesign; sustainable, resilient infrastructure; low carbon agriculture; appliance efficiency . . . This area is crying out for ambitious proposals, perhaps in a competitive format.

The UK has a Global Challenges Research Fund, not well-evaluated by ICAI in 2017. It could be merged into a greatly expanded new approach, but with research embedded much more firmly in programme delivery and innovation systems. A Global Challenges Research and Delivery Fund?

And note, that there is an opportunity cost. Doing more in this area, will inevitably mean cutting some cherished programmes focused specifically on the SDGs. For example, spending more on higher education and research, might, not necessarily, but conceivably, mean leaving to others support of primary education.

  1. From projects and programmes to budget support

At country level, a greater emphasis on climate change implies greater horizontal and vertical integration: horizontal in the sense of dealing with policy as well as technology; vertical in the sense of seeing change through to implementation on the ground. In this context, budget support is a more attractive option than individual programmes or projects.

There was a time in which budget support was a preferred option for donors, seen as consistent with the Paris Principles of Aid Effectiveness. It could either be in the form of ‘general budget support’, underpinning a recipient Government’s budget, or ‘sector budget support’, focused on an individual sector, like health or education. General budget support, at least, has rather gone out of fashion, with the EU being one of the few remaining advocates.

DFID’s position was reviewed by the IDC in 2017. It found that

‘DFID is ending all of its traditional general budget support—giving money directly through beneficiary governments. DFID’s focus on fragile and conflict-affected states means that there are fewer governments with which it is working to whom it is appropriate to give general budget support. General budget support should not be used with governments with high levels of mismanagement or corruption. There is, however, evidence which shows that, when used and managed appropriately, general budget support can be an effective means of development. We therefore recommended that DFID should consider “the case for an option to give general budget support in exceptional circumstances, where systems are in place to effectively monitor transparency and accountability.” DFID disagreed with this recommendation, stating that it “will neither start any new, nor restart any previous, traditional general budget support programmes in conventional aid settings” as DFID increasingly works in countries where it is less appropriate and with different needs.’

Perhaps a focus on Missions would change that, especially if funding were taking place in countries with less fragile governance. Budget support would also allow greater flexibility in funding the social costs of transition, including safety nets.

  1. From ownership to conditionality

This one really is provocative, but there is a case for DFID to be much more demanding in terms of climate action by developing countries. The voluntary system used by the UNFCCC is hardly delivering the rapid reductions in emissions that are required (see the UN Environment Emissions Gap Reports), and although the main culprits are developed countries, it is also true that developing countries need to be more ambitious. For example, the Climate Action Tracker, which actually does not cover most developing countries, says that only Morocco and the Gambia have commitments consistent with 1.5 degree warming.  Five more countries are compatible with 2 degrees, including India and Ethiopia. Every other country is categorised as insufficient, highly insufficient, or critically insufficient. Chile, China, Peru, Brazil and Turkey all fall below the bar.

More generally, I looked at this question in the context of global footprints, and recommended that developed countries should Encourage, Incentivise and Enforce higher ambition in developing countries. The first two are obviously preferable, but carbon tax adjustments or other trade measures could play a part as a last resort. Certification could also play a role, and is a growing area. But the point is that incentives and enforcement both imply a robust dialogue with aid recipient countries, perhaps leading to some form of conditionality.

Conditionality could be positive as well as negative, for example with rewards for more ambitious emission reductions. DFID could make a major commitment to help developing countries finance the additional effort embodied in Conditional rather than Unconditional Nationally Determined Contributions.

  1. From fragile states to climate vulnerable countries

DFID has committed to spend 50% of its resources in fragile states, and has developed instruments to help deliver the commitment, including the Conflict, Stability and Security Fund.

Personally, I am not a fan of the fragile states classification. There are too many overlapping lists, with over half of aid recipient countries classified by one donor or another as ‘fragile’. I have argued instead for ‘conflict-affected’ to be a more limited category which focuses on the especially difficult task of combining diplomatic, military and aid-related interventions.

Climate vulnerability, however, might be an additional option, not to merge with conflict-affected as a single category, but as an extra. Interestingly, the OECD/DAC States of Fragility Report has environmental vulnerability as one of its criteria. This attempts to capture the vulnerability to environmental climatic and health risks to citizens’ lives and livelihoods, including exposure to natural disasters, pollution and disease epidemics. A country list does not seem to be published, but the map in Figure 1 shows that many African countries fall into the most vulnerable category, with countries in South Asia and East Asia not far behind, and Central America also prominent. Could these provide a focus for DFID work on adaptation, particularly, and for disaster planning?

Figure 3

Countries identified as environmentally fragile by OECD/DAC

 

 

 

 

Source: http://www.oecd.org/dac/conflict-fragility-resilience/docs/OECD%20Highlights%20documents_web.pdf

  1. From bilateral to multilateral

Finally, DFID needs to address the question of whether new objectives can best be achieved via bilateral or multilateral channels. Prima facie, there might be a case for an increase in the multilateral share, including via cooperation with the EU after Brexit. On the other hand, if DFID is really going to pioneer a new approach, and pursue the big shifts, there may be a case for retaining strong bilateral control.

Conclusion

To summarise, then, these are the steps DFID could take:

  1. Adopt the concept of climate compatible development, as recommended by the International Development Select Committee;
  2. Revise the Single Departmental Plan and introduce a new Strategic Objective on climate compatible development;
  3. Set up a new DFID Climate Change Advisory Committee;
  4. Support countries better in building climate compatible development into national plans;
  5. Insist on a climate change lens in country diagnostics;
  6. Earmark a larger share of oda to work with middle (and low) income countries on Grand Challenge Missions which will benefit the climate;
  7. Commit to encouraging, incentivising and enforcing higher ambition climate plans and lower carbon intensity of exports by developing countries;
  8. Assess the scope for increasing climate funding through multilateral channels;
  9. Advocate for stronger UK Government structures and processes on the international dimensions of climate change, for example via a Cabinet Committee on climate change, and a wider remit for the UK Climate Change Committee.
  10. And practically, consider five big shifts in DFID’s approach:
  • From the SDGs to Grand Challenges;
  • From projects and programmes to budget support;
  • From ownership to conditionality;
  • From fragile states to climate vulnerable countries; and
  • From bilateral to multilateral

Climate change in DFID’s Annual Report for 2017-18

DFID continues to play a key role in the UK Government’s efforts to prevent climate change and assist the poorest in adapting to its effects. As part of the historic global climate agreement struck in Paris in 2015, the UK committed to increasing its international climate finance by 50% to at least £5.8 billion between 2016-17 and 2020-21. DFID climate finance has supported millions of the poorest and most vulnerable people, particularly women and girls, to cope with the effects of climate change by boosting their resilience to floods, droughts and other climate impacts and to gain improved access to clean energy.

DFID is leading reform of the international climate architecture, including the Green Climate Fund, to ensure it significantly reduces future greenhouse gas emissions as well as delivering tangible benefits for the poorest people who are already experiencing the severe effects of climate change. These activities will contribute towards achieving Global Goal 13 on combatting climate change and its impacts.

DFID is working with the Department for Environment, Food and Rural Affairs (Defra) across a number of areas to address catastrophic environmental degradation. Notably, Defra is now a cofunder of the Global Environment Facility (GEF), the leading mechanism for funding developing countries to address global challenges including biodiversity loss, land degradation, international waters, climate change, and chemicals and waste. DFID and Defra are working closely on the design and funding of the next four years of the GEF and pushing for increased focus on UK priorities including the illegal wildlife trade and marine plastic pollution.

DFID also provides technical support to Defra policy-led programmes, for example, the Illegal Wildlife Trade Challenge Fund. Both departments have been working closely together over recent months on developing action to address waste management in developing countries as part of the government’s commitment to tackle plastic waste. DFID has committed to spending £65 million on clean energy Research, Development and Demonstration in 2020-21 as part of the wider UK commitment to the Missions Innovation initiative and we’re increasing our spend year on year to reach that point. Programmes are being developed to deliver the best results for this commitment. In the past year, contributing programmes have supported technologies as diverse as second-life battery repurposing, off-grid refrigeration, smart minigrids, and solar crop processing technologies.

Source: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/750989/DFID-Annual-Report-Accounts-2017-18-amended-Oct18.pdf

Image : https://www.123rf.com/stock-photo/climate_change.html?&sti=nto0seh9ffli42v7c4|

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A priority for MEPs: elbow your way onto the Development Committee

6. Juni 2019 - 16:54

A priority for MEPs: elbow your way onto the Development Committee

 

 

(This article was first published on the website of the European Think Tanks Group, here)

 

The new European Parliament will convene in Strasbourg in the first week of July. As a newly- or re-elected MEP, your first priority should be to elbow your way onto the Development Committee. This is a higher priority than buying a return ticket to Brussels, finding a flat, sorting out your office, or hiring staff.

Why? Four reasons.

First, you really care – of course you do – about poverty and inequality in the developing world, and about the potential for good of EU development programmes. You are affronted that 800 million people still live in extreme poverty, that over 150 million children are stunted by ill-health and under-nutrition, and that 300,000 women every year die as a result of complications from pregnancy or childbirth. You have probably met some of these people on your travels. If not, you will have been haunted by images from countries like Somalia, Yemen, or the refugee camps of Bangladesh. The EU spends nearly €15bn a year in aid to developing countries. You want to make sure every penny of that is well-spent and contributes to development outcomes.

Second, you know that your own constituents in Europe can only benefit from prosperity and peace in developing countries. You know that one job in seven in Europe depends on exports, 36 million in total. Countries like China, India and Turkey are essential and growing markets for EU workers in all sectors. You hate to see terrorism exported to the streets of Europe. And, as a responsible politician, you want to see both humane treatment of refugees, and migration flows which are well-managed.

Third, you are very aware that ‘we are all in this together’. The Sustainable Development Goals apply to all countries, rich and poor. More important, they set goals for 2030, 17 of them, with 169 specific targets, which can only be achieved if developed and developing countries work together. EU initiatives on climate change will be ineffectual unless we work with China and other large emerging countries. Fish stocks and plastic in the oceans, ditto. Biodiversity also. Floods, droughts and heatwaves affect your constituents, but have their roots in collective failure to tackle a global crisis.

Fourth, and this may be the clincher, development needs the best people, with the broadest vision and the greatest capacity to get things done. Your passion and your skill will be in demand across the board: but nowhere will they have the potential to make a bigger difference.

Let us hope your sharp elbows do the trick.

If they do, an early priority will be to make sure the development and humanitarian Commissioners live up to the high standards you have set yourself. The candidate Commissioners face hearings in the Parliament, probably in September. Past incumbents have brought different skills and priorities. For example, the present Development Commissioner, Neven Mimica, has distinguished himself by a strong commitment to gender issues.

But think about the job description of his replacement: the oratorical skill of Demosthenes, the political dexterity of Machiavelli, and above all the vision to recalibrate development cooperation for a new decade of disruption and structural change.

How will development policy change as the advocates of globalisation confront a new nationalism? How will the pressure on jobs of automation and big data change the prospects of the world’s poor? And how can the new industrial revolution associated with action on climate change be managed?

Remember that the EU Development Commissioner is one of the three titans of the global system, alongside the President of the World Bank and the Head of UNDP.

Then, decisions about the budget will lumber over the horizon. You may well have asked why the EU’s financial planning is completely disconnected from the electoral and Commissioner cycle. Never mind. You will need to approve the Multi-Annual Financial Framework for 2021-27, a period covering the second half of your mandate and the first half of the mandate of the next Parliament. You will be tempted to dive into the detail of instruments and earmarks, into whether a new single instrument should be agreed, or whether the European Development Fund should be incorporated in the budget. Focus first, however, on defending development spending overall, Heading 6 of the € 1.1 trillion budget (in 2018 prices). The Commission has proposed a budget of € 108bn (in 2018 prices), mostly for development and humanitarian assistance. This is an increase, commensurate with the scale of need. Do not let Member State Governments cut it back.

Once the budget is agreed, you will be able to turn your attention to spending. The main purpose of EU development spending is poverty reduction: it says so in the Treaties. But it will not have escaped your attention that over 40% of European aid is spent in Upper Middle Countries. Further, the EU has failed to meet its target of spending 20% of aid on health, education, and social protection. You will be determined to be a champion of poverty-focused ‘real aid’.

Two other issues will be on your agenda early on.

You will have noticed that the remit of the development committee extends beyond aid, to include what is known as ‘policy coherence’. Probably, you will have read the 2019 Report from the Commission on Policy Coherence for Development. Health, food security, migration, trade, peace: these are all areas you care about. You will want to make sure that the Development Committee has a mechanism for dealing with all of them. For example, the EU Policy on Trade and Development, back in 2015, made specific commitments on transparency, human rights and regulation. Have those survived the new realist approach to trade in the world? And should they? Trade is too important to be left for the Committee on International Trade to follow on its own.

The Development Committee is also responsible for overseeing political dialogue with developing countries. That could be a big topic, as the Cotonou Agreement between the EU and the 79 countries of the Africa, Caribbean and Pacific Group comes up for renegotiation. You have probably talked a good deal about ‘partnership’ in your election rallies. How can that concept be renewed for a new era, in which new powers are beginning to dominate, and new configurations, like the African Union, assume greater prominence? It will not help if the European Development Fund, at present an instrument linked to Cotonou, becomes subsumed in the budget, and removed from oversight by the joint institutions of the EU and the ACP.

So, no time to slouch. It can be frustrating being an MEP. You don’t exactly ‘own’ any of the issues on your agenda. Negotiation with the other institutions, including the Council, the Commission, and the External Action Service, will be a fact of life. In addition, you are  commited to working closely with people in developing countries who either benefit or not from EU actions. But do not underestimate what you can achieve, by setting an agenda and pursuing it relentlessly in plenary as well as in Committee.

We will be watching.

Good luck.

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