Massachusetts May Become First State to Send Money to Low-Income Countries to Deal With Climate Change

Originally published in In These Times on September 16, 2021.
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As unprecedented natural disasters ravage the United States, while federal commitments to climate finance have lagged, the Massachusetts legislature is poised to make a statewide commitment to global climate initiatives. A bill winding its way through the Massachusetts House and Senate could make the state the first in the nation to legislate in support of international climate finance — that is, the transfer of money to low-income countries so they can reduce their carbon emissions and respond to threats of climate change. 

The legislation would create a voluntary check-off option for Massachusetts residents to donate through their annual tax returns to the Least Developed Countries Fund, a multilateral fund established in 2001 under the UN Framework Convention on Climate Change to help low-income nations adapt to the climate crisis. 

The Biden administration’s commitments to the Green Climate Fund, another multilateral vehicle established by the United Nations in 2010 to finance projects in low-income countries, have fallen far short of what activists say is necessary for the United States to pay its fair share and meet the scale of the global threat. While Biden has promised to restore trust among international partners in the wake of the Trump presidency, climate advocates say much more funding is needed.

“I think it’s very important for states to step up,” said bill sponsor Tony Cabral, a Democratic representative from the 13th Bristol District in Massachusetts who has served in office for 30 years.

Supporters say the bill can help elevate the oft-ignored climate justice issue and its impact on vulnerable countries which usually receive scant attention. Both the Least Developed Countries Fund and the Green Climate Fund serve the Paris Agreement, adopted by the United States and other major countries in 2015, but they are separate entities and any revenue raised for the former would not count toward the U.S. government’s pledges to the latter.

“One of the objectives is to lead by example,” said Lauren Stuart, a climate change policy adviser at Oxfam America. ​“At the end of the day, realistically, this legislation probably won’t bring in a ton of money — Massachusetts is not a huge state — but the idea is that hopefully this can prompt other states to take action and, collectively, if we can get more states to implement this, then that can lead to much bigger contributions.”

Righting climate wrongs

The impetus for the legislation came in 2017, when former President Donald Trump announced his intent to withdraw from the Paris Agreement and to end the United States’ climate finance contributions. At the time, the country had donated just $1 billion out of a $3 billion Green Climate Fund pledge it promised to meet by 2018.

By implementing the new legislation, lawmakers in Massachusetts hope to begin the process of jumpstarting climate aid to lower-income countries. 

“We were really optimistic it was going to pass during the last legislative session,” said Stuart. ​“It’s a very straightforward bill, there’s no real opposition to it, but policymaking can be a painfully slow process.” The majority of bills that get introduced never become law and those that do often take years to pass, according to Chris Gregory, a lobbyist with the Boston-based Northeast Energy Efficiency Council, a trade group. When Covid-19 hit, legislative priorities in the state were upended immediately as lawmakers grew overwhelmed with new challenges.

Gregory, who has been helping to shepherd the bill on a pro-bono basis, said one challenge advocates initially faced was the fact that the state’s existing process for income tax return checkoffs wasn’t working very well. Massachusetts residents already have six options on their tax returns to contribute to various causes, but while there is an established process for adding charities to the form, there is no way to remove them, even when groups raise no money or no longer merit receiving donations. 

“The lawyers in the [Massachusetts] Senate said, ​‘wait a second this whole thing is screwed up, we essentially need you to fix it before we take up your bill,’” said Gregory. ​“So after the first version, we went back and drafted a mechanism by which [charitable groups] could get thrown off. It took a lot of research and a lot of work, but we think it will work better now across the board.”

According to the National Conference of State Legislatures, the first state to introduce a checkoff box on its state income tax form was Colorado in 1977, which was intended to raise money for nongame and endangered wildlife preservation. By 2018, there were over 420 state checkoff programs across 30 states and Washington D.C., with most going to efforts to support military families, health education, disease prevention and groups for children.

Exactly how much money the option in Massachusetts could raise for climate finance each year is not clear, but Gregory thinks it could be in the six figures, and that there’s room for more concerted public service advertising than past checkoff programs have deployed.

Next steps

The legislation has been referred to the Committee on Revenue, and supporters are waiting for a hearing to be scheduled for the fall. Stuart said they’re expecting a legislative schedule by the end of September with a hearing for their bill hopefully within a month or two. ​“We keep asking for the set date and we just heard we will be given plenty of time to prepare,” she said.

While there’s no organized resistance to the bill, which promotes a voluntary effort that costs the state nothing, activists say that doesn’t mean its passage is guaranteed, especially as lawmakers are still focused on processing the influx of federal money from Covid-19 stimulus.

“This should be easy, but stuff that should be easy is always the hardest to pass,” said Gregory. He added that the state Senate is expected take the bill up and pass it quickly, but the House, which both bigger and more conservative, is where the real challenge lies.

“People think of Massachusetts as a very liberal place, but it’s an extremely conservative place in some ways, and lawmakers don’t like frivolous gestures,” he said. ​“So you have to make sure it’s seen as a serious undertaking and that constituents want it.”

Massachusetts Sens. Elizabeth Warren and Ed Markey did not return requests for comment on whether they support the bill or are advocating its passage. When Warren ran for president in 2020, she proposed a $100 billion ​“Green Marshall Plan” to fund projects in developing nations, but the projects would have required countries to purchase American-made energy technology. Projects funded out of the Green Climate Fund and the Least Developed Countries Fund do not come with similar restrictions. Markey, who has emerged as a strong proponent of environmental justice, has been less vocal on the need for international climate finance, though earlier this year he introduced a bill to support individuals displaced by climate disasters.

Larry Yu, co-chair of the Boston Metro chapter of the Climate Reality Project, said his group has been working to help advance the bill. ​“Tactically we’ve held a couple of webinars and talked about it in our meetings,” he told In These Times. ​“And we’ve used those talking points in talking to a few targeted legislators in the state House. This is not a campaign where our strategy has been to get 10,000 people to show up at the state House. Our approach has been to go to committees.”

Yu said he and his fellow activists have no illusions that Massachusetts would somehow offset the outstanding commitments from the federal government. ​“But if we save one community’s livelihood, or save another family’s lives, that’s powerful,” he said. ​“This is a real issue of global climate justice that many people haven’t seriously engaged with before.”

Advocates of the bill hope its passage will spur similar legislation across the country. It wouldn’t be the first time states followed one another in adopting pioneering climate reforms, as has happened before in commitments to pursue 100 percent clean energy goals and set new emission standards on construction and transportation. 

Daniel Sosland, president of the Acadia Center, a regional climate and energy think tank, said he’s supporting the Massachusetts bill in part because it offers citizens a way to take direct action on a global level. 

“It’s symbolic,” added Gregory. ​“But sometimes symbols are important.”

We Have To Finance A Global Green New Deal — Or Face The Consequences

Originally published in The Intercept on June 24, 2019.
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AS POLITICIANS TALK more about ramping up their commitments to reducing carbon emissions — over the weekend, even Vice President Mike Pence squirmed when pressed on his climate denialism and said the U.S. is making progress on that front — one key aspect of the crisis remains conspicuously absent from most U.S discussions: so-called climate finance. The question of how much money the U.S. and other wealthy, industrialized nations will transfer to poor, developing countries so that they can effectively reduce their own carbon emissions has gone largely unaddressed, even as it grows in importance. Developing countries already account for more than 60 percent of the world’s CO2 emissions and are expected to contribute nearly 90 percent of emissions growth over the next two decades.

The amount of money needed for “climate finance” is one of the most hotly debated issues between countries and represented one of the most contentious aspects of the Paris Agreement in 2015. Poorer countries have repeatedly said they could make steeper emissions cuts if they were adequately supported by wealthier nations in the process.

new report from the People’s Policy Project, a socialist think tank, argues that industrialized countries should contribute $2 trillion annually to help developing nations stave off the effects of climate change. An investment of that size would be 20 times larger than existing global commitments, which developed countries are already struggling to meet.

There is also an ideological debate behind the purpose of climate finance. Proponents of environmental justice argue that the U.S. has a moral and ethical responsibility to help less prosperous countries deal with the threat of climate change because so much of the U.S.’s own development and economic growth has contributed to suffering around the globe. Politically speaking, though, the issue is largely framed in terms of national security: The United States will be safer and better off if climate disasters don’t go unmitigated in other parts of the world.

The needle on climate finance has moved slowly since 2009, when then-Secretary of State Hillary Clinton announced at international climate negotiations in Copenhagen that by 2020 the U.S and other developed nations would “mobilize” $100 billion per year from public and private sources. The figure was selected to convey political will and was not based on any scientific analysis. As part of that $100 billion commitment, the U.N. established the Green Climate Fund, designed to finance climate mitigation and adaptation projects in developing countries like securing the water supply in South Tarawa, Kiribati, and restoring degraded ecosystemsin El Salvador.

The fund’s governing board includes equal representation between developing and developed nations, and its first round of funding began in 2013, when 43 countries pledged to raise $10.3 billion for projects. Of that amount, the U.S. pledged to contribute $3 billion over four years.

As countries and experts debate how much climate aid is needed to raise over the long term, the amount of money raised and spent so far is also a matter of great dispute. One reason for that, according to Kevin Adams, a researcher at the Stockholm Environment Institute, is that countries generally self-report what they’re providing, and so what developing countries say they receive can differ from what developed countries say they have contributed. “This can be due to factors like exchange rates and currency fluctuations, fees paid to consultants or other service providers, as well as the financial instrument used, such as grants versus loans,” he explained.

In 2015, for example, the Organization for Economic Cooperation and Development released a report stating that wealthy countries had already mobilized $57 billion in climate aid, but leaders from developing nations argued that those figures were dramatically inflated. Indian officials called the OECD’s estimates “deeply flawed” and just “partially correct at best.” A 2018 Oxfam report also argued that climate-specific assistance to developing countries was likely overstated by a “huge margin.”

There’s also disagreement over what formally constitutes climate finance, an umbrella term that generally refers to climate mitigation, adaptation, and reparations. The “climate finance” term, according to Adams, is supposed to signify new and additional funding that goes above what countries are already spending (or supposed to be spending) on international development.

Adams said the rhetorical separation between “developmental aid” and “climate aid” is important so countries don’t just “relabel existing funds” they were already contributing. Though in practice, he explained, the distinction between the two can be much more tenuous, “particularly in the case of adaptation [funding] where climate vulnerability is so closely tied to poverty, access to services, and institutional capacity.”

Leonardo Martinez-Diaz, the global director of World Resources Institute’s Sustainable Finance Center, agrees the gap between development finance and climate finance is fairly porous. “There was always an overlap, and the reality is, the distinction is starting to break down,” he said. “These days, people recognize you can’t really do proper development without thinking about climate change and that we need to be talking about it as climate-informed development.”

Despite the growing consensus over the overlap between the categories, the Paris Agreement and other climate conventions have been designed using various methodologies and accounting systems that do not include development finance. “In some ways, we’re kind of stuck in this system we’ve created, where for a while we’ll have to move forward on these parallel tracks,” said Martinez-Diaz. “On the one hand, we’ll have a system to measure climate finance for [the] Paris [Agreement] and the $100 billion pledge, and on the other hand, we need to try and incorporate climate change into our water programming and our food security programming and our health programming. Even though some of that money cannot be counted as climate finance under the current rules, it still matters.”

THE CONVERSATION AROUND climate finance has been more robust outside the United States, yet President Donald Trump’s reneging on prior U.S. commitments has raised serious questions about how international targets can be met. Late last month at the R20 Austrian World Summit, U.N. Secretary-General António Guterres emphasized how important climate financing was for tackling the crisis, stressing the need to meet the $100 billion goal by 2020 and “a full replenishment and an effective functioning” of the Green Climate Fund.

International climate talks are taking place this month in Bonn, Germany, and in July, the Green Climate Fund will hold its next board meeting. The next round of fundraising for the Green Climate Fund is provisionally planned for the fall, but right now leaders don’t know how much they’ll be able to raise without the help of the United States. In 2017, Trump announced that he was ending U.S support for the Green Climate Fund, even though the U.S. had yet to pay $2 billion of the $3 billion it had previously pledged. (The U.S. had transferred $1 billion to the fund under President Barack Obama.) Last fall, under its newly elected far-right prime minister, Australia said that it too would no longer be honoring its pledge to the Green Climate Fund.

Advocates see the challenge of mobilizing more money in this next round of funding as critical for establishing legitimacy and trust in the climate financing project and the Paris Agreement more broadly. If poor countries can’t rely on wealthy nations to help them industrialize in sustainable ways, then they may conclude they have little choice but to develop their economies along the same carbon-heavy trajectories that North America, East Asia, and Europe already took.

Encouragingly, both Germany and Norway have already announced their plans to double their previous commitments to the Green Climate Fund in the upcoming round of resource mobilization. Martinez-Diaz said WRI estimates that an ambitious replenishment goal should be about $14 billion if the U.S. does not participate, and about $22 billion if the U.S. does.

IN THE PEOPLE’S Policy Project report, published earlier this month, author Jacob Fawcett lays out a plan for what he calls a “Global Green New Deal,” under which developed countries would contribute $2 trillion annually, with the U.S. raising $680 billion of that, which amounts to 3.5 percent of the U.S.’s GDP.

The report suggests three ways for the U.S. to raise that money. One possibility would be a one-time issuance of open market treasury bonds, like selling $10.8 trillion worth of bonds into the open market and giving the earned cash to an investment fund managed by the U.N.; it would be difficult for a future president to repeal something like that, but it could spike interest rates. Another option is a one-time issuance of special treasury bonds, which could alleviate the interest rate risk but would be a little easier for a future administration to default on. The last proposed option is for Congress to pass a law authorizing annual mandatory spending, which would avoid the sticker shock of a one-time government debt issuance but also be the most vulnerable to political repeal.

The premise of Fawcett’s argument is that estimates for climate finance thrown around by world leaders are not actually based on what is necessary to confront the climate crisis. He notes that there are reputable climate finance models that project a cost of hundreds of billions and trillions annually; those figures fluctuate depending on what’s included and how they weigh various public and private financing methods.

“I want to see more attention paid to just how big this funding issue is, and I think it’s really a big fight,” he said, “with the amount of funding needed just several orders of magnitude beyond what people have been discussing.”

IN 2015, the England-based Centre for Climate Change Economics and Policy issued a report calling for up to $2 trillion in annual climate financing. Another estimate by the Intergovernmental Panel on Climate Change calls for $2.38 trillion in annual funding for energy sector development alone. Another 2015 report, produced by the World Bank and consultancy firm Ecofys, said financial transfers “could reach up to US$100–400 billion annually by 2030, possibly increasing to over $2 trillion dollars by 2050.” A 2011 U.N. estimate put the “annual financing demand to green the global economy” in the range of $1.05-$2.59 trillion. The World Economic Forum estimated in 2013 that there needs to be at least $700 billion in green infrastructure spending per year by 2020, separate from the $5 trillion annual investment in traditional industries.

While there are several multilateral funds aimed at climate finance, the People’s Policy Project recommends that the U.S. contribute the entirety of the $680 billion to the Green Climate Fund, which is the one most deeply rooted in the principles of the Paris Agreement and the U.N. Framework Convention on Climate Change. The paper assumes that it’s the global institution with the most capacity to handle that much money responsibly, and that it’s more secure once it’s in the hands of the U.N.

The Green Climate Fund’s ability to handle that level of investment is another question. “The Green Climate is good at upscaling ideas, and it’s crucial that the approaches it is developing are closely linked to the principles of the Convention, but you’d have some practical issues to it handling that much funding,” said Adams of the Stockholm Environment Institute. “While the replenishment is currently ongoing, scaling it up 200 times to $2 trillion would be an enormous institutional challenge.” Indeed, the Green Climate Fund’s capacity to review projects is limited, and it can only distribute money to countries that apply with a robust project to pursue — not a quick or easy task.

Adams said industrialized countries should “do more and contribute more” toward the effort of climate finance, which is more important than a focus on the exact figures needed. “While $2 trillion might be in line with the scale of the climate challenge, it is so far beyond the $100 billion goal currently enshrined in the Paris Agreement and which contributor countries are struggling to meet, it’s hard to see that figure gaining much political traction,” he said.

Oscar Reyes, an Institute for Policy Studies fellow focused on climate and energy finance, said the $2 trillion figure is in line with the costs of retooling large swaths of infrastructure and creating new infrastructure, which can escalate quickly, especially in economically disadvantaged nations where energy systems with proper access to electricity are being developed for the first time. Still, he said, aiming to raise $2 trillion — especially considering corruption in the international development space — is not necessarily the way to go.

“What probably makes more sense to me at the moment is, let’s get the Green Climate Fund to $20 billion, or $30 billion, and build the organization up in a sustainable way,” he said. “If you throw out a lot of money, it’s really difficult to see how that’s done, though maybe that’s my lack of imagination.”

The U.N., meanwhile, is working to develop a better sense of what’s needed. The UNFCCC’s Adaptation Committee is seeking proposals to better determine what is needed to address adaptation funding gaps. The committee aims to compile results in late 2020 or early 2021.

THERE IS ALSO a debate over the role of public versus private climate funding. The People’s Policy Project operates from an assumption that the public sector should cover the entire cost and not rely on businesses or philanthropists to shoulder the responsibility. Most other climate financing plans rely on a mix of public and private sources, though typically with public funding acting as a sweetener for hefty private investment. The 2015 Centre for Climate Change Economics and Policy paper Fawcett cites in his report argues that “private finance is potentially the most important source of funds for climate mitigation investment.”

Fawcett said he isn’t wholly opposed to private investment, citing carbon-capture technology as one example that he’d feel more comfortable with. He cautioned, though, against the potentially more exploitative situations, like companies that rent out solar panels to poor villages. He thinks predatory situations could be more easily mitigated if the U.N. had control over the aid.

Advocates and world leaders face the challenge of striking the balance between a wealthy, developed country’s moral obligation to helping poorer, developing countries and framing the climate finance conversation in terms of national self-interest.

When Trump announced he would no longer contribute the rest of the United States’ pledge to the Green Climate Fund, he wrongly claimed it was “costing the United States a vast fortune.” Matthew Kotchen, an Obama administration official, responded in the Washington Post that U.S officials had “vigorously advocated for a fund that served the interests of the United States.” Kotchen also noted that encouraging other countries to reduce their emissions helps create a more stable and secure world, and reduces economic costs for many sectors of the U.S. economy. He made no mention of environmental justice or the nation’s ethical obligation.

Even as he calls for greater climate finance flows, Adams acknowledged “there is a tension between trying to help contributor countries recognize their own vulnerability to climate change in a globalizing world, and,Feliza at the same time, recognizing that contributing to climate finance should not only be about individual interest.”

THE GREEN NEW Deal, considered among the boldest proposals to tackle climate change in the United States, is rooted in the principles of economic justice. The resolution commits to promoting a “just transition” for all communities and workers, and prioritizes job creation and social benefits for “frontline and vulnerable communities.” Still, it is very domestic in focus, and some commentators have urged legislators to think more deeply about climate finance.

Last month, Ben Adler, an editor at City & State, argued in the Washington Post that while many conservatives claim the Green New Deal is too big, its sparse focus on the United States’ international obligations suggests that the plan might not be nearly big enough. The Green New Deal resolution contains one sentence that gestures at climate finance, endorsing the “international exchange of technology, expertise, products, funding and services, with the aim of making the United States the international leader on climate action, and to help other countries achieve a Green New Deal.” Earlier this month Rep. Alexandria Ocasio-Cortez, D-N.Y., said she expects her Green New Deal climate plan to cost at least $10 trillion, though she did not specify how much of that she envisioned for international funding, if any. Her office declined to comment on specifics about climate finance. Massachusetts Democrat Ed Markey, the original Senate co-sponsor of the Green New Deal resolution, also did not return requests for comment.

Looking toward 2021, which is the soonest a Green New Deal plan could feasibly be passed, Democratic presidential candidates have so far steered clear of very large climate financing figures. Joe Biden promised to rejoin the Paris Agreement and use “America’s economic leverage and power of example” to get other countries to increase their emission reduction goals. His plan doesn’t say anything specific about climate aid. Jay Inslee, the candidate who has centered climate change most prominently in his campaign, did pledge to double the United States’ investment in the Green Climate Fund. And Elizabeth Warren proposed a $100 billion “Green Marshall Plan” to fund projects in poor, developing nations — though the projects would require countries to purchase American-made energy technology for the work. Projects funded out of the Green Climate Fund do not come with similar restrictions.

Ultimately, with Green Climate Fund replenishment talks coming up soon, the political will for tackling the climate crisis on the rise, and Green New Deal details yet to be formalized, it’s in many ways a ripe time for the U.S. to begin thinking more seriously about its role and responsibility to other nations grappling with the climate crisis.

“I think there is an international dimension of the Green New Deal that’s missing,” said Adams. “But at the same time, I think it’s a helpful policy approach because it moves the conversation to a space where climate change is inextricable from our economies and the way our societies are structured, as opposed to treating it like a one-off externality.”