December 8, 2015

Stopping the President’s Climate Slush Fund

  • Developing countries meeting in Paris say they could want at least $5.4 trillion by 2030 for climate mitigation and adaptation projects.

  • Developed countries, including the U.S., are pledging to contribute $100 billion annually.

  • Congress rejects the Green Climate Fund as no more than a U.N. slush fund.

This week, 196 countries that participate in the United Nations Framework Convention on Climate Change continue their meeting in Paris. They plan to reach “a legally binding and universal agreement on climate, with the aim of keeping global warming below 2?C.” President Obama has promised to provide the UNFCCC’s Green Climate Fund with $3 billion in U.S. taxpayer dollars. He has also pledged to reduce U.S. greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2025.

Other countries will welcome the president’s pledge to transfer American wealth and to constrain American prosperity in favor of subsidizing their economic growth. Those countries should not count on the president’s ability to deliver on his commitments, which do not enjoy the support of the American people.


Developing Countries want at least $5.4 Trillion

In May, the French foreign minister, who is now presiding over the Paris talks, explained that the willingness of the U.S. and other developed countries to transfer money to developing countries would play a “decisive” role in reaching an international agreement on climate change.

As of last Friday, 73 developing countries had submitted plans for how much they would reduce their own emissions. They also estimated that meeting these goals would come with a high price tag: approximately $5.4 trillion by 2030. India alone estimates that it wants $2.5 trillion by 2030. South Africa says it wants $909 billion. Iran says it wants $840 billion – and warned that its greenhouse gas pledge is entirely dependent on the removal of all sanctions. 

The countries expect to pay for just $253 billion of the total themselves. Another $1 trillion would come from international sources. The countries offered no explanation of where the bulk of the money – $4.1 trillion – would come from. Presumably, they expect other countries to eventually fund that shortfall.

These huge figures do not even include the desires of at least 50 developing countries that declined to provide specific estimates. They also do not include the financial requests of another 40 developing countries that the Organisation for Cooperation and Development projected could be eligible for international assistance in the future. 

A U.N. Slush Fund

In 2010, 24 developed countries that are part of the UNFCCC committed to raising $100 billion a year to help developing countries. They agreed that a “significant portion of such funding should flow through the Copenhagen Green Climate Fund.” Even if developed countries are able to meet that goal, it will not satisfy the $341 billion per year the 73 developing countries say they want. The cash demands will only grow when another 90 developing countries announce how much money they expect.

Last Saturday, the World Bank Group’s special envoy for climate change conceded to Politico, “That $100 billion is not a scientific number.” She added: “The $100 billion was a political number that emerged in Copenhagen and it’s become very important because promises made should be promises kept. The true cost of what we’re trying to do is … multiple trillions of dollars. Whether it’s 90, 100, 120, 150, 160, 170 is a political discussion. It’s got no real bearing on the reality of what we’ve got to do.” Last December, the United Nations’ chief climate official admitted the same thing: “What we actually need is a trillion dollars a year.”

Not only was the $100 billion created out of thin air, even that goal is nowhere close to being met. So far, 38 countries have pledged $10.2 billion to the fund. A total of $5.9 billion have been announced, signed, and disbursed. A total of $4.3 billion – including President Obama’s pledge of $3 billion – have been announced but not yet been signed and disbursed. Last December, the head of China’s delegation at U.N. climate talks called the $10 billion in commitments announced by that time “far from adequate.” Most countries have spread out their pledges to the Green Climate Fund over four years.     

Officially, the Green Climate Fund will finance “low-emission and climate-resilient projects and programmes in developing countries.” Realistically, it will operate as a slush fund for the U.N. and government officials in Asia, Africa, and elsewhere. According to one analysis in July, the top climate finance recipients of 2014 are also among the world’s most corrupt countries. India, Indonesia, Brazil, Mexico, Vietnam, Egypt, South Korea, Kenya, Thailand, and the Philippines each score as “corrupt” to “highly corrupt” on Transparency International’s 2014 Corruption Perceptions Index.

The 10 riskiest countries for money laundering and terrorist financing, according to the International Centre for Asset Recovery’s 2015 Basel AML Index, have said they could need more than $900 billion in climate financing by 2030. Even the Green Climate Fund board includes several government officials from some of the riskiest countries for money laundering and terrorist financing.

American Financial Support is up to Congress

The American people, through their representatives in Congress, have the right to approve or disapprove any contribution of U.S. taxpayer dollars to the Green Climate Fund. Earlier this year, the president requested in his fiscal year 2016 budget a first payment of $500 million toward his $3 billion pledge. In March, the Senate rejected that budget by a vote of 98 to 1. In June, House appropriators passed a bill out of committee that does not include an appropriation for the Green Climate Fund and prohibits any other appropriations from being made available for it. In July, Senate appropriators also passed a bipartisan bill out of committee that does not include an appropriation for the fund.

The likelihood that the American people will approve the promised funds in the future is doubtful. In a letter to the president last month, 37 Senators wrote: “We pledge that Congress will not allow U.S. taxpayer dollars to go to the Green Climate Fund until the forthcoming international climate agreement is submitted to the Senate for its constitutional advice and consent.” The Senators requested that the president direct his lead climate negotiator “to be forthcoming with his foreign counterparts representing developing nations in Paris about the views of members of Congress.”

Instead of being realistic with its foreign negotiating partners, the Obama administration has continued to write checks it cannot cash. As the Paris talks kicked off last week, the administration unilaterally pledged an additional $51 million in U.S. taxpayer funds for a global account that distributes climate finance to developing countries. “The Obama administration didn’t specify where the U.S. dollars would come from,” an Associated Press article noted.

President Obama spent a total of $12.8 billion of U.S. taxpayer dollars on climate finance from fiscal years 2010 to 2014, according to the State Department’s website. That includes $4.3 billion in financing for climate initiatives in developing countries, according to a February 2015 Congressional Research Service report

Developing countries are demanding trillions of dollars in return for participating in a feel-good climate-change pact. Developed countries have been willing to pledge only a fraction of that amount, and have actually paid just a sliver of that fraction. Whatever the world’s developed countries do contribute is more likely to be squandered in countries where governance is lacking.

With the American economy stuck with paltry 2 percent growth, a national debt approaching $20 trillion, and uncertainty about how international climate funds will be used, the American people should continue to reject President Obama’s $3 billion promise. Democrats should join Republicans in protecting Americans and their hard-earned tax dollars. 

Issue Tag: Energy