Updated October 25, 20172, 2019
Paris Agreement: U.S. Climate Finance Commitments
International Environmental Assistance
Many governments hold that environmental degradation
and climate change pose international and trans-boundary
risks to human populations, economies, and ecosystems. To
confront these challenges, governments have negotiated
various international agreements to protect the
environment, reduce pollution, conserve natural resources,
and promote sustainable growth. While some observers call
upon industrialized countries to take the lead in addressing
these issues, many recognize that efforts are unlikely to be
sufficient without similar measures being taken in lowerincome countries.
However, lower-income countries, which face poverty and
economic growth issues, may not have the financial
resources, technological know-how, and/or institutional
capacity to deploy environmentally protective measures on
their own. Therefore, international financial assistance, or
foreign aid, has been a principal method for higher-income
governments to support actions on global environmental
problems in lower-income countries. Often, this assistance
can serve as a cost-effective strategy for donor countries to
provide greater market access for their environmental goods
and services abroad and increased environmental benefits at
home.
The United States and other industrialized countries have
committed to providing financial assistance for global
environmental initiatives through a variety of multilateral
agreements, including, among others, the Montreal Protocol
(1987), the United Nations Framework Convention on
Climate Change (UNFCCC, 1992), and the U.N.
Convention to Combat Desertification (1994). International
financial assistance takes many forms, from fiscal transfers
to market transactions. It may include grants, loans, loan
guarantees, export credits, insurance products, and private
sector investment. It may be structured as official bilateral
development assistance or as contributions to multilateral
development banks and other international financial
institutions.
Ultimately, U.S. government assistance to developing
countries for environmental initiatives is determined by
Congress. Congressional committees of jurisdiction include
the House Committees on Foreign Affairs, Financial
Services, and Appropriations and the Senate Committees on
Foreign Relations and Appropriations.
Finance Underunder the UNFCCC
The UNFCCC is the principal international treaty to
acknowledge and address human-driven climate change.
The United States ratified the treaty in 1992 (U.S. Treaty
Number: 102-38).
Among the obligations outlined in Article 4 of the
Convention, higher-income Parties (i.e., those listed in
Annex II of the Convention, which were members of the
Organization for Economic Cooperation and Development
in 1992) sought to provide unspecified amounts of “new
and additional financial resources to meet the agreed full
costs incurred by developing country Parties in complying
with their obligations” under the Convention. Further, “the
implementation of these commitments shall take into
account the need for adequacy and predictability in the flow
of funds and the importance of appropriate burden sharing
among the developed country Parties.”
Over the past several decades, the United States has
delivered financial and technical assistance for climate
change activities in the developing world through a variety
of bilateral and multilateral programs. U.S.-sponsored
bilateral assistance has come through programs at the U.S.
Agency for International Development, the U.S. State
Department, the Millennium Challenge Corporation, the
Export-Import Bank, and the Overseas Private Investment
Corporation, among others.
U.S.-sponsored multilateral assistance has come through
contributions by the U.S. Departments of State and the
Treasury to environmental funds at various international
financial institutions and organizations such as the Global
Environment Facility (GEF), the Green Climate Fund
(GCF), the U.N. Development Program, the U.N.
Environment Program, the UNFCCC’s Special Climate
Change Fund and Least Developed Country Fund, and the
World Bank’s Climate Investment Funds and Forest Carbon
Partnership Facility, among others. Each channel has its
own mission and particular capacities.
Global Environment Facility
To facilitate the provision of climate finance under the
UNFCCC, the Convention establishes a financial
mechanism to provide funds to developing country Parties.
Article 11 of the Convention states that the operation of the
financial mechanism can be entrusted to one or more
existing international entities.
The GEF was established in 1991 as an independent
international financial institution to provide grants, promote
cooperation, and foster actions in developing countries to
protect the global environment. The GEF subsequently
became an official operating entity of the financial
mechanism of several international environmental
agreements, including the UNFCCC. The relationship
between the UNFCCC and the GEF is outlined in a
memorandum of understanding contained in UNFCCC
Conference of Parties (COP) decisions 12/CP.2 and
12/CP.3.
https://crsreports.congress.gov
Paris Agreement: U.S. Climate Finance Commitments
The George H. W. Bush Administration supported the
establishment of the GEF in 1991. The United States has
made commitments to all six GEF resource replenishments,
including $430 million in 1994, $430 million in 1998, $430
million in 2002, $320 million in 2006, $575 million in
2010, $546 million in 2014, and $273and $546 million in 20142018, for a
total of $2.732
just over $3.0 billion. U.S. commitments correspond
to about 1312% of
GEF’s total. U.S. disbursements to the
GEF since 1994
have totaled approximately $2.27 billion.
Finance Underunder the Cancun Agreement
The 2009 COP in Copenhagen, Denmark, took note of a
non-legal political document called the Copenhagen
Accord. The following year, in Cancun, Mexico, the COP
officially adopted many of the accord’s elements into the
Cancun Agreements (CA), including several quantified
financial arrangements. The CA puts forth a collective
commitment by developed country Parties (not specified in
the text) to seek to provide new and additional resources
approaching $30 billion for the period 2010-2012 to address
the climate finance needs of developing countries
(1/CP.16§95). The CA takes note of the pledge by
developed country Parties to achieve a goal of mobilizing
jointly $100 billion per year by 2020 to address the climate
finance needs of developing countries (1/CP.16§98). The
CA states that “funds provided to developing country
Parties may come from a wide variety of sources, public
and private, bilateral and multilateral, including alternative
sources” (1/CP.16§99).
Finance Underunder the Paris Agreement
In 2015, the COP in Paris, France, adopted the Paris
Agreement (PA). Article 9 of the PA reiterates the
obligation in the Convention for developed country Parties
to seek to mobilize financial support to assist developing
country Parties with climate change mitigation and
adaptation efforts (Article 9.1). Also, for the first time
under the UNFCCC, the PA encourages all Parties to
provide financial support voluntarily, regardless of their
economic standing (Article 9.2). The agreement states that
developed country Parties (not specified in the text) should
take the lead in mobilizing climate finance and that the
mobilized resources may come from a wide variety of
sources. It adds that the mobilization of climate finance
“should represent a progression beyond previous efforts”
(Article 9.3). The COP decision to carry out the PA
(1/CP.21) uses exhortatory language to restate the CA’s
collective pledge by developed countries of $100 billion
annually by 2020 and calls for continuing this collective
mobilization through 2025. In addition, the Parties agree to
set, prior to their 2025 meeting, a new collective, quantified
goal for mobilizing financial resources of not less than $100
billion annually to assist developing country Parties.
The Green Climate Fund
The GCF is an official operating entity of the financial
mechanism of the UNFCCC. The fund was proposed during
the 2009 COP in Copenhagen, Denmark, and its design was
agreed to by all Parties during the 2011 COP in Durban,
South Africa. The GCF was made operational in 2014. The
GCF aims to assist lower-income countries in their efforts
to combat climate change through the provision of grants
and other concessional financing for mitigation and
adaptation projects, programs, and activities. The GCF is
capitalized by “financial inputs from developed country
Parties to the Convention” and “may also receive financial
inputs from a variety of other sources, public and private,
including alternative sources” (3/CP.17§§A29-A30).
The GCF was officially opened for capitalization at the
U.N. Climate Summit in September 2014. Parties called for
an immediate capitalization of between $10 billion and $15
billion over the course of the first year. Initial funding came
from Germany, France, and a dozen other countries that
pledged approximately $2.3 billion. Further pledges
brought the total to approximately $10 billion.
U.S. Commitments: The Obama Administration announced
a U.S. pledge of $3 billion over four years during the G-20
meetings in Australia on November 15, 2014.
U.S. Contributions: Under the Obama Administration, the
U.S. State Department made two separate contributions of
$500 million to the GCF on March 8, 2016, and on January
17, 2017. The funds were obligated with FY2016 budget
authority from the agency’s “Economic Support Fund”
account. No contribution was made for FY2017.
The Trump Administration
The Trump Administration’s FY2018 budget request,
released on May 23, 2017, proposes to “eliminate U.S.
funding for the Green Climate Fund (GCF) in FY2018, in
alignment with President Trump’s promise to cease
payments to the United Nations’ climate change programs.”
Notwithstanding, the U.S. disbursement of $1 billion to the
GCF under the Obama Administration ensures that the
United States remains a member of the GCF board at least
through 2018, the end of the initial phase of capitalization.
On June 1, 2017, President Trump announced his intention
to withdraw from the PA. Under the provisions of the PA,
this could not be completed before November 4, 2020.
While a withdrawal from the PA would release the United
States from specific obligations under the PA, it would not
release the United States from the obligations under the
UNFCCC to provide “new and additional financial
resources to meet the agreed full costs incurred by
developing country Parties in complying with their
obligations” under the Convention or the collective pledge
by developed country Parties to achieve “a goal of
mobilizing jointly $100 billion per year by 2020.”
The effects of the Trump Administration’s announced
withdrawal from international climate finance commitments
would rely on assumptions regarding the efficiencies of
these programs and the sum of the collective assistance
provided by other nations, regional governments, cities, and
the private sector. Some analysis suggests the impacts could
be minimal if other contributions compensate for the lack of
U.S. assistance. However, the U.S. decision could also lead
to an erosion of international efforts to help developing
countries confront climate change.
Richard K. Lattanzio, Specialist in Environmental Policy
https://crsreports.congress.gov
IF10763
Paris Agreement: U.S. Climate Finance Commitments
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