US sub-national contributions to the financial mechanism of the Paris Agreement
There is a growing realization among US ‘sub-nationals’ – that is states, cities, corporations, counties, universities, grass-root networks, non-profit organizations, individuals (in essence, anyone outside the White House) – that climate change is a serious issue that needs to be tackled, and the withdrawal from the Paris Agreement by the Trump administration is viewed as a reckless act of geo-political vandalism.
The fact is, the Paris Agreement is necessary for us to come to grips with global climate change. Why? We need most, if not all, countries to ratchet up their emission reduction ambitions significantly if we are to get on top of the problem, and this requires international collaboration. Yet that will not be forthcoming if the global climate regime is seen to be blatantly unfair. A solution requires a lot of goodwill and good faith from everyone, and not only with regard to reducing emissions.
The Paris Agreement is not just about emission reductions. It is, as highlighted in a recent Climate Home article (‘US cities and states back Paris deal but ignore climate finance’), equally about providing financial support to (particularly vulnerable) developing countries in their fight against climate change and its adverse impacts.
One of the key instruments of the Paris Agreement for this purpose is a number of multilateral funds collectively known as the Agreement’s ‘financial mechanism’. While the sums of money flowing through this mechanism are minuscule in comparison to the amounts that developing countries will have to spend themselves, the mechanism itself is of key importance for the international regime:
- It serves as a beacon for the developed world – signalling to developing countries that their plight is recognized and appreciated.
- It symbol character helps to reduce the prevailing sense of injustice which otherwise will scupper all efforts to enhance the worldwide mitigation ambitions that we all need to address climate change successfully.
With this in mind, the question then is how can ‘sub-nationals’ contribute to multilateral climate funding under the Paris Agreement? What can they do to minimize the erosion of global trust instigated by the Trump White House decision to renege on the contributions to the Paris financial mechanism signed up to by the Obama administration?
US state governments could follow the precedent set by the government of the Canadian Province of Quebec which contributed CA$6 million to the UNFCCC Least Developed Countries Fund (LDCF) at the 2015 Paris climate summit. Alternatively, they could establish dedicated state-level ‘international climate solidarity funds’ to collect funding for the Paris financial mechanism. One example of this already underway is the ‘Massachusetts UN Least Developed Countries Fund (MLDCF)’, currently under consideration in the Massachusetts State Senate. This fund would be replenished through an income tax refund check-off programme and by a range of other public and private sector contributions, for the benefit of the LDCF.
In terms of demonstrating individual state efforts, and also to provide some much-needed funding predictability, the best way forward would be to create such state funds for the collection of donations from individual residents, city networks, corporate actors, as well as local and state governments. In the case of state governments, this would ideally be though earmarking a small share of some innovative source of revenue – such as carbon taxes or the proceeds of auctioning emission trading permits. For example, a bill currently under consideration in the California State Senate to modify the existing California Cap and Trade Programme envisages the distribution of emission permit auctioning revenue as ‘climate dividends’ to all residents on a per capita basis. In order to show solidarity with the world’s poorest and most vulnerable communities, California could then, for example, introduce a voluntary climate dividend check-off programme for the benefit of LDCs through the establishment of a California Least Developed Countries Fund, maybe with the additional provision that the climate dividends of the top x per cent of earners are mandatorily checked off in that manner.
Only in the presence of such support for the Paris finance mechanism can state governors truly make the claim: We Are Still In the Paris Agreement!
 Managing Director, Oxford Climate Policy; Convener International Climate Policy Research, Environmental Change Institute, University of Oxford.
 In the case of the Green Climate Fund alone, this leaves a shortfall of $2 billion against the $3 billion contribution signed off by the previous administration