Australia should step up and commit to loss and damage finance at COP27.

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Graph: Emissions trajectories (blue) compared to damage trajectories (red) from the year 2000 to 2075. From Greenpeace Pacific report. Note that damage continues to rise exponentially despite ceasing emissions. (Ed)

 

Excerpts From Greenpeace Pacific report

WHAT ARE THE SOLUTIONS? INNOVATIVE FINANCE FOR LOSS AND DAMAGE

To enable a funding mechanism to deliver new, additional, long-term, and predictable cash flows for loss and damage on a polluter-pays basis, innovative financial sources have been proposed by a variety of climate policy and finance experts. These financial sources vary but include:

The redirection of public money spent on subsidising fossil fuels.

With regards to fossil fuel subsidies, every year, governments channel money towards fossil fuel companies to support the ongoing production of fossil fuel products. In 2020, AUD $9.3 trillion131 was spent on fossil fuel subsidies globally.132 This money could cover the estimated costs of loss and damage in developing countries projected in 2030 (AUD $460-921133 billion per year) 20 times over for the lower estimate and ten times over for the higher estimate. This money could cover the estimated costs of loss and damage in developed countries projected in 2050 (AUD $1.6-2.9134 trillion per year) five times over for the lower estimate and three times over for the higher estimate.

In the financial year 2021-22, Australian Federal and State governments spent a total of AUD $11.6 billion on subsidies for fossil fuel companies.135 This money could instead be channelled towards climate impacted countries to support solutions that address loss and damage.

For example, between 2010-2020, Fiji was hit by 9 cyclones costing AUD $1.66135 billion in losses and damages.137 The AUD $11.6 billion spent on fossil fuel subsidies in 2021-22 could fund the redress of these damages six times over.

Outside of the scope of this report, climate affected communities within Australia are also not receiving adequate funding to address climate impacts, including during the 2019/20 bushfire crisis and recent Eastern Australian floods.138 Funds could be raised using the same mechanisms proposed for a Loss and Damage Finance Facility to support impacted communities at home.

The placement of levies and taxes on polluting industries.

Examples include a climate damages tax applied to fossil fuel companies or a tax on windfall profits of fossil fuel companies.140 The climate damages tax is a charge applied to fossil fuel companies on the extraction of fossil fuels per tonne, barrel, or cubic litre, based on the amount of climate pollution embedded within the fossil fuel product. In one proposal, a tax of USD $5 per tonne of CO2 produced commencing in 2021, increasing by USD $5 (AUD $7.9141) each year until 2030 where a tax of USD $50 (AUD $78.6142) per tonne is reached could raise USD $210 billion (AUD $333.9143) in its first year and would help incentivise the phase out of fossil fuels.144

Based on the example above, compensation for current damage from climate-related disasters would require a tax of at least USD $5 per tonne, and this amount would rise rapidly over time as the impacts of climate change continue to worsen. It is important to observe that, assuming the Paris goal of reducing net emissions to zero is achieved, the revenue from a climate damages tax, based on current emissions, must eventually decline to zero. As illustrated by Professor John Quiggin’s analysis in Figure 1, the majority of climate damage will be incurred after 2050, when most countries plan to have achieved net zero emissions.145 Therefore, additional measures to mobilise funds will be required in the future.

The proposals for the redirection of fossil fuel subsidies and a climate damages tax were recently supported in the Special Rapporteur’s report on the Promotion and Protection of Human Rights in the Context of Climate Change, along with the additional inclusion of cancelling debt for climate impacted countries and closing down tax havens in island nations.

By implementing some of these proposed financial sources, Australia could deliver genuinely additional, ongoing finance to address loss and damage that targets major polluting individuals and companies. These forms of finance do not place additional burdens on government budgets and align with the polluter pays principle.

 

MOVING AUSTRALIA FROM LOSS AND DAMAGE BLOCKER TO LEADER

The Albanese government has pledged to be “a different Australian Government” for the Pacific and to take decisive and ambitious action on climate change, setting high expectations against which to be judged.

If the Albanese government wants to demonstrate genuine climate leadership and repair damaged relations with Pacific nations, then it must deliver on a range of climate policies and commitments.

In line with the demands of representatives from 19 Pacific island nations at the Pacific Climate Justice Summit in October 2022, Greenpeace Australia Pacific calls on the Labor government to:

  1. Rule out all new coal, oil and gas projects in line with the recommendation of the UN and the International Energy Agency, and support a just transition from fossil fuels to renewable energy, including beginning a managed decline out of fossil fuel exports over time.
  2. Align Nationally Determined Contributions with a science backed 75% reduction in greenhouse gas emissions by 2030, and net zero by 2035.
  3. Pay Australia’s fair share for existing international climate finance, increase the transparency of climate finance reporting, and rejoin the Green Climate Fund.
  1. Unconditionally support the International Court of Justice Advisory Opinion on climate change and human rights led by Vanuatu and vote yes for the resolution at the UN General Assembly.
  2. Stop blocking loss and damage finance negotiations, and start supporting them. This must include advocating for a dedicated Loss and Damage Finance Facility at COP27, committing funds towards loss and damage, and recognising Pacific leadership on loss and damage by engaging directly with Pacific island nations to understand their needs in the face of the climate crisis.

In previous reports and papers, Greenpeace Australia Pacific has laid out our emissions reductions demands in line with the latest climate science, as well as calling for increased adaptation finance and more transparency regarding these financial flows from Australia.153 In this report, we have focused on Australia’s position and obligations regarding loss and damage finance.

Since the early 1990s, Pacific island nations have led the fight to establish a financing mechanism to remedy the surging costs and devastating human impacts of climate change beyond which they can be reasonably expected to adapt. However, for 30 years, the Global North Blockers have prevented progress on loss and damage finance due to their unwillingness to pay up for historical emissions. Sitting alongside major polluters like the US and the EU, Australia has played a key part in ensuring loss and damage negotiations do not progress beyond mere talk.

At COP27, loss and damage finance can no longer be delayed.

Australia has an obligation to pay up for loss and damage due to its historical and present day emissions, and its strong economic standing. Redirecting money from polluters, such as through the redirection of fossil fuel subsidies is a simple means through which Australia could source a large share of its contributions to a Loss and Damage Finance Facility.

To the Albanese Government, Greenpeace Australia Pacific and the wider Pacific region calls on you to be a climate leader and Pacific ally and support the establishment of a Loss and Damage Finance Facility at COP27. Doing so will demonstrate that Australia’s bid to co-host a COP with the Pacific Islands is a genuine partnership.

A row of men seated on the wet sand at low tide, praying for a benevolent sea, before going fishing. © Rodney Dekker / Climate Visuals

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