Examination of Witnesses (Question Numbers
120-139)
RT HON
DOUGLAS ALEXANDER
MP, MR ANDREW
STEER AND
MR MARTIN
DINHAM
25 NOVEMBER 2009
Q120 Chairman: No. Just to be clear,
the Act specifically states that 90% of bilateral aid will go
to low income countries. It is that specific point. That is not
the case in relation to the money that goes to multilaterals.
It has to conform to the international ODA definition but not
the International Development Act. I am not trying to be mischievous;
I am just trying to get clarification.
Mr Alexander: I appreciate that,
but I would say two things in response. One is: even if we continue
to work to a 90/10 split in bilateral funding, we have made a
conscious choice in the White Paper to try and ensure that we
better shape and influence the multilateral system. It is not
that we are looking for a reason to avoid a 90/10 split that we
are putting more money into multilaterals. It is a conscious policy
decision to say: how can we influence major global institutions
like the World Bank and others. Also I would argue that we are
having real success in terms of using the exemplar of our 90/10
split in our bilateral programme to influence the approaches that
are being taken by others. I know that there was some discussion
before the Committee yesterday in relation to the European Commission
and EDF[3]
funding. That is an example where I welcome the fact that the
proportion of money that is being spent in low income countries
is rising. Similarly, we are working hard with the Bank and with
others to ensure that there is a very clear focus on those countries
that most require those resources. In that sense I think it would
be the wrong response to say we are going to constrain, as you
say, against a rising budget line, a willingness where we judge
it appropriate to put money into the multilateral system in order
to be caught by the International Development Act. I think actually
the right response is to say: how do we take the experience that
we have learned from the bilateral programme and seek to cascade
that learning and that example out into the multilateral system.
Chairman: I think it reinforces the role
of this Committee, not only in holding your Department to account
but constantly holding the multilaterals to account, who have
such a substantial proportion of the aid budget.
Q121 Andrew Stunell: There are a
number of other major ODA contributors and some of them have become
wobbly. Let us say Italy, France or Ireland. Can you say something
about what you are doing to encourage G8 partners to honour their
Gleneagles commitments, particularly in relation of course to
Africa?
Mr Alexander: The dilemma that
we often face in discussions such as this is that some see the
metric of our commitment to influence others as being the volume
of our public criticism of them. As a fellow politician, you will
appreciate that that is not always the most effective way to influence
partners to engage in activities that otherwise they might not
engage in. Whether it is as recently as last week—I will
ask Martin to say a word or two about the General Affairs Council
of the European Union (GAERC)—or whether it is the action
that we took at the G20, whether it is the action that we took
at the United Nations high level meeting as recently as September,
I think even those countries that find themselves on the other
end of the telephone or the other end of discussions would concede
we are fairly relentless in our encouragement of partners to meet
the promises that they have made. The final point I would make
before I would ask Martin to take you through two or three of
those specifics is that our credibility in making that case is
contingent on us meeting our own promises. That is why it is for
us so fundamental, both in terms of the legislative commitment
we have now made but also the commitments that we are under at
the moment, that we are in a position to try and advocate effectively
for other countries to meet their Gleneagles commitments, because
if we were not in as strong a position ourselves I think our words
would ring rather more hollow.
Mr Dinham: On the General Affairs
Development Council last week, we were instrumental both before
the meeting, in the margins of the meeting and during the meeting
itself in arguing very strongly that EU members should keep to
their commitments which for the older Europe members, as it were,
is 0.51% and, for newer members, 0.12%; and to their commitments
to 0.7% by 2015. We were also instrumental, working with the Presidency,
to establish a very strong statement by the Presidency at the
end of that GAERC on the importance of those commitments and what
we need to do to achieve those. That includes a proposal that
EU leaders should each year, in the spring of each year, look
at progress on those targets to make sure that there is the highest
political pressure behind them to actually reach them in view
of the importance of reaching them by 2015. I would just add on
the G8 that we have also been instrumental in the proposal for
an accountability framework which would hold all members of the
G8 to account, both individually but also collectively, for the
various commitments that they have made, both on ODA volumes but
also in relationship to thematic issues, such as what we are doing
on health and education and so on. These are two areas where we
have been really pushing very hard to keep people to the commitments
they have made.
Mr Alexander: I think it is fair
to say in both of those examples, which are just the most recent
examples in relation to the accountability framework, had it not
been for British pressure, albeit exerted behind the scenes in
the days preceding the summit, the summit would simply not have
produced the initiative on food security which the Americans were
promoting. We simply would not have seen the accountability framework
being delivered. Similarly in terms of the General Affairs Council
I myself was engaged in discussions in the days immediately preceding
the General Affairs Council with Bert Koenders, my opposite number
in the Netherlands, and with Gunilla Carlsson, holding the Presidency
at the moment for Sweden. I think it would be fair to say that
anticipating the meeting there was not universal support for the
position that Britain was advocating in saying we need clear language
upholding the commitments—I mean the commitments that had
been made by others—but by a great deal of work by officials
and contributions from ministers we got to a place where we got
a pretty robust Presidency statement last week, which we certainly
welcome.
Q122 Andrew Stunell: Can you say
something more about the G8 and the implementation of the accountability
framework? Where have we actually got to, following on from that
agreement?
Mr Dinham: There was a commitment
at the last G8 summit that the results on the accountability framework
which were delivered last year would be built on and worked on
and a more detailed accountability framework would be delivered
for the summit this year. There is work going on through the year
to ensure that that is kept up to date with more detail and more
strength behind it. Another proposal alongside that which is kind
of similar and related was the MDG needs assessment which we got
onto the table at the last summit, which is doing the same thing,
indicating what is needed both by G8 and other countries to deliver
the MDGs. The assessment will be delivered in time for the next
G8 summit in the middle of next year.
Q123 Andrew Stunell: We should be
able to see some outcome at that point?
Mr Dinham: That is right. The
idea is you set the proposal and then you give a date for when
it is going to be followed up, so there is an accountability process
built into that.
Mr Alexander: As Martin says,
we were working towards twin tracks in a sense. It was a significant
prize to secure a degree of transparency in terms of progress
made in relation to ODA commitments. We also judged however that
it was worth pushing the boat out, if you like, to try and get
an assessment on the MDGs because that also provides a degree
of transparency to say, "Actually, even if these commitments
are made, let us be clear as to what is required internationally
if we are to achieve the MDGs." In that sense again, the
pursuit of that proposal was not without scepticism or in some
cases resistance but nonetheless we judged that it was a significant
prize to try and secure.
Q124 Chairman: We are just under
two weeks away from the Copenhagen conference. The assessment
of where that is going seems to be up and down. I was attending
a legislators' conference about a month ago in Copenhagen which
was convened by the Prime Minister of Denmark who at that point
seemed to be playing down the likelihood of any fixed agreement.
We now have notification of 60 heads of state going and suggestions
that something might come out of it. What is your assessment of
the situation right now? I suppose what we are talking about is
what is the best and worst outcome one could expect. Presumably
not a complete text that everybody will sign up to, but some practical
progress. What is the assessment?
Mr Alexander: I am not sure if
this is a manifestation of coincidence but within a few minutes
of me arriving in this committee room President Obama confirmed
he is going to be travelling to Copenhagen himself.
Q125 Chairman: I think en route to
collecting his Nobel Prize in the process.
Mr Alexander: I am not sure whether
this was to assist me in answering this question, but it helps
nonetheless. You are right. There are now more than 60 heads of
government who have said they will attend and President Obama
within the last hour has made a public statement confirming that
he will attend. Our objectives are what they have always been,
which are to have a fair, effective and ambitious outcome. In
essence that comes down to two or arguably three key issues, the
first issue being what is the appropriate distribution of emissions
cuts to keep us within the science. That is within a two degree
temperature rise. Essentially, that turns on the balance of responsibilities
between a historic responsibility largely following on developed
countries as a result of present levels of emissions, whereby
the historic responsibility is clear, but on the other hand a
recognition that, looking forward, the significant rises in emissions
anticipated in the years ahead are predominantly from developing
countries. Therefore, that balance is going to be one of the central
issues for negotiation. Related to that issue is the second main
pillar of negotiations, which is the issue around climate finance.
We put numbers on the table back in June, a figure of US$100 billion
a year by 2020. That has since been the basis on which there have
been further discussions at the European Council with European
numbers being put on the table. The third issue which some would
argue is going to be as central—although personally I have
always believed, without diminishing it, it would be an issue
that could be resolved if the first two are resolved—is
the issue of governance of any agreement and what would be the
mechanism post-Copenhagen for ensuring the appropriate disbursement
of funds, monitoring of emissions cuts and the other consequences.
There has been variously speculation in the newspapers in recent
days which has ebbed and flowed as to whether we are realistic
in our objective now, given the very limited number of days between
now and Copenhagen, in securing a legally binding agreement. That
remains Britain's negotiating objective. Whether that will be
achieved will be the stuff of negotiations in the days ahead.
I talked very recently to my colleague, Ed Miliband, who asked
almost exactly the question you have asked. We have a further
meeting in government tomorrow because this is an issue which
we are working on all the time at the moment. He basically had
a degree of cautious optimism on the basis of the ambition that
people are bringing to Copenhagen. In essence, the Chinese are
in a position where they are the largest emitters already. If
there was to be a failure at Copenhagen to reach an agreement,
the prospects are that there would be even more pressure on China
in the years ahead. Similarly, I think it is hard to construct
a scenario whereby there are more benign political circumstances
in the United States, very tough though the political situation
is in the United States, than the first year of a Democratic President
with Democratic control of the House and the Senate. That is not
to diminish the challenge that is being faced in health care or
indeed the challenge of trying to secure more than a Kyoto-style
rejection by the Senate involving ratification in due course.
I do think it is difficult to construct a scenario whereby, if
Copenhagen fails, in two or three years' time the politics will
be any easier on the other side of the Atlantic than they are
at present. Similarly, on the basis of the discussions that I
had with the Indian Government when I was in India in September
with Ed, the Climate Change Secretary, I sensed that they wanted
to be deal makers rather than deal breakers. One of the challenges
will be the position of Africa where Prime Minister Meles, who
is representing the African Union, has been appointed as climate
champion. He was of course party to the fact that African negotiators
left the recent Barcelona conference because they were not convinced
that the ball park that was being talked about, not least in relation
to climate finance, was correct. There are some extremely difficult
and tough days of negotiation that lie ahead of us.
Mr Steer: One of the encouraging
things is that some of the middle-income countries are now coming
out with explicit offers with regard to how they will reduce their
carbon emissions below business as usual. Some of them are coming
out with two numbers. One, what we will promise to do, and then
a more ambitious number if we get adequate finance. That is of
course where the issue of finance will then come in. The issue
of adaptation finance is obviously very central to Africa. There
is a huge degree of debate going on within Africa right now. People
like Prime Minister Meles are clearly putting in a serious demand
for adaptation finance that is above what seems to be on the table
so far. As you know, within the $100 billion that the Secretary
of State mentioned, the discussion is around maybe $30 billion
would be appropriate for adaptation, but that is not a firm figure.
Q126 Chairman: Does the Copenhagen
process run the same danger as the Doha process, in a sense that
nothing is agreed until everything is agreed and everybody has
to agree? You give a very fair analysis as far as I can see, Secretary
of State, of where we are at. The American President has a problem
of Congressional approval which he therefore has to cope with.
The Chinese are unlikely to sign up to something that puts them
at a disadvantage in relation to the United States. On the other
end of the scale, as we found out in Bangladesh and in Africa,
countries are saying, "You caused the problem. Unless you
come up with the money, we are not interested in the emissions,
trying to get them to sign anything or nothing, because we are
not causing the problem. If you want us to agree to those things,
then we need the money." That seems a heck of a big ask to
get out of the next three weeks.
Mr Alexander: Doha is very instructive
and it informs my own thinking about the prospects for the deal
in Copenhagen in part because I, along with my ministerial colleague
Gareth Thomas, bear the scars of those eight days in Geneva the
year before last, where there was a great weight of expectation
and effectively as an international community we failed to find
that common ground and to reach agreement. What lessons do I draw?
Firstly, even the WTO with a really outstanding Secretary General
in Pascal Lamy and a tried and tested architecture of negotiation
did not manage to pull off a big win for multilateralism in Geneva.
In that sense, candidly, we are using a much less tested architecture
for negotiations involving often very complicated negotiations
between climate change ministries, energy ministries, finance
ministries, development ministries, even within individual countries.
It is a tough set of negotiations. Few of us when we arrived in
Geneva the year before last would have anticipated that ultimately
special safeguard mechanisms and sectorals would be the two issues
on which apparently those trade negotiations foundered. In reality,
what happened, I judge, in Geneva was best articulated by the
then European Trade Commissioner, now my Cabinet colleague, Peter
Mandelson, when in the European Council of Ministers meeting immediately
after the failure of the talks he said, "What we have witnessed
here in Geneva was a coalition of the unwilling." It was
a typically insightful phrase because in truth by that stage the
politics in China, in India and in the United States did not work
for a deal. In that sense it seems to me there is a prior question.
The political downsides of the American US Trade Representative
going back or the Chinese minister or indeed Kamal Nath in India
going back and saying, "Alas, I was not willing to compromise
the subsistence farmers of India. Alas, I was not willing to yield
to Chinese demands. I was willing to stand up to the United States"
were not aligned in a way that guaranteed that a deal would be
done. One of the lessons I therefore draw out of the trade negotiations
which is very apposite for Copenhagen is: can you answer the prior
question that there is a political willingness to find agreement?
That is why I genuinely take encouragement from the fact that
President Obama has said he is going to attend. I sense from my
own discussions with the Indians and from my colleague Ed's discussions
with the Chinese that, at least in those three very large and
significant contributors to the negotiations, there is a genuine
willingness to reach an agreement. Whether that agreement will
be acceptable to our friends and colleagues in Africa is another
issue. It is not that there will not be difficult negotiations
but my instinct is that there is a prior willingness to try and
find that political agreement. The other lesson that I draw from
the WTO experience in Geneva however is that literally these negotiations
are too important to be left to the negotiators. If they arrive
in Copenhagen with a mandate to continue to negotiate, they will
be negotiating a year this Christmas, never mind this Christmas.
In that sense again, partly on the basis of our own experience
of the G20 in April where the Prime Minister relentlessly worked
the phones with international leaders in the weeks and months
preceding the April summit, there is no substitute for very high
level, political engagement in the Copenhagen process right now.
That is why the role that our own Prime Minister, President Obama
and others are playing is going to be absolutely instrumental
because there is a prior question, which is: is there a political
will for agreement? There is then the ability for that political
will not to be imperilled by over-zealous negotiating on areas
of detail which could mean that the good agreement becomes the
enemy of the perfect agreement.
Q127 Mr Hendrick: On the point you
made about getting the big players to get to an agreement, are
you aware of any bilateral discussions for example between the
US and China or are any bilateral discussions going to take place
that actually could make Copenhagen that much easier in terms
of getting a deal? As you say, if you sat down today, it might
take another year. Has this work been going on between the big
players as it is coming to an end with Copenhagen? How far down
the track are they?
Mr Alexander: There is a huge
amount of that work that is underway. President Obama himself
has just very recently visited Beijing. This was one of the key
issues that was under discussion. That is evidence of the continuing
level of contact that there is at a very high level on these negotiations.
Will it be enough? The honest answer is I do not know. There are
some very tough negotiations still to be taken forward, but I
take the fact that President Obama has made a judgment to travel
to Copenhagen as a positive sign. I hope he is more successful
than in securing the Olympics for Chicago.
Q128 John Battle: There was a rather
good debate yesterday on Copenhagen. I thought it reflected well
on the House and all parties. I thought at least the British position,
Government and Opposition, in relation to Copenhagen was quite
strong. Things are moving and there is still some movement, but
I really want to focus not on what can or cannot be achieved at
Copenhagen. I want to look at what we are doing and the funding
from our Government, including DFID, on climate change. Regardless
of Copenhagen, this issue is not going to go away. We have still
to take action. At the present time, the costs of adaptation for
the poor countries alone massively overwhelm the ODA flows. For
example, the estimates of 120 to 160 or 170 billion dollars by
2030 for adaptation to climate change. Some of our Committee were
recently in Bangladesh where the Chars Islands, as they are called,
are being overwhelmed by the tide coming in now. What I learned
from that experience is that it is not just the water coming in,
because you can grow rice in water. If it is salt water, you have
a hell of a problem because desalination becomes a major, major
challenge. Some 13 million people in Bangladesh now are under
pressure and might have to be moved somewhere. By 2030 it could
be 35 million people. How do we address that? One of the things
that was in the White Paper was this paragraph: "The UK will
also increase its poverty related expenditure on climate change,
recognising that part of the climate financing gap could legitimately
come from official development assistance." I just want to
say to you I feel slightly that that could be interpreted ambivalently.
We can use the development budget to do climate change now. I
am looking to you to see if you can give me assurances that DFID
is not going to use that money and say, "Well, we can do
climate change now because that is the hot topic", and the
poor pay a price by losing out on the other funds. How much does
DFID currently spend in terms of its percentage? How does that
compare with other donors? Is it 8%? Is it 3%? How did you arrive
at that 10%? You say a bit later in the paragraph you want the
money for climate change to be limited to 10% of ODA and you want
other countries to limit theirs to 10%. Can you talk me around
that and say what is the thinking behind it, because your Department
has a great track record on pro-poverty policies. I do not want
them to be undermined by switching the budget to climate change.
They need it but not at the expense of the poverty reduction strategy.
Mr Alexander: I hope I can offer
you exactly the assurance you are looking for. Firstly, we look
forward with interest to the report of the Committee on Bangladesh.
I myself travelled to the Chars in September with Ed Miliband.
We were in Bangladesh and then travelled on to India. The objective
of us travelling together was to seek to communicate a clear conviction
that we both hold that the challenges of poverty reduction and
dealing with dangerous climate change are now intertwined and
indeed indivisible. You simply cannot travel in the developing
world, as I have done over many months now, and discuss the issue
of climate change, which is undoubtedly of growing concern because
it is in so many parts of the developing world not a future threat
but a contemporary crisis, the cruellest irony being that these
communities and populations who are least responsible for the
emissions that are causing dangerous climate change are being
hit first and being hit hardest; and you cannot have those conversations
without repeatedly having exactly the anxiety you articulated
played back to you, which is people saying, "Listen, we recognise
the need for additional funds to allow us to adapt to climate
change that is already happening and to allow us to secure a low-carbon
development path for our growth." If you take the example
of India, I sat with Rahul Ghandi, a leader of the Congress Party,
and with others. It is simply impossible to convince those politicians,
and perfectly reasonably so, that the cost of environmental sustainability
for our planet should be borne by the 400 million Indians without
access to electricity to whom, if the wrong deal was agreed, you
would deny the legitimate aspirations to a life lived out of poverty.
In that sense, I promise you I understand the point you are making
and I believe we have already categorically addressed it. The
way we have sought to address it is to say we have made a judgment.
I was having this conversation with Andrew earlier. I will ask
him to embellish the account that I am able to offer to you of
the rationale for 10% of this particular figure. 10% reflects
the fact that there are a number of our programmes already where
it would be the judgment of Job to try and say, "This is
exclusively poverty reduction" or, "This is exclusively
climate adaptation". Indeed, I would argue that the Chars
livelihood programme that you witnessed and I witnessed is probably
an exemplar of that. Similarly the kind of work we are doing in
terms of the livelihood and forestry programme in Nepal, another
example of where I would argue uncontroversially there are very
clear poverty reduction and climate adaptation benefits to that
portion of money. If you travel in the developing world, their
great fear is that the developed world will trumpet a deal in
Copenhagen and simply wholesale rebadge money that is needed to
secure the MDGs as climate finance. The finance ministries will
sigh a sigh of relief. The world caravan will move on and children
will find themselves without classrooms, without inoculations
or without anti-malarial bed nets. That is why we need a judgment
in terms of the Prime Minister's speech which he made in June
that not only would we put on the table the $100 billion by 2020,
our estimate of the figures that are necessary—and again
I will ask Andrew to account for the difference in some of the
figures that you quoted, because as you recognised in your question
many of the other projections actually go to 2030 rather than
to 2020 when we are saying 100 billion—but nonetheless we
were clear that, unless there was also a guarantee given that
we judged 10% was the limit of the ODA DAC scorable contribution
to the public financing element of that $100 billion global package
that would be required for adaptation, then it would be, as you
say, a great fear and a legitimate concern that there would simply
be wholesale rebadging of those resources. I can speak for the
Government and say categorically that the Prime Minister reiterated
that position back in June in the speech that he made. I have
articulated that on a number of occasions. Again, I have to say
it is an instance where there is not cross party consensus in
the House. Repeatedly the Conservative Party have been given the
opportunity to affirm that they also hold to that principle that
only 10% of ODA should be allowable in terms of calculations of
climate finance but again, under consistent pressuring from myself
and from others as recently as Andrew Mitchell's visit to the
Overseas Development Institute on Monday, that promise and that
undertaking has not been forthcoming. The argument that is being
advanced is to say we cannot make that commitment ahead of Copenhagen.
I have to say I struggle to see any principled reason why that
commitment cannot be given, regardless of what ultimately emerges
in the negotiations. Maybe in terms of 10% both reflecting the
bottom up and the top down rationale for that figure and also
the various estimates that existed, Andrew, you could be helpful?
Mr Steer: We have been struggling,
as have others, to try and understand why estimates vary so greatly
on adaptation. We have been financing quite a bit of work ourselves
on that. Estimates range from low to extremely high. In a nutshell,
at the risk of slight over-exaggeration, those that are very high
assume that people keep doing basically exactly what they are
doing now, the same economic activities, the same patterns of
life and so on. Adaptation has to be very precise around current
patterns of work, current structures of the economy and so on.
Those that are very low assume a great deal of flexibility in
terms of the structure of the economy adjusting and some, which
we would not subscribe to, even accept the fact that people will
move location. Then, your costs of adaptation come much lower.
What we are trying to do is get the right kind of sensible number.
We are going to have to be flexible in terms of what the financing
needs are. As the Secretary of State was saying, in UNFCCC[4]
for example, the total costs they have estimated are $120 to $160-odd
billion per year overall adaptation and mitigation for the year
2030. The World Bank last year came up with again 2030 numbers
that again were quite high, almost $200 billion up to more than
$600 billion, so quite large variations and they explained why.
Bringing it back to 2020, we do not know what the sum of money
is. The $30 billion is at least a sensible starting number. In
terms of what we are doing ourselves, you may have seen the press
today and yesterday about the commitments that were made in Bonn
in 2001 to finance a certain amount each year. Our side of the
obligation—I would be happy to give you the numbers—has
been more than delivered. Specifically, our obligation was to
deliver about $244 million over the space of four years, 2005
to 2008 and we actually spent more than £180 million, which
on exchange rates, means we over delivered, but that is nothing
to brag about. That still is only about £40 million a year.
What is happening right now is our spend is increasing a great
deal. For example, in 2010 we would expect to be spending about
£400 million under current trajectories. We cannot promise
that right now but that is under current plans, including what
we are doing through the Environmental Transformation Fund and
our bilateral programmes, as the Secretary of State mentioned.
With regard to the 10%, there is not accurate science in this,
but we have done quite a lot of thinking as to what are the kinds
of investments that our partner countries are coming to us now
and asking us to finance out of ODA, even though there is no pot
of money for adaptation. They are saying, "We want you to
finance the Chars programme" and various other ones, forestry
programmes in Nepal, and I could list quite a number. "We
want you to finance it out of your current ODA." Because
they are justified on poverty reduction grounds, they happen to
be exactly what is needed on adaptation. Roughly speaking, that
would come to about 10%.
Q129 John Battle: You have given us the
figures and the numbers but what percentage now is spent on climate
change?
Mr Steer: If next year for example
were to be £400 million, our total spend next year will be
£7 billion, so it is less than the 10%, but not much less,
so probably about 6% next year.
Q130 Mr Hendrick: Mr Steer has taken
the wind a little bit out of my sails because he has obviously
partly answered the question that I was going to ask about the
disbursal of funds, pledged funds in particular. As you know,
$283 million was pledged to the UNFCCC and, as we understand it
at the moment, only $133 million has been received and $32 million
disbursed. As you know the BBC today has reported that the 20
industrialised countries, including the UK—but obviously
you have made the point that the UK has more than paid its way
on this—have pledged $410 million per year from 2005 to
2008 under the Bonn Declaration. Nevertheless, Mr Ban-Ki Moon
is saying that there is an issue of trust here, to quote him.
There is the spectre that the poor countries might not sign up
to a new agreement unless they are convinced that the promises
will be kept and also that mechanisms are put in place to ensure
that other countries pay up like the UK is paying up. What can
we do to ensure that those mechanisms are put in place to make
sure everybody keeps to their commitments?
Mr Alexander: It rather echoes
our more general discussion about ODA commitments in the sense
that the first thing we need to do is to keep doing the right
thing, because it gives us the credibility to encourage others.
In that sense, it is not simply as Andrew said that we have spent
£120 million in the period 2005 to 2008, but it is likely
that that will more than double this in the following period to
2012. In that sense, the upward trajectory that Andrew described
is entirely accurate. It also makes the case for why, even at
this late hour ahead of Copenhagen, we want to see a legally binding
treaty. That is not guaranteed. It is far from guaranteed, but
I think it is understandable, given past experiences, that the
international community and poor countries in particular will
be looking for as great a degree of certainty as possible in terms
of the post-Copenhagen implementation of any agreement reached
in Copenhagen. You could say if we get a strong political commitment
emerging out of Copenhagen there will then be time to translate
the high level political commitment into the practical realities
of the governance structure involving UNFCCC or others to the
mechanism by which there will be a degree of accountability in
terms of what is anticipated in terms of national compacts with
plans being offered up, approved and funding being provided. We
have consciously taken a maximalist position in relation to Copenhagen
for some time in arguing not just for a fair, effective and ambitious
outcome, but a legally binding agreement to try and address exactly
the concerns that my sense is the Secretary General was giving
expression to when he quoted the particular figures in relation
to the Bonn agreement in 2001. Perhaps, with your indulgence Chairman,
I would just add one further point in relation to Bangladesh because
I know it is on the Committee's mind. When I was in Bangladesh,
not most recently as I was in September but on a previous visit—I
am sure you probably met Chris Austin, our head of office, out
there—after what was a very instructive and constructive
visit that I paid, the challenge I really set to Chris was to
say, "Listen if we had had this conversation 10 years ago
in Dar es Salaam, as DFID was beginning to establish policy leadership
with the use of the instrument of budget support, and we had in
part developed policy leadership globally around our expertise
in the use of budget support over those years, the opportunity
for Bangladesh is in many ways to be as instrumental as the equivalent
operation in Tanzania would have been 10 years previously, which
is it is easy with respect to the Secretary of State to sit at
committees like this and, as you have tried to do in the past,
say, `We mainstream our programming on climate change and everything
we do reflects the importance of climate change.'" We, like
every other bilateral aid agency, need to continue to work at
how to deliver that in as effective a way and with as much impact
as possible. In that sense, that is why the Chars livelihood programme
I think is an area of real focus for Chris and for his team, because
actually, as you know, Bangladesh is on the front line of dangerous
climate change. If we are going to prove those genuine interactions
between poverty reduction and climate change, it is going to happen
in a country like Bangladesh. In that sense, while you are right
to say there needs to be a constraint on the wholesale rebadging—and
I completely share both that sentiment and that commitment—I
do think that does not give us a pass from doing the important
and difficult policy innovation work of saying that if the Bangladesh
Government do come to us, as they have, with a revealed preference
and say, "Listen, we want help with climate change in our
endeavour to deal with poverty reduction", what expertise
can we bring to the table in terms of how that money can be spent
effectively. I think that is a challenge which we are embracing—and
we sought to reflect that in the White Paper—but actually
it is a degree of policy work that is not going to be exclusive
to DFID. There is going to be a whole range of international actors
working on these issues more in the years ahead.
Q131 John Battle: If I were the delegate
of Bangladesh at Copenhagen though, I might point out that with
my population of millions I make a 0.03% contribution to carbon
emissions, which is the lowest in the world per population. They
need more assistance rather than less.
Mr Alexander: That is in part
why, when I met Sheikh Hasina, the Prime Minister, I actively
encouraged her to travel to Copenhagen and make exactly the points
that need to be addressed.
Q132 Richard Burden: Staying on the
issue of climate change, could we just spend a little bit of time
looking at the role of the World Bank in this? Andrew, I think
you were mentioning a figure of £400 million. You mentioned
including the Environmental Transformation Fund. Could you perhaps
just start off by laying out for us how much of DFID expenditure
goes to the World Bank and also what that is in terms of proportion
disbursed via the World Bank on climate change?
Mr Alexander: $6.5 billion is
the figure globally around the CIFs, of which we are making a
contribution of £800 million. I would ask Andrew to speak
about that and then we can come back to the more general issue
in terms of funding for the Bank.
Q133 Richard Burden: As a proportion
of DFID expenditure, that would be roughly—?
Mr Steer: As a share of DFID spending
on climate change, less than half. I would have to get you the
detailed numbers but let us say, if £400 million was the
total, I would say 170/180 would be what we would put through
the Climate Investment Funds which are then implemented by regional
banks and the World Bank. They are implemented by governments
but they are channelled through these international financial
institutions.
Q134 Richard Burden: Looking to the
future, would you see that balance staying roughly constant or
would you see the World Bank moving much more to becoming the
primary mechanism for disbursing climate change funding? There
has been talk occasionally in the past of seeing the World Bank
as an environment bank. That is something we as a Committee would
have something to say on. How do you see the World Bank?
Mr Alexander: It is difficult
to give a definitive answer ahead of Copenhagen in the sense that
there are some who will go to Copenhagen arguing that there should
be a central role for the Bank. There are some who are deeply
concerned at the prospect of the Bank having a central role on
any climate financing post-Copenhagen. Our position, I hope, is
both pragmatic and reasonable, which is to say we recognise the
legitimacy of the UNFCCC process and the primacy of the UNFCCC
process in this whole area of policy making. Indeed, there were
some concerns expressed in relation to the strategic climate funds
which we were, I hope, genuinely able to allay on the basis of
misunderstandings as to what would be the role of the Bank and
ultimately what was our vision of the Bank's role in the future,
given the concerns that both NGOs and some governments have expressed
in terms of the environmental track record of the Bank in the
past. In terms of Copenhagen, which will be key in determining
this whole issue of new and additional funding for climate finance,
we are clear that we see the UNFCCC as being the lead. There are
some who argue that sitting underneath the authority of the UNFCCC
there should be a number of different windows through which money
could legitimately flow, whether that is the GEF,[5]
whether that is the adaptation fund, whether that is a fund held
by the World Bank. That I understand is very much going to be
part of the discussions around governance which, if we get far
enough in Copenhagen, will inevitably come onto the table but
at the moment are sitting some way behind the issue of emissions
and climate finance. In that sense, without having an answer to
that question as to how important a role will the World Bank have
in disbursing funds agreed under a compact arrangement with the
UNFCCC, I cannot give you a definitive answer. I can tell you
that, in terms of our bilateral programmes, as I reflected in
the conversation I had with Chris in Dhaka, we do not see this
as being that the multilaterals will deal with climate change
and we will simply deal with poverty reduction. We are saying
where there is a genuine interface, as in Nepal, as in Bangladesh,
we should be looking at how our programmes can yield the maximum
impact both in terms of climate impacts as well as on poverty
reduction.
Q135 Richard Burden: That is very helpful.
You mention there the worries that some would have about the World
Bank assuming too big a role in being a major mechanism for disbursement
of climate change funding. Key within those people who would be
uncertain when they express choices are the NGOs. They have provided
evidence to us saying that. During the visit to Bangladesh similar
worries were expressed then. How far do you think those worries
are valid? You say that, as far as the UK is concerned, you would
sit somewhere between doing it all through the World Bank and
those who would say that is a really dangerous way to go. How
far do you think the concerns of the NGOs go?
Mr Alexander: I have already mentioned
Peter Mandelson once in this discussion but I would probably keep
to the third way on this one. I am neither an apologist for the
Bank nor an unreconstructed critic who fails to recognise that
the Bank does some good things. Perhaps at the cost of popularity
with some of the NGOs, I have been unrelenting in challenging
everybody to produce evidence to substantiate their point of view—the
Bank, in their defence of their conduct—and as recently
as the annual meetings in Istanbul I was very forceful in my advocacy
of a process of reform within the Bank but, at the same time when
Bob Zoellick, the President of the Bank, was here in the UK I
know as well as meeting this Committee I afforded him the opportunity
to meet with a number of NGO policy leads and gave them the opportunity
to ask the searching questions. I think one of the difficulties
is that the Bank casts a long shadow and in that sense, whether
it is discussions around conditionality, forced privatisation
or Washington consensus, the risk is that at times legacy thinking
on all sides gets in the way of a constructive dialogue. That
is not to say that the Bank is beyond improvement. Quite the reverse.
On the issue of climate finance, I think there is some confusion
as to what could be the role of the Bank in any post-Copenhagen
world in the sense that it seems to me sensible to say, "If
we recognise the legitimacy and authority of the UNFCCC whereby
all countries are represented, there is a degree of equity which
many NGOs in many countries rightly want in terms of climate negotiations".
How do we discharge something as basic as an exchequer function
with really very significant sums of money? If we are talking
US$100 billion by 2020, that is, if I recollect, broadly comparable
to the total global aid flows at the moment. In that sense it
is not an unreasonable question to say if you have the legitimacy
of the UNFCCC, if they are the body that can authorise and accept
national plans being offered up as part of the national compact,
then given that they are very significant new and additional sources
of public money potentially flowing, we should look at whichever
institution can discharge that exchequer function and accounting
function in an effective way. For all of its critics amongst the
NGO community, the Bank has quite a strong claim to being a body
that is able to deliver robust systems of financial management.
Q136 Richard Burden: That is helpful.
One of the sources of unease—and there is a number of sources
of unease—that NGOs have about the World Bank would be the
balance between using concessionary loans around climate change
finance and money given in grants. Would you expect the proportions
that are there at the moment to stay roughly constant or is that
also "how long is a piece of string?"
Mr Alexander: His answer once
again risks making himself unpopular with the NGOs! One of my
frustrations in this conversation with the NGOs about this is
if they actually take the trouble to read the Bali Action Plan
it anticipated concessionary lending and, in that sense, I struggle
to see why that is a terrible bad thing done by the World Bank
when it was a UN process in Bali that actually raised the prospect
of concessionary funding being used in terms of climate finance.
I understand people have concerns, not least in terms of issues
of debt sustainability looking to the future, but on the other
hand I would rather get beyond an instinctive neuralgic approach
to lending and say what are the debt sustainability criteria that
are being applied, what did the Bali Action Plan agree with widespread
participation and, if those conditions are met, then I think it
is a conversation that countries are well able to participate
in themselves.
Mr Steer: All financial institutions,
whether it is the World Bank or a regional bank or any financial
institution, would be delighted to make grants. It is who provides
the money that decides whether it is a loan or whether it is a
grant, so to the extent in the post-Copenhagen agreement it is
grants that are provided, any financial institution that is chosen
will do as it is instructed. If the instruction is to pass it
on as grants it would be passed on as grants. The decision is
at a different point, if you like, than in the institution itself.
Q137 Richard Burden: Just a couple
more questions to finish off on this, specifically about the Environmental
Transformation Fund. Could you clarify how that fits with the
10% figure for climate; is it included within it or would it be
on top of it or what?
Mr Steer: Of course the Environmental
Transformation Fund is a three-year fund. It will disappear, if
you like. The 10% was a 10% sort of bound that would be something
that is on-going into the future. The idea was that you want to
do exactly as Mr Battle was saying and you want to make absolutely
sure that you are not siphoning off money that was going to provide
immunisations and so on for climate change, so the 10% is to bound
that. The 10% does not exist at the moment. Currently if somebody
were to ask us how much the British Government is providing for
climate change, we would include the ETF.
Q138 Richard Burden: A last question
on the ETF is in October you said it was probably a bit early
to evaluate the use of ETF spending but spending was progressing
well. How close are we to looking at the effectiveness of the
ETF and what measures will you be using to evaluate it?
Mr Alexander: Andrew lives and
breathes this stuff but let me add one or two points from my point
of view. Firstly, we can already judge the effectiveness of the
ETF in the sense we have taken £800 million and turned it
into $6.5 billion, in the sense that we have managed to persuade
others to come on board in exactly the kind of example of multilateralism
that I should probably have thought of earlier in saying that
if you are intelligent in how you use national resource you can
extend influence through the multilateral system. Secondly, we
are also at a stage now where countries are developing their own
national plans which the CIF will fund, and in that sense there
are quite advanced discussions underway at the moment. As I say,
Andrew, you are our resident expert on the CIF.
Mr Steer: We have now agreed a
results framework that lays out exactly what is expected and that
will be monitored. The first annual statement of achievements
will be out in December of this year, next month, so that will
be the first step. It would be possible shortly thereafter to
analyse the effectiveness mainly based on the process so far.
In terms of the quality of the delivery on the ground, that will
take another year or two before you start to really see that in
implementation.
Q139 Richard Burden: Would your results
framework encompass that?
Mr Steer: Definitely, yes, it
is central. Of the different funds, for example—
3 European Development Fund Back
4
UN Framework Convention on Climate Change Back
5
Global Environment Facility Back
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