Working version submitted for special issue of International Environmental Agreements: Politics, Law and Economics (June 2016) – please contact authors before citing
The fulfilment of wealthy countries’ commitment to mobilise $100 billion a year in climate finance by 2020 will hinge on maintaining domestic political support in contributor countries. Predictability in flows of climate finance is likely to enhance the overall stability of the climate finance system and the broader climate regime. However, at present it remains unclear how the 2020 target will be achieved and little is known about what drives fluctuations in support among contributor countries.
This paper explores domestic and international factors that may explain fluctuations in national support through a case study of Australia’s climate finance from 2007 to 2015. The analysis tracks two domestic factors that may influence support for climate finance—the government’s political orientation and public concern about climate change—and two international factors—commitment to multilateral agreements and international peer pressure.
We find that the government’s political orientation on domestic climate policy and aid explains some but not all variations in Australia’s stance on climate finance. International peer group effects have moderated the positions of two governments that were otherwise reluctant to embrace substantial action on climate change. Our analysis highlights that national support for prior commitments on climate finance remains vulnerable to political partisanship on climate change and aid, even if public support for both may remain solid. However, national policy reforms combined with improved multilateral oversight and more established replenishment cycles could bolster support in contributor countries and thereby strengthen the capacity of the climate finance system.
Keywords: climate finance; climate change; Green Climate Fund; fragmentation; peer group effects; Australia.
We are grateful for helpful feedback from participants at the Lund Climate Finance Workshop, the 2015 Australian Political Studies Association Conference, and the 2016 Australasian Aid Conference, where earlier versions of this paper were presented. In particular we appreciated written comments from Carola Betzold, Pieter Pauw, Jakob Skovgaard, and two anonymous reviewers. We also appreciate the generosity of former colleagues and other interviewees in shedding light on the issues addressed in our paper. This research was supported under the Australian Research Council’s Laureate Fellowship funding scheme (project number FL140100154).
Wealthy countries have pledged to provide “scaled up, new and additional, predictable and adequate funding” to assist developing countries’ efforts to curb greenhouse gas pollution and strengthen their resilience to the impacts of climate change (UNFCCC 2009: Paragraph 8). Adequacy and predictability in financing flows are crucial for enhancing the effectiveness, fairness and legitimacy of the climate finance system and the climate regime as a whole (see Introduction to special issue).3 However, low-income countries remain concerned about the volume and predictability of current financial flows, which will need to rise steeply in order to meet the collective target of mobilising US$100 billion a year in climate finance by 2020 (Westphal et al. 2015). Lack of predictability undermines trust in negotiations, which is crucial to ensure low-income countries’ participation in a global deal (Rübbelke 2011). Unpredictability also makes it difficult for recipient countries to develop long-term climate policies, which can reduce the effectiveness and sustainability of funded initiatives (Hudson and Mosley 2008).
While the climate finance target will be met from a range of public and private sources, funding provided by national governments is likely to constitute a significant share of the total (Bowen 2011: 1022). In the absence of legally enforceable and precise effort-sharing rules for finance under the United Nations Framework Convention on Climate Change (UNFCCC), decisions about how much finance each government provides remain largely within its budgetary discretion. As a result, the target’s fulfilment will hinge on maintaining political support in contributor countries.
Previous research has identified how the breadth of national discretion contributes to fragmentation and uncertainty in the climate finance system (Pickering et al. 2015b: 150-151). Despite the climate finance system’s dependence on national support, little is known about what influences the volume and predictability of funding in contributor countries. Clarifying these influences may provide valuable evidence to inform policy innovations aimed at improving the predictability of climate finance. More broadly, analysis in this area may help to build knowledge of factors that affect participation, compliance and institutional fragmentation in arrangements for financing global environmental protection, including the climate finance system.
In this article we seek to improve understanding of domestic and international influences on national support for climate finance. Our analysis tracks national support primarily in quantitative terms; that is, the amount or level of climate finance a country provides over a given time period. However, we also address qualitative aspects of support, including whether a country actively supports a coherent and ambitious climate finance system in UN negotiations. Given our interest in explaining variations in support over time, we focus on a case study of Australia, a country whose stance on climate finance has varied considerably over the past decade. Australia’s domestic climate policy has changed markedly along with shifts in the political orientation of successive governments. The current conservative government’s performance on domestic climate policy compares unfavourably with that of its predecessor and other countries (Burck et al. 2015). Yet, remarkably the government reversed its previous antagonistic stance towards the Green Climate Fund in 2014, pledging A$200 million for the Fund’s initial operations.4 At the following UN climate summit in Paris in 2015 the government made a broader financing pledge of at least $1 billion over five years (Turnbull 2015). These developments raise important questions about whether the government’s political orientation adequately explains variations in support for climate finance, or whether other factors are at play.
Section 2 sets out a literature review of domestic and international factors that may influence national support for climate finance. In Section 3 we outline the methodology for our case study. Section 4 tracks changes in support for climate finance under three successive Australian governments between 2007 and 2015. Section 5 then seeks to explain these changes with reference to two domestic factors that may influence support for climate finance—political orientation of government and public concern about climate change—and two international factors—commitment to multilateral agreements and international peer pressure.
We find that the political orientation of the government of the day explains many but not all variations in Australia’s stance on climate finance. We find that international factors have helped to moderate the positions of two centre-right governments that were otherwise reluctant to embrace substantial action on climate change. Section 6 then outlines policy implications arising from our findings and provides recommendations on how contributor countries and the UNFCCC could enhance the predictability of financing flows.
2. Political drivers of national support for climate finance
Given our interest in the adequacy and predictability of support, our analysis seeks to identify domestic and international factors that may influence fluctuations in support over time. In this section we select a set of plausible factors from the limited literature on climate finance, as well as the more extensive literature on determinants of climate, environment and development policies. All of the latter areas tend to have greater political prominence and budgetary expenditure than climate finance, and may thus be expected to exert some influence on a government’s approach to climate finance. Our analysis focuses on political factors, some of which may be more subject to short-term variation (e.g. political orientation of government) than others (e.g. prior international commitments). However, we acknowledge that national support for climate finance may vary according to economic factors such as a country’s wealth, fossil fuel reserves and vulnerability to climate change, which some analyses have found to influence cross-country variation on domestic climate policy (Harrison and Sundstrom 2007; Bailer and Weiler 2015).
2.1. Domestic factors
While some domestic political factors such as democratic quality may be reasonably stable over longer time periods, other factors may exhibit greater variation. Here we focus on two time-varying political factors: the orientation or ideology of the government, and public opinion on climate change.
2.1.1. Political orientation of government
Other things being equal, right-leaning political parties are less likely to support ambitious action on climate change than left-leaning political parties (Garmann 2014; Fielding et al. 2012). Reasons commonly cited for these attitudes include the greater aversion of right-leaning parties to regulatory interventions in markets and to change in existing economic and political systems as compared to left-leaning parties, which have traditionally supported environmental regulation more strongly (McCright and Dunlap 2011: 160; Neumayer 2004). Some studies find that right-leaning governments also tend to provide less Official Development Assistance (ODA, or aid) than left-leaning governments (Tingley 2010: 47), although overall the evidence on this point remains inconclusive (Fuchs et al. 2014: 177).
The contrast between the climate policies of right-leaning and left-leaning governments may be moderated by other domestic factors. In Europe, for example, substantial investment in measures to respond to climate change is more likely to attract bipartisan support than in more fossil-fuel dependent countries with adversarial political cultures such as the United States, Canada and Australia (Harrison and Sundstrom 2007: 7).
Importantly, a government’s stance on domestic climate policy may not necessarily carry over to its international stance. Halimanjaya and Papyrakis, for example, find that countries’ aid-funded financing of mitigation in low-income countries is negatively correlated with their domestic environmental expenditure (Halimanjaya and Papyrakis 2015: 15; see also Hicks et al. 2008: 177). Hicks et al. find that left-leaning governments tend to provide less environmental aid than right-leaning governments, suggesting a potential tension between local environmental and labour concerns on the one hand and global environmental objectives on the other (Hicks et al. 2008: 179).
2.1.2. Public concern
Public awareness and concern about climate change may influence the strength of a country’s overall climate policy, as may the political influence of civil society actors and private sector interests that support or oppose action on climate change (Brulle et al. 2012). Changes in public opinion may influence whether left- or right-wing parties win elections (Tranter 2013). While there is little literature about drivers of public support for climate finance, experimental evidence suggests that citizens’ support is strongly influenced by the level of support pledged by other countries (Gampfer et al. 2014). Public opinion about the efficiency of aid and its importance relative to domestic spending may also influence overall levels of aid (Chong and Gradstein 2008; Heinrich 2016).
2.2. International factors
International institutions and actors may influence domestic policies through a range of more or less explicit means (see Drezner 2003; Bernstein and Cashore 2012: 585-604). In the absence of legal or “hard” enforcement mechanisms under the UNFCCC, international cooperation on climate finance depends to a greater extent on political or “soft” mechanisms to promote compliance (Byrnes and Lawrence 2015). Drawing on a distinction made by Fankhauser et al. (2014), we explore two types of observable factors: (i) whether the country has adopted an international climate agreement (commitment effects); and (ii) whether the country experiences pressure from other countries to support climate finance (peer group effects).
2.2.1. Commitment effects
A country’s adoption of international commitments relating to climate change may encourage the enactment of domestic legislation on climate policy (Fankhauser et al. 2014). One study has found, for example, that ratification of the Kyoto Protocol is correlated with higher support for international mitigation finance (Halimanjaya and Papyrakis 2015: 15). Even if countries do not have to formally ratify political (as opposed to legal) decisions made under the UNFCCC, adoption of an international commitment may lead to the creation of institutional arrangements and corresponding vested interests in the implementation of the commitment, as well as generating domestic and international expectations that the commitment will be fulfilled (Fukuda-Parr and Hulme 2011).
2.2.2. Peer group effects
Regardless of whether a country has signed up to an international commitment, it may experience pressure to keep up with its peers or to fulfil what other countries view as its fair share of a global cooperative effort (Bernauer et al. 2010). In the context of climate finance peer pressure could be explicit, through diplomatic interventions by countries that have pledged larger shares of climate finance, or through demands made by potential recipients of finance or transnational civil society actors. Peer pressure could also be implicit if a country perceives its international credibility or reputation to be under threat (Finnemore and Sikkink 1998: 903). The literature on aid is inconclusive as to whether a donor country’s aid is positively affected by levels of aid provided by its peers, or negatively affected because donors may free-ride on the efforts of others (Fuchs et al. 2014: 176). The influence of peer pressure on an individual country may also vary according to the political orientation of the government (Elliott 2011).
Whereas some forms of peer group effects may be normative (by emphasising a country’s responsibility to act), others may be cognitive, as when other countries or international organisations generate new knowledge or information (for example, about the costs or benefits of climate finance) that may increase support for climate finance (Abbott and Snidal 2010: 325).
3. Case study methodology
Much of the literature cited so far consists of comparative econometric analysis of countries’ policies. While this literature provides important insights, our review also highlights two reasons why other modes of analysis are needed to explore possible determinants of support (Halimanjaya and Papyrakis 2015: 15-16). First, even if some determinants (such as peer group effects) have rough quantitative proxies (for example, volume of funding provided by peer countries) they may have other features that are better captured by qualitative analysis (for example, diplomatic interventions or events that induce reputational pressure). Second, even if the government’s political orientation does not substantially influence climate finance across a wide range of countries, it is possible that it plays a more important role in a subset of countries where climate change is a more polarising social issue. For these reasons, qualitative, single-case analysis over an extended time period may help to build a finer-grained picture of the dynamics of support in these countries, particularly through its ability to study different causal mechanisms and their interaction in ways not readily achievable in studies encompassing a large number of countries.
3.1. Case study selection
Our analysis focuses on the period from 2007 to 2015. We selected our starting date to coincide approximately with the recent rise in the volume and political prominence of climate finance internationally (see Introduction to special issue). Australia, as a “prime example of political partisanship in relation to climate change” (Fielding et al. 2012: 716), is a promising case for exploring political drivers of national support. Over the relevant period Australia has had three governments: a centre-right Coalition led by Prime Minister John Howard (1996-2007); a centre-left Labor government under Kevin Rudd and Julia Gillard (2007-2013); and a second centre-right Coalition under Tony Abbott and Malcolm Turnbull (2013-present). During this time, Australia’s levels of climate finance have fluctuated significantly. Even at its highest, Australia’s funding has comprised a small share (less than 2 %) of wealthy countries’ total climate finance (Standing Committee on Finance 2014: 42), so the decisions it makes on climate finance have limited global impact. However, Australia’s current government is widely viewed as lagging behind other wealthy countries in its stance on climate change (Burck et al. 2015: 6). As such, Australia represents a “most-likely” case (King et al. 1994: 209) for testing the argument that the government’s political orientation has a dominant role in explaining changes in climate finance in countries where political polarisation on climate change is high, such as the US and Canada. Conversely, the case of Australia presents a challenge for the view that international factors may substantially affect national support.
Our analysis explores the influence of the four domestic and international factors outlined in section 2—political orientation of government, public concern, commitment effects and peer group effects— on Australia’s support for climate finance. We provide evidence to test the hypothesis that right-leaning governments are less supportive of climate finance than left-leaning governments.
Specifically we investigate the possibility that variation in support for climate finance is influenced by party-specific variation on domestic climate and aid policy. At the same time, we explore the possibility that the overall relationship between the government’s political orientation and support for climate finance may be moderated or amplified by the other three factors we have identified.
Our research draws on a range of sources, including (i) qualitative documentary analysis, (ii) quantitative analysis of Australian government expenditure and public opinion, (iii) semi-structured interviews with policymakers and stakeholders familiar with Australia’s climate finance policies and programs; and (iv) our experience as officials in the Australian government’s overseas aid program working on climate finance initiatives from 2008-11 (Mitchell) and 2007-09 (Pickering). Over two phases (mid-2015 and early 2016) we conducted ten interviews with former senior and mid-level government officials, non-government organisations and former senior politicians (see Table 1 below). The interviews sought respondents’ views on explanations for key policy shifts and on options for improving predictability.
Table 1. Interviews conducted
|Category||Number of respondents (n=10)||References to individual respondents in main text|
|Officials – aid program5||3||1A, 4A, 6A|
|Officials – Department of Environment / Climate Change||2||3E, 5E|
|NGO representatives||3||2N, 7N, 8N|
4. Tracking Australia’s support for climate finance
4.1. Centre-right I (1996-2007): A late conversion?
For much of its time in office the centre-right government led by Prime Minister John Howard neglected climate change as a policy issue (Saul et al. 2012: 102). Along with the US, the government refused to ratify the Kyoto Protocol. However, the government showed signs of a late shift in policy, announcing in 2007 plans to launch an emissions trading scheme in 2012. Around the same time, the government’s climate finance increased (see Figure 1 below). There is little evidence of climate finance prior to 2007, other than limited aid-funded assistance which had commenced under previous centre-left governments.
The 2007-08 aid budget was the first to articulate specific climate change programming and included nearly $200 million in funding for climate change activities. The centrepiece of the new funding was the Global Initiative on Forests and Climate, which aimed to reduce greenhouse gas emissions from deforestation in developing countries (REDD+). In addition, a Climate Change Partnerships Initiative would support multilateral partnerships for mitigation and adaptation (Australia 2007: 11-12).
Figure 1: Australian Official Development Assistance and climate finance (2006-2016)6
4.2. Centre-left (2007-2013): “the great moral challenge of our generation”
In late 2007 the Australian Labor Party, led by Kevin Rudd, won a decisive election victory. During the election campaign Rudd described climate change as “the great moral challenge of our generation” (cited in Elliott 2011: 213). The issue was at the forefront of both the campaign and the Rudd government’s early priorities in office. The first act of the new government was to ratify the Kyoto Protocol. Rudd and his successor from mid-2010, Julia Gillard, subsequently embarked on a fraught mission to introduce a domestic carbon pricing mechanism, which came into effect in July 2012 in the face of intense resistance from the centre-right opposition (Chubb 2014).
The Labor government rapidly increased Australia’s climate finance commitments, announcing in its first budget (2008-09) a three-year $150 million International Climate Change Adaptation Initiative aiming “to meet high priority climate adaptation needs in vulnerable countries in our region” (Australia 2008: 20). The Initiative, which was later expanded to $328 million over five years, was Australia’s first major foray into international adaptation finance. This early scaling up of climate finance was further entrenched through Australia’s contribution of $599 million (approximately US$520 million) towards the UNFCCC’s US$30 billion fast-start finance effort.
When the fast-start period expired, Australia did not make a subsequent multi-year commitment. By 2012 it had also discontinued its major REDD+ investments (Davies 2015: 16). Nevertheless, the government maintained support for the nascent Green Climate Fund, with a senior official serving as co-chair of the Transitional Committee tasked with developing the Fund’s governance architecture and subsequently serving as inaugural co-chair of the Fund.
4.3. Centre-right II (2013-2015): “Socialism masquerading as environmentalism”
Domestic climate policy was once again a prominent feature of the 2013 federal election. A core election pledge made by the centre-right opposition, led by Tony Abbott, was to repeal Labor’s carbon pricing mechanism, which it proceeded to do on assuming office. While international climate change politics were not prominent in the election campaign, the opposition committed to cancel aid-funded climate change programming if elected (Morton 2010). Soon after entering office, the government decided not to send a minister to the UNFCCC conference in 2013 and its delegation was criticised for being obstructionist (Readfearn 2013). The government also distanced itself from the Green Climate Fund, with Prime Minister Abbott ruling out any Australian contribution and labelling the Fund “socialism masquerading as environmentalism” (cited in Hannam 2014). The government’s first budget (2014-15) contained only $3 million to “encourage the development of international policies and measures in relation to climate change through the pursuit of broad-based international climate action and agreement” (Australia 2014: 38).
By the end of 2014 the outlook for Australian engagement on international climate change had improved. The government sent two ministers to the UNFCCC conference, albeit with differing positions on Australia’s role in the UNFCCC (Bamsey and Rowley 2015: 3). In a reversal of its previous stance the Minister for Foreign Affairs, Julie Bishop, announced a $200 million, four-year contribution to the Green Climate Fund. Whereas the volume of climate finance had fallen in 2013-14, by 2014-15 it rebounded to a level slightly higher than under the Labor government (see Figure 1 above).
In September 2015, Tony Abbott was ousted as Prime Minister by Malcolm Turnbull. In previous ministerial roles Turnbull had supported stronger action on climate change, but as Prime Minister his ability to change tack was constrained by more conservative elements in the Coalition on whose support he relied to attain his new position (Hasham 2015). Subsequently, at the UN climate summit in Paris in late 2015, Turnbull announced a five-year, $1 billion climate finance pledge (Turnbull 2015). Despite this commitment, Australia’s share of the total amount pledged by developed countries has fallen from slightly under 2 % during the fast-start period to less than 1 % based on estimates for 2020 (Nakhooda et al. 2015). Shortly before the summit Australia was also successful in its bid to co-chair the Green Climate Fund’s Board once more (Bishop and Ciobo 2015).
5. Explaining shifts in Australia’s support
The preceding section has presented an account of changes in climate finance over three governments. In this section we seek to explain these changes based on the explanatory factors outlined in section 2.
5.1. Domestic factors
5.1.1. Political orientation of government
The account we have presented is largely consistent with the hypothesis that left-leaning governments support climate finance more strongly than right-leaning governments. The notion that support for climate finance is influenced by underlying party ideology rather than being a mere coincidence over our period of analysis is bolstered by the fact that variations in support for climate finance have largely mirrored party-specific variations on domestic climate policy and aid.
Even if climate finance was not a central feature of each party’s electoral platform, its stance on domestic climate policy set parameters that either broadened or narrowed the prospects for supporting international funding. One interview respondent characterised the drop in climate finance during the early period of the second centre-right government as “collateral damage” from an “ideological war” on domestic carbon pricing (interview 8N). This mirrored growing polarisation of climate change views along party lines in other similar polities during this period, particularly in the US and Canada (McCright and Dunlap 2011).
By and large both centre-right governments have been less supportive of aid than the centre-left government. However, both the first centre-right and centre-left governments were able to boost climate finance under a growing aid budget in favourable economic circumstances. By contrast, the second centre-right government presided over the largest cuts in the aid program’s history (Howes and Pryke 2014). The government’s primary justification for the cuts was a need to reduce a modest but growing budget deficit that it inherited after a long mining boom had ended (see Garnaut 2013). Many of the resulting cuts to climate finance initiatives are hard to disentangle from these broader cuts to the aid program.
Despite the correspondences we have identified between climate finance and the government’s political orientation, our analysis suggests some anomalies. First, the level of climate finance grew in the final year of the first centre-right government after a decade of insubstantial funding. While this coincided with the government’s softening stance on domestic climate policy (and growing public concern, which we discuss next), it occurred two years after its pledge to double the aid budget. Second, the centre-left government’s support for climate finance wavered after the fast-start period even as the aid budget continued to rise. A third anomaly is the second centre-right government’s climate finance pledges despite falling aid levels and its overall reticence on climate policy.
5.1.2. Public concern
Figure 2 below shows a compilation of several surveys on levels of Australian public concern about climate change. Burgmann and Baer observe a “seismic shift” in attitudes to climate change from the mid-2000s (Burgmann and Baer 2012: 68-69). They argue that this shift was fuelled by a range of factors, including the long-running drought in rural Australia, and media coverage of prominent international advocates for action on climate change such as Al Gore and Nicholas Stern. Public concern over climate change declined substantially between 2008 and 2012 in the wake of the global economic crisis, the perceived failure of the Copenhagen climate summit, the growing influence of organised climate scepticism, and the centre-right opposition’s effective anti-carbon tax campaign (Burgmann and Baer 2012: 89). Public concern began to increase again steadily from 2012 as scientific evidence of climatic risks continued to accumulate (Climate Institute 2015: 5).
Figure 2: Percentage of Australians expressing concern over climate change (2006-2015)7
The figures show only a limited correlation between public support and climate finance levels. Commitments continued to increase through the fast-start period even as public support declined from 2009 to 2012, yet they dropped as public support rose again. Most respondents considered that public opinion about climate finance had little direct influence on levels of support (interviews 2N, 4A 5E, 8N, 10P). In general, public debates on climate change have centred on how Australia conducts its domestic policy rather than its international finance (interviews 7N, 8N). Thus the influence of public opinion was largely indirect, as where the initial climate finance boost from 2007 may have ridden a rising tide of public concern about climate change generally (interviews 4A, 9P). Policy-makers were often more concerned about potential negative impacts of public attention on climate finance, for example through perceptions that international funding is a distraction from domestic priorities (interviews 2N, 10P) or an ineffective use of public funds, as where Australia scaled back its REDD+ programs in Indonesia following negative media coverage (interviews 2N, 6A; see also Davies 2015: 39-40). Thus, while it is tempting to seek to resolve the third anomaly—the second centre-right government’s Green Climate Fund and Paris pledges—by pointing to resurgent public concern, this factor is unlikely to provide a sufficient explanation in isolation.
5.2. International factors
5.2.1. Commitment effects
Interviews identified several ways in which Australia’s international commitments influenced its approach to climate finance. First, the fact that wealthy countries did not make a collective pledge for the 2013-2015 period once the fast-start finance commitment expired meant that Australia had little incentive to issue its own multi-year pledge for that period (interviews 2N, 6A). As a result, Australia’s level of climate finance began to decline even before the centre-left government departed from office.
A second, contrasting influence concerns the second centre-right government’s stance on climate finance. While that government presided over a temporary decline in climate finance, it remained bound (politically if not legally) by the previous government’s financing commitments under the Copenhagen Accord. The fact that Australia had made a prior commitment strengthened the hand of those within government who argued in favour of maintaining a significant level of funding (interview 7N). International undertakings outside the climate regime have also raised the transparency and reputational costs of attempts to cut climate finance dramatically. Thus, under its obligations as a member of the Organisation for Economic Co-operation and Development’s (OECD’s) Development Assistance Committee, the government continues to report on the Rio marker standards for categorising items of Official Development Assistance (ODA) expenditure as climate and/or environment-related (see Hall, this issue; Roberts and Weikmans, this issue).
Finally, the fact that the centre-left government had invested heavily—albeit primarily through expertise rather than direct financing—in the creation of the Green Climate Fund meant that Australia had shown a degree of commitment to the Fund’s future. Interviews suggested that this increased the reputational costs incurred by the centre-right government while it sought to distance itself from the Fund (interviews 2N, 3E).
5.2.2. Peer group effects
Figure 3 below compares Australia’s climate finance trajectory with that of other wealthy countries. It is evident from the figure that climate finance began to rise before 2009 but saw a significant boost following the Copenhagen Accord, which was concluded later that year.8
Figure 3: Climate finance as a percentage of official development assistance: Australia compared to OECD average9
The first centre-right government’s modest conversion on climate change represented something of a departure from its close alignment with the US on many foreign policy issues (Saul et al. 2012). However, Australia’s shift was consistent with that taking place among many other high-income countries. One external source of the government’s late enthusiasm for climate finance was the Stern Review commissioned by the UK government (Stern 2007: ix), which was highly influential in advancing a mainstream economic case for rapid mitigation and in boosting policy-makers’ interest in reducing emissions from deforestation in developing countries (interview 6A).
Peer group effects also helped to strengthen the centre-left government’s resolve to support climate finance. Prime Minister Rudd, a former career diplomat, was keenly aware of the diplomatic ramifications of global cooperation on climate change and made a significant personal investment in reaching a deal at Copenhagen (Beeson and McDonald 2013: 334). Officials reported that Australia based its share of the fast-start finance effort largely on estimates of what peer countries were intending to pledge or had pledged to comparable funds (interviews 1A, 2N, 4A; see also Pickering et al. 2015b: 155).
Perhaps most starkly, international pressure provides the most plausible explanation for why the second centre-right government reversed its position on the Green Climate Fund. Prior to its pledge Australia was becoming increasingly isolated in the UNFCCC negotiations and in other key international forums, including the G20 Summit hosted by Australia in 2014, where the government was repeatedly embarrassed by the US, China and others over its stance on climate change (Taylor 2014a). The fact that Australia had been the first country to dismantle a national carbon pricing policy exposed it further to international reproach. By the time of the UNFCCC meeting in late 2014 most developed countries had made pledges, including the US and Australia’s closest ally in the negotiations, Canada (Bamsey and Rowley 2015: 19).
Foreign Affairs Minister Julie Bishop, recognising the difficulties that Australia’s recalcitrant stance was posing for its ability to engage effectively in the UNFCCC, lobbied successfully for the pledge despite resistance from other ministers (interviews 2N, 3E, 7N). Commenting on the pledge announcement, Abbott said that, due to developments over recent months, it was now appropriate for Australia to make “a modest, prudent and proportional commitment” in the interests of being a “good international citizen” (cited in Taylor 2014b). Australia’s pledge aimed to reposition it inside the negotiating “tent” rather than outside by keeping pace with other wealthy countries (interviews 2N, 3E, 5E, 7N, 8N). One respondent observed that “Australia did what it had to do to avoid being isolated, no more no less” (interview 5E). While this strategy involved reversing a strongly articulated position, it posed fewer political problems domestically than reinstating the carbon pricing mechanism it had recently abolished.
A final aspect of international pressure arises from developing countries in Australia’s region, particularly Pacific island countries that are highly vulnerable to climate change (Barnett and Campbell 2010). Aid remains an important part of Australia’s overall diplomatic relationships with Pacific island countries, which governments of both persuasions have sought to maintain with varying degrees of success (Elliott 2011: 217-219). Although Australia’s overall aid program has been declining despite the concerns of recipient countries, demand for climate finance may have helped to protect some ongoing engagement in this area (interviews 2N, 8N).
6. Policy implications
Based on the preceding analysis and evidence from interviews about the range of feasible policy responses, we highlight three areas where national governments and the UNFCCC could strengthen the predictability of climate finance while maintaining democratic legitimacy: improved funding projections; mainstreaming climate change into development assistance while tapping alternative sources of finance; and greater reliance on multilateral funding channels.
6.1. Better projections of financing flows
By playing a stronger role in measurement, reporting and verification of financial flows, the UNFCCC—particularly through its Standing Committee on Finance—could help to reduce fragmentation and unpredictability resulting from the patchwork of national approaches to climate finance (compare van Asselt and Zelli 2014: 147). Under the Paris Agreement, developed countries have agreed to communicate their “projected levels of public financial resources” for developing countries every two years (UNFCCC 2015, Article 9.5). For these projections to be effective, contributors will need to agree on reporting standards that provide a picture of how much funding is projected globally as well as for each recipient country. Stronger multilateral oversight of climate finance would in turn provide greater scope for citizens, civil society organisations and other countries to hold national governments to account for their performance (Pickering et al. 2015a; Roberts and Weikmans, this issue).
Regardless of whether and when multilateral standards are agreed, governments could issue multi-year forward projections for climate finance, as previous Australian governments of both political persuasions have done for aid. These projections should be issued in conjunction with a policy statement outlining Australia’s strategy for its international climate investments. Any projections could not prevent democratically elected governments from departing from the positions of their predecessors (interview 5E, 9P). Nevertheless, an incoming government would find that abandoning or substantially scaling down these projections would incur costs to its international and domestic credibility. Further investment in consistent use of robust methodologies to track climate-related development assistance may add greater transparency and may deter against precipitous drops from one year to the next.
6.2. Mainstreaming and diversification
Given that different sources of climate finance are prone to different kinds of unpredictability, we propose a twofold approach that may help to hedge these risks. First, mainstreaming climate-related finance within ongoing development and diplomatic partnerships (as with Australia’s relationships with Pacific island countries) may be a relatively low-profile way of protecting climate investments when governments remain rhetorically opposed to ambitious action on climate change. Mainstreaming may be a pragmatic means of “climate-proofing” aid investments against potential losses associated with heightened temperatures and disaster risks (Ayers and Huq 2009; Hall, this issue). For Australia, effective mainstreaming will require restoring expertise in climate programming that has been substantially depleted in the wake of recent aid cuts (interview 8N). Mainstreaming alone would not, however, resolve recipient countries’ concerns about the diversion of funds from other development priorities. Second, therefore, governments should intensify efforts to raise public funds from sources outside aid budgets, such as through revenue from pricing carbon or dismantling fossil fuel subsidies (Jotzo et al. 2011).
6.3. Multilateral funding channels
National governments could boost their investments in multilateral funds such as the Green Climate Fund and development banks that support clean energy and adaptation (Delina, this issue). The fact that multilateral replenishments typically involve multi-year pledges may enhance longer-term predictability (interview 9P; see also Heinrich 2016: 75). In addition, the precedent value accorded to countries’ previous “burden shares” increases the visibility and reputational costs of attempts by governments to contribute less than they have in the past (interview 4A; Pickering et al. 2015a), as illustrated by the second centre-right government’s pledge to the Global Environment Facility’s sixth replenishment in 2014 (Davies 2014). Australia’s pledge was largely in line with its share of previous replenishments despite the government’s reluctance to commit to other climate-related expenditure at the time. In order to justify sustained support on the part of their contributors, fledgling institutions such as the Green Climate Fund will need to build a track record of transparent and effective implementation (interview 10P).
Through the case study of Australia we have illuminated a number of factors that may explain variations in support for climate finance over time, including political orientation of government, public opinion, commitment effects and peer group effects. Further research could usefully complement the present study, in particular by adopting a comparative framework for qualitative analysis and by encompassing a wider range of political factors, including the role of national and transnational actors (see Skovgaard, this issue).
The factors that we have identified to explain policy change give cause both for concern and for hope about the future of international cooperation on climate finance. On the one hand, national support for climate finance remains vulnerable to political partisanship on climate change and aid, even if public support for both may remain solid. Formal oversight arrangements under the UNFCCC are yet to play a robust role in reducing this vulnerability. Moreover, the challenge of maintaining national support for climate finance may increase as the magnitude of the required funding increases.
On the other hand, despite the persistence of many obstacles to progress on addressing climate change, the fact that the strength of these obstacles may vary over time gives reason to hope that further progress can be made (Beeson and McDonald 2013: 345). In particular, the example of Australia’s policy reversal on the Green Climate Fund illustrates how international pressure may influence an otherwise reluctant government. This provides qualified support for the idea that national policy reforms, combined with improved multilateral oversight and more established replenishment cycles, could bolster support in contributor countries. Greater predictability should in turn strengthen the capacity of the climate finance system to deliver long-term strategies for mitigation and adaptation in low-income countries.
- Dr Jonathan Pickering is a Postdoctoral Fellow at the Centre for Deliberative Democracy and Global Governance, University of Canberra. Email Jonathan.
- Paul Mitchell is a PhD Candidate at the School of Global, Urban and Social Studies, RMIT University. Email Paul.
- Currencies are expressed in Australian dollars (A$) unless otherwise indicated.
- Adequacy may be understood as the extent to which funding flows reflect prior international commitments or developing countries’ financing needs (Hof et al. 2011). We define predictability as whether “funding is known and secure over a multi-year funding cycle” (Bird and Brown 2010: 7).
- In 2013, the Australian Agency for International Development (AusAID) was integrated into the department of Foreign Affairs and Trade (DFAT). Current DFAT officials were unavailable for interview.
- Figures for Official Development Assistance (ODA)/Gross National Income (G6I) ratios drawn from Australian government aid budget statements, 2006-07 to 2015-16 (the Australian financial year commences on 1 July). Climate finance figures are from the following sources: (a) 2006-07 and 2007-08: Australia 2009; (b) 2008-09 and 2009-10: government aid budget statements; (c) 2010-11 to 2014-15: Australia’s biennial reports to the UNFCCC (2013 and 2015); (d) 2015-16: Turnbull 2015. Precise comparisons across time are complicated by the fact that Australia’s method of reporting on climate finance changed after 2012-13. From 2013-14 onwards, reporting was based on the OECD’s Rio Markers for classifying aid as climate-related.
- Data sources and questions asked: Australian Bureau of Statistics: “concerned about climate change” (Australian Bureau of Statistics 2012); Climate Institute: “percentage of Australians who want their nation to be a leader in climate solutions” (Climate Institute 2015); CSIRO: “climate change is happening and human induced” (Leviston et al. 2014); Lowy Institute: “Global warming is a serious and pressing problem. We should begin taking steps now even if this involves significant costs” (Oliver 2015).
- The spike in 2010 is largely due to frontloaded expenditure of fast-start finance pledges by Japan and France.
- Figure shows climate finance to ODA ratio for (i) Australia and (ii) OECD Development Assistance Committee members excluding Australia. Climate finance data based on activities bearing Rio marker addressing climate change mitigation and/or adaptation as their principal objective (OECD 2015). Due to data limitations over this time period, there may be some double-counting where the same activity is marked as targeting both adaptation and mitigation. The OECD began tracking the adaptation Rio marker in 2010. Australia’s low Rio marker figure for 2008 compared to budget data used for Figure 1 appears to be due to a reporting error.
Abbott, K. W., & Snidal, D. (2010). International regulation without international government: Improving IO performance through orchestration. Review of International Organizations, 5(3), 315-344, doi:10.1007/s11558-010-9092-3.
Australia (2007). Australia’s overseas aid program 2007-08: Statement by the Honourable Alexander Downer MP, Minister for Foreign Affairs.
Australia (2008). Budget: Australia’s international development assistance program 2008-09.
Australia (2009). Environment annual thematic performance report 2007-08. Canberra: AusAID.
Australia (2014). Portfolio budget statements 2014-15: Foreign Affairs and Trade portfolio.
Australian Bureau of Statistics (2012). Environmental views and behaviour, 2011-12.
Ayers, J. M., & Huq, S. (2009). Supporting adaptation to climate change: What role for Official Development Assistance? Development Policy Review, 27(6), 675-692, doi:10.1111/j.1467-7679.2009.00465.x.
Bamsey, H., & Rowley, K. (2015). Australia and climate change negotiations: At the table, or on the menu? Sydney: Lowy Institute for International Affairs. http://www.lowyinstitute.org/files/australia-and-climate-change-negotiations_1.pdf. Access 14 April 2016.
Barnett, J., & Campbell, J. (2010). Climate change and small island states: Power, knowledge, and the South Pacific. London: Earthscan.
Beeson, M., & McDonald, M. (2013). The politics of climate change in Australia. Australian Journal of Politics & History, 59(3), 331-348, doi:10.1111/ajph.12019.
Bernauer, T., Kalbhenn, A., Koubi, V., & Spilker, G. (2010). A comparison of international and domestic sources of global governance dynamics. British Journal of Political Science, 40(3), 509-538.
Bernstein, S., & Cashore, B. (2012). Complex global governance and domestic policies: Four pathways of influence. International Affairs, 88(3), 585-604, doi:10.1111/j.1468-2346.2012.01090.x.
Bird, N., & Brown, J. (2010). International climate finance: Principles for European support to developing countries. European Development Co-operation to 2020 Working paper No. 6. Bonn: European Association of Development Research and Training Institutes (EADI). http://www.edc2020.eu/fileadmin/publications/EDC_2020_Working_Paper_No_6.pdf . Accessed 14 April 2016.
Bishop, J., & Ciobo, S. (2015). Australia to lead Green Climate Fund board. Media release, 6 November 2015.
Bowen, A. (2011). Raising climate ﬁnance to support developing country action: Some economic considerations. Climate Policy, 11(3), 1020-1036, doi:10.1080/14693062.2011.582388.
Brulle, R., Carmichael, J., & Jenkins, J. C. (2012). Shifting public opinion on climate change: An empirical assessment of factors influencing concern over climate change in the U.S., 2002-2010. Climatic Change, 114(2), 169-188, doi:10.1007/s10584-012-0403-y.
Burck, J., Marten, F., & Bals, C. (2015). The climate change performance index: Results 2015. Bonn: Germanwatch. http://germanwatch.org/en/download/10407.pdf. Accessed 14 April 2016.
Burgmann, V., & Baer, H. (2012). Climate politics and the climate movement in Australia. Melbourne: Melbourne University Press.
Byrnes, R., & Lawrence, P. (2015). Can “soft law” solve “hard problems”? Justice, legal form and the Durban-mandated climate negotiations. University of Tasmania Law Review, 34(1), 34-67.
Chong, A., & Gradstein, M. (2008). What determines foreign aid? The donors’ perspective. Journal of Development Economics, 87(1), 1-13, doi:10.1016/j.jdeveco.2007.08.001.
Chubb, P. (2014). Power failure: The inside story of climate politics under Rudd and Gillard. Collingwood: Black Inc.
Climate Institute (2015). Climate of the nation 2015: Australian attitudes on climate change. Sydney: Climate Institute. http://www.climateinstitute.org.au/verve/_resources/Climate_of_the_Nation_web_final.pdf. Accessed 14 April 2016.
Davies, R. (2014). A nice backflip on climate change financing: Australian funding for the Global Environment Facility. DevPolicy Blog, 5 June 2014, http://devpolicy.org/a-nice-backflip-on-climate-change-financing-australian-funding-for-the-global-environment-facility-20140605/ . Accessed 14 April 2016.
Davies, R. (2015). The Indonesia-Australia Forest Carbon Partnership: A murder mystery. CGD Policy Paper 60. Washington, D.C.: Center for Global Development. http://www.cgdev.org/publication/indonesia-australia-forest-carbon-partnership-murder-mystery. Accessed 14 April 2016.
Drezner, D. W. (Ed.). (2003). Locating the proper authorities: The interaction of domestic and international institutions. Ann Arbor: University of Michigan Press.
Elliott, L. (2011). Plus ça change? The Coalition, Labor and the challenges of environmental foreign policy. In J. Cotton, & J. Ravenhill (Eds.), Middle power dreaming: Australia in world affairs 2006-2010 (pp. 208-223). Melbourne: Oxford University Press.
Fankhauser, S., Gennaioli, C., & Collins, M. (2014). Domestic dynamics and international influence: What explains the passage of climate change legislation? Grantham Research Institute on Climate Change and the Environment Working Paper No. 156. London: Grantham Research Institute on Climate Change and the Environment. http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/05/Wp156-Domestic-dynamics-and-international-influence-what-explains-the-passage-of-climate-change-legislation.pdf. Accessed 14 April 2016.
Fielding, K. S., Head, B. W., Laffan, W., Western, M., & Hoegh-Guldberg, O. (2012). Australian politicians’ beliefs about climate change: Political partisanship and political ideology. Environmental Politics, 21(5), 712-733, doi:10.1080/09644016.2012.698887.
Finnemore, M., & Sikkink, K. (1998). International norm dynamics and political change. International Organization, 52(4), 887-917.
Fuchs, A., Dreher, A., & Nunnenkamp, P. (2014). Determinants of donor generosity: A survey of the aid budget literature. World Development, 56, 172-199, doi:http://dx.doi.org/10.1016/j.worlddev.2013.09.004.
Fukuda-Parr, S., & Hulme, D. (2011). International norm dynamics and the “end of poverty”: Understanding the millennium development goals. Global Governance, 17(1), 17-36.
Gampfer, R., Bernauer, T., & Kachi, A. (2014). Obtaining public support for north-south climate funding: Evidence from conjoint experiments in donor countries. Global Environmental Change, 29, 118-126, doi:http://dx.doi.org/10.1016/j.gloenvcha.2014.08.006.
Garmann, S. (2014). Do government ideology and fragmentation matter for reducing CO2-emissions? Empirical evidence from OECD countries. Ecological Economics, 105, 1-10, doi:http://dx.doi.org/10.1016/j.ecolecon.2014.05.011.
Garnaut, R. (2013). Dog days: Australia after the boom. Collingwood: Black Inc.
Halimanjaya, A., & Papyrakis, E. (2015). Donor characteristics and the allocation of aid to climate mitigation finance. Climate Change Economics, 6(3), 1-25, doi:10.1142/S2010007815500141.
Hannam, P. (2014). Red faces for Tony Abbott on Green Climate Fund. Sydney Morning Herald, (17 November 2014). http://www.smh.com.au/environment/climate-change/red-faces-for-tony-abbott-on-green-climate-fund-20141117-11oca7.html. Accessed 14 April 2016.
Harrison, K., & Sundstrom, L. M. (2007). The comparative politics of climate change. Global Environmental Politics, 7(4), 1-18, doi:10.1162/glep.2007.7.4.1.
Hasham, N. (2015). Heat turned up on Malcolm Turnbull’s domestic climate policies as world pledges to act. Sydney Morning Herald (14 December 2015). http://www.smh.com.au/federal-politics/political-news/heat-turned-up-on-malcolm-turnbulls-domestic-climate-policies-as-world-pledges-to-act-20151213-glmbv1.html. Accessed 14 April 2016.
Heinrich, T., Kobayashi, Y., & Bryant, K. A. (2016). Public opinion and foreign aid cuts in economic crises. World Development, 77, 66-79, doi:http://dx.doi.org/10.1016/j.worlddev.2015.08.005.
Hicks, R. L., Parks, B. C., Roberts, J. T., & Tierney, M. J. (2008). Greening aid: Understanding the environmental impact of development assistance. Oxford: Oxford University Press.
Hof, A. F., den Elzen, M. G. J., & Mendoza Beltran, A. (2011). Predictability, equitability and adequacy of post-2012 international climate financing proposals. Environmental Science & Policy, 14(6), 615-627, doi:10.1016/j.envsci.2011.05.006.
Howes, S., & Pryke, J. (2014). Biggest aid cuts ever produce our least generous aid budget ever. DevPolicy Blog, 15 December 2014, http://devpolicy.org/biggest-aid-cuts-ever-produce-our-least-generous-aid-budget-ever-20141215-2/. Accessed 14 April 2016.
Hudson, J., & Mosley, P. (2008). Aid volatility, policy and development. World Development, 36(10), 2082-2102, doi:http://dx.doi.org/10.1016/j.worlddev.2007.02.018.
Jotzo, F., Pickering, J., & Wood, P. J. (2011). Fulfilling Australia’s international climate finance commitments: Which sources of financing are promising and how much could they raise? Centre for Climate Economics and Policy (CCEP) Working Paper 1115. Canberra: The Australian National University. http://ideas.repec.org/p/een/ccepwp/1115.html. Accessed 14 April 2016.
King, G., Keohane, R. O., & Verba, S. (1994). Designing social inquiry: Scientific inference in qualitative research. Princeton: Princeton University Press.
Leviston, Z., Price, J., Malkin, S., & McCrea, R. (2014). Fourth annual survey of Australian attitudes to climate change: Interim report. Perth: CSIRO. https://publications.csiro.au/rpr/download?pid=csiro:EP1312080&dsid=DS2. Accessed 14 April 2016.
McCright, A. M., & Dunlap, R. E. (2011). The politicization of climate change and polarization in the American public’s views of global warming, 2001–2010. Sociological Quarterly, 52(2), 155-194, doi:10.1111/j.1533-8525.2011.01198.x.
Morton, A. (2010). Coalition growing cooler towards climate policy. Sydney Morning Herald (21 July 2010). http://www.smh.com.au/federal-politics/political-opinion/coalition-growing-cooler-towards-climate-policy-20100720-10jlc.html. Accessed 14 April 2016.
Nakhooda, S., Watson, C., & Barnard, S. (2015). Climate finance pledges at COP21. https://www.odi.org/opinion/10196-infographic-climate-finance-pledges-cop21-paris. Accessed 14 April 2016.
Neumayer, E. (2004). The environment, left-wing political orientation and ecological economics. Ecological Economics, 51(3–4), 167-175, doi:http://dx.doi.org/10.1016/j.ecolecon.2004.06.006.
OECD (2015). OECD.Stat. http://stats.oecd.org. Accessed 14 April 2016.
Oliver, A. (2015). The Lowy Institute poll 2015. Sydney: Lowy Institute for International Policy. http://www.lowyinstitute.org/files/final_2015_lowy_institute_poll.pdf. Accessed 14 April 2016.
Pickering, J., Jotzo, F., & Wood, P. J. (2015a). Sharing the global climate finance effort fairly with limited coordination. Global Environmental Politics, 15(4), 39-62.
Pickering, J., Skovgaard, J., Kim, S., Roberts, J. T., Rossati, D., Stadelmann, M., & Reich, H. (2015b). Acting on climate finance pledges: Inter-agency dynamics and relationships with aid in contributor states. World Development, 68, 149-162, doi:doi:10.1016/j.worlddev.2014.10.033.
Readfearn, G. (2013). How rich countries dodged the climate change blame game in Warsaw. The Guardian (25 November 2013). http://www.theguardian.com/environment/planet-oz/2013/nov/25/climate-change-warsaw-rich-countries-blame-paris-deal. Accessed 14 April 2016.
Rübbelke, D. T. G. (2011). International support of climate change policies in developing countries: Strategic, moral and fairness aspects. Ecological Economics, 70(8), 1470-1480, doi:10.1016/j.ecolecon.2011.03.007.
Saul, B., Sherwood, S., McAdam, J., Stephens, T., & Slezak, J. (2012). Climate change and Australia: Warming to the global challenge. Annandale: The Federation Press.
Standing Committee on Finance (2014). 2014 biennial assessment and overview of climate finance flows report. Bonn: UNFCCC.
Stern, N. (2007). The economics of climate change: The Stern review. Cambridge, UK; New York: Cambridge University Press.
Taylor, L. (2014a). G20 leaders force Australia to back down on climate change language. The Guardian (16 November 2014). http://www.theguardian.com/environment/2014/nov/16/g20-leaders-australia-back-down-climate-change-language. Accessed 14 April 2016.
Taylor, L. (2014b). Green Climate Fund will get $200m from Australia after Tony Abbott’s about-turn. The Guardian (10 December 2014). http://www.theguardian.com/environment/2014/dec/10/green-climate-fund-200m-australia-tony-abbott-about-turn. Accessed 14 April 2016.
Tingley, D. (2010). Donors and domestic politics: Political influences on foreign aid effort. The Quarterly Review of Economics and Finance, 50(1), 40-49, doi:10.1016/j.qref.2009.10.003.
Tranter, B. (2013). The great divide: Political candidate and voter polarisation over global warming in Australia. Australian Journal of Politics & History, 59(3), 397-413, doi:10.1111/ajph.12023.
Turnbull, M. (2015). 2015 United Nations climate change conference. https://www.pm.gov.au/media/2015-11-30/2015-united-nations-climate-change-conference. Accessed 14 April 2016.
UNFCCC (1992). United Nations Framework Convention on Climate Change.
UNFCCC (2009). Copenhagen Accord. Document number FCCC/CP/2009/11/Add.1.
UNFCCC (2015). Adoption of the Paris Agreement. Document number FCCC/CP/2015/L.9/Rev.1.
van Asselt, H., & Zelli, F. (2014). Connect the dots: Managing the fragmentation of global climate governance. Environmental Economics and Policy Studies, 16(2), 137-155, doi:http://dx.doi.org/10.1007/s10018-013-0060-z.
Westphal, M., Ballesteros, A., Morgan, J., & Canfin, P. (2015). Getting to $100 billion: Climate finance scenarios and projections to 2020. Washington, D.C.: World Resources Institute. https://www.wri.org/sites/default/files/getting-to-100-billion-final.pdf. Accessed 14 April 2016.