Japanese Government Offers US$15 bil. in Climate Aid for Developing Countries

Japan's Climate Pledge

Japan's government has offered to contribute US$15 billion in aid to developing countries to help them cope with climate change until 2012. The funds are contingent upon a successful political accord being achieved at Copenhagen, defined as a fair and effective framework with participation of all major emitting countries and agreement of their ambitious targets. Around US$11 billion of the total money will come from public finances while private sources will contribute US$4 billion. The US$15-billion figure exceeded previous expectations that Japan would contribute US$10 billion and is the biggest financial offer yet for climate change, exceeding the European Union's 7.2 billion euro (US$10.63 billion) in climate change finances pledged last week for the three years from 2010 to 2012.

Japan's pledge ties into the so-called "Hatoyama Initiative" named after Japan's prime minister Yukio Hatoyama, which comprises four main principles to help developing nations to mitigate and adapt to global warming. The first principle of the initiative is that Japan and other developed countries must contribute substantial public and private financing to help developing countries tackle climate change. The US$15 billion is a direct reflection of this policy aim and is likely to be injected into a "fast-track" fund to help developing countries adapt to climate change, building upon Hatoyama's US$425-million climate change loan and grant agreement with Indonesia that was finalised last week (see Indonesia: 11 December 2009: Indonesia to Receive US$425-mil. Climate-Change Loan from Japan). As stated under Hatoyama's second principle, Japan supports a transparent international system established under the auspices of the UN climate change regime, to facilitate information on bilateral and multilateral financing. Debates over what shape international architecture to manage fund transfers will take are ongoing. The latest proposal is for a single climate finance board representing developed and developing countries to administer funds in support of global climate change policies and projects, which appears to be an adoption of the Mexico, United Kingdom, and Norway proposal from last week, although Japan is likely to press for a role for the World Bank alongside this. Hatoyama's third principle states that Japan wants to develop rules that will encourage international recognition of developing countries' carbon emissions reductions, in particular those achieved through financial assistance in a measurable, reportable, and verifiable manner, in line with the broad and common framework for differentiated action towards the same end. This reflects Japan's concern to track the impact of its money pledged to tackle climate change to ensure it is being monitored and spent effectively. Much progress still needs to be made on how to verify carbon emissions cuts and on Hatoyama's fourth principle, which is that Japan should help establish a framework to promote the transfer of low-carbon technologies. This reflects Japan's concern to safeguard intellectual property rights (IPRs), which are extremely important given that Japanese companies are leading providers of technology in energy efficiency.

Outlook and Implications