Saudi Arabia, Venezuela and China among countries that reject calls for Paris deal to move financial flows away from carbon intensive forms of fuel

By Ed King in Paris

Trillions of dollars of coal, oil and gas investments in the next decades hang on two sentences in a proposed UN climate deal under discussion in Paris.

One details how the countries should direct finance flows towards “low emission and climate resilient” economies and societies. The other calls on governments to reduce support for “high emission investments”.

These are references to fossil fuel energy and sit in a part of the text focused on finance, expected to form the bedrock of a long term binding deal set to be signed off on Friday.

Both are under fierce attack, the first sentence from Saudi Arabia and Venezuela, which fear immediate impacts on their oil-heavy economies, and the second from China and India, which still have large coal investment plans.

Two developing country sources told Climate Home that Beijing and Delhi asked for the offending line related to investments to be deleted on Tuesday, fearing it would compromise their economic growth.

Ministers from Germany and Gabon have been asked to broker a compromise by the French hosts, who asked for proposals by 1730 on Tuesday.

Agreement on a radical financial shift to backing clean energy over other sources is “crucial” for success said Thomas Spencer, head of climate diplomacy at the Paris-based IDDRI think tank.

China is the world’s top greenhouse gas emitter and largest user of coal for power. India is the world’s fourth highest carbon polluter and plans to double coal production by 2020.

Lead envoy Xie Zhenhua told a press conference today heavy smogs as a result of coal use are forcing the government to redirect investments.

“China needs to transform economic growth patterns to adjust our energy mix,” he said.

But developing countries with heavy carbon footprints are pushing back on moves to stipulate what kind of energy they can use, or efforts to use the term ‘decarbonisation’ as part of a 2050 target.

And the 134-strong G77 and China group appears united on demands for countries rated in 1992 as ‘developed’ to provide levels of climate funding well above US$100 billion a year beyond 2020.

“The politics are toxic,” said one negotiator from South East Asia, speaking off the record.

An Indian analysis distributed to delegates at the Paris climate summit claims the true flow of annual climate funds is closer to $1 billion a year than the $62 billion advertised by the OECD, a club of wealthy nations.

The OECD study – launched in October and widely cited by EU and US officials as evidence of action – has “serious problems” and is “deeply flawed,” said India’s ministry of finance in a withering review.

“We need to establish more credible, accurate and verifiable numbers,” it added, arguing that as it included overseas development aid and figures from multilateral development banks it could not be trusted.

South Africa environment chief Edna Molewa also dismissed the OECD report, saying it wildly overestimated flows. “Double counting cannot be accounted for,” she said.

A spike in loans classed as climate finance were in danger of “plunging us into a debt hole,” warned Seychelles climate ambassador Ronnie Jumeau.

“We need to urge developed countries to implement their obligations,” said China’s top negotiator Xie Zhenhua.

But in a sign of rising tensions New Zealand, Australia and Switzerland proposed on Monday there should be no $100 billion number in a Paris agreement, arguing it would fast become outdated in a deal primed to last for decades.

It’s a position supported by the US, which is having troubling getting Congress approval for an initial $3 billion offer to the Green Climate Fund, and wants monies after 2020 to come from a wider base of donors.

One developed country delegation head pointed out today that six of the 10 countries with the world’s highest per capita GDPs are still classed as developing, including Saudi Arabia, Qatar and Singapore.

With 80 hours until a deal is set to be signed off, it’s as much a debate over language as long term investment trends.

The AILAC coalition of Latin American countries has suggested developed countries lead in “providing” finance while all contribute to “mobilisation”.

Xie said China could accept a “voluntary” expansion of the donor base provided the $100 billion target was met.

Lead US envoy Todd Stern warned any new finance post 2020 had to be tied to tougher carbon cuts and emissions reporting from developing countries.

“There’s going to need to be meaningful provisions on transparency and mitigation,” he said.