Over the last two weeks in Cancún, some Latin American countries have shown openness to exploring private funding sources and market mechanisms to address climate change, while a small number of others have staked an ideological opposition to market-based climate solutions with little interest in compromise.
Those that are more flexible in their approach will find themselves better positioned to move ahead with climate initiatives, and will speed along a global greenhouse gas agreement as well.
The magnitude of funding that is necessary will exceed the capacity of wealthier governments (especially in a time of large deficits) to assist developing nations. Therefore, those countries that don’t accept a broader set of tools for financing mitigation and adaptation measures will have inadequate access to financial resources.
Even before coming to Cancún, the Bolivarian Alliance for the Americas (a group that includes Bolivia, Cuba, Ecuador, Nicaragua, Honduras, and Venezuela) issued a joint statement saying that market mechanisms were not acceptable. Bolivian officials have even declared that capitalism is the root cause of the current climate crisis. At a press conference yesterday, Bolivian President Evo Morales went so far as to say: “Before we said country or death, now we say planet or death. It will be the death of capitalism or the death of the planet. If we try to look for middle ground, we deceive the people of the world.”
Other Latin American countries have taken a different approach, realizing that in this complex situation, pragmatism may be a wiser course. They see that using markets is a good way for getting investments in low emission technologies in their countries, contributing to the overall effort against climate change. They have already had positive results through the use of market mechanisms established in the Kyoto Protocol, such as the Clean Development Mechanism.
Setting up market mechanisms would allow these countries to start building carbon markets that would energize private investment, enabling new investments in clean energy and low carbon technologies.
Open to the possibility that assistance from developed nations would include private funds, countries like Chile and Mexico are exploring the use of market mechanisms to undertake their own emissions reductions and major organizations like the World Bank have taken notice. The Bank’s new program, "Partnership for Market Readiness," will assist developing countries in creating, and then managing the market-based systems.
Without giving up their legitimate national interests, Latin American leaders must set aside ideological rhetoric and instead commit to finding solutions to the severe risks that climate change poses. A pragmatic approach, rather than winner-take-all posturing, is the only way forward to this greater goal.
*Gonzalo Moyano is a guest blogger to AQ Online. He is a fellow at the Global Climate Finance Project and a fellow at the Institute for Policy Integrity at NYU School of Law. He was at the UN Climate Change Conference in Cancún, Mexico.