“The Squeezed Middle: Why Latin America Matters for Climate

Politics”Dr. Mónica Araya

Senior Associate E3G (United Kingdom)Climate Finance Advisor (Government of Costa Rica)

Brown University Conference April 8, 2011

Five Ideas

Why Latin America matters in context of:1. Climate negotiations2. Climate finance3. Low-carbon pathways

Emerging drivers of climate politics :4. Vulnerability 5. China

1. Never before, has Latin America been so impactful in the international

climate negotiations

Cancun took many by surprise

COP16 put the train back on track

• The Mexican Diplomacy as the ‘surprise’ engineers of consensus

• Christiana Figueres (Costa Rica) brought a fresh, ‘yes, we can’ impetus

• Cartagena Dialogue was most constructive voice in the COP – behind scenes

The Power of Dialogue

• Cartagena Dialogue as “safe space” for negotiators of 30 plus countries; testing comfort zones– Beyond North-versus- South

• Meetings in Colombia, Maldives, Costa Rica, Malawi – Samoa & Chile forthcoming 2011

• “Block the blockers” – Counterbalance to polarizing countries

2. Latin America is “squeezed” in the middle; the region is insufficiently large and powerful (Asia)

and insufficiently poor (Africa) for donors

Traditionally, the region has not been a priority of US & EU climate finance

Climate finance flows

BASIC&

Asia

Mid-income economies

(Latin America)

Small Islands&

Africa

“SCALE /ABATEMENT”

Focus of private carbon finance

“POVERTY / VULNERABILITY”

Focus of adaptation finance / aid

Focus?

“REPLICABILITY” Models to avoid switch to high

carbon

Example: The CDM concentrated 85% of flows in 5 countries, mostly China

Source: UNFCCC Stats (Fall 2010)

3. Despite the “squeeze” (and partly because of it), Latin middle-income economies are showing unprecedented

willingness to experiment with low-carbon growth models

3. Mid-income economies are becoming much-needed “laboratories”

• The low-carbon transformation needs champions:– Experimentation (build prototypes) – Replication (test, draw lessons, adjust) – Scaling up (from project, sector to economy-wide)

• Chile, Colombia, Costa Rica, Peru, Mexico are adopting low-carbon most pragmatically. – …BRICS and BASIC: “No conditionality!”– …Africa: “Aid first!”– …Islands: “Right to exist!”

Precedent: LatAm’s experimenting with low-carbon loans

• The imperative: “Getting infrastructure right”

• Mexico’s and Colombia’s low-carbon investment plans as new prototypes

• Providing key lessons for low-carbon lending for mitigation (World Bank (CIF) & IADB)– Realization that

1) Carbon markets are not delivering the scale of finance needed

2) Aid is insufficient to de-carbonize infrastructure

REVISITING “FUNDAMENTALS” (Part 1)

Latin America’s infrastructure debate and climate agenda are merging for the first time (politically) – creating opportunity for low-carbon, resilient pathways…

4. Concerns in LatAm about climate vulnerability are creating new politics

Source: www.metoffice.gov.uk

REVISITING “FUNDAMENTALS” (Part 2)

But stronger economic ties with China may pull the region in the opposite direction… creating new incentives for carbonization

5. …China’s role in Latin America’s economy and infrastructure is on the rise

• Gone are 1980s/90s when LatAm looked to the US as the core economic partner…

• …Today, China is boosting growth in Latin America – Bought $44bn worth of the region’s

exports (2009), 10x more than in 2000

• High-carbon sectors are likely to become stronger & oppose climate ambition

Source: See Kevin Gallagher’s Latin America must see China as a trade threat, as well as a partner (FT, Nov 2010)

In conclusion:

- Middle income economies in Latin America matter in climate politics because of their new role in the negotiations (constructive middle ground) and their low-carbon experimentation on the ground (demonstrating feasibility)...

- But this momentum must be locked-in by creating larger low-carbon coalitions inside these countries .It is therefore critical to increase the engagement of local business (low-carbon investments) and local governments (low-carbon, resilient cities) at the very least.

THANKS

Monica.araya@e3g.org