World finance ministers to convene at Bali meet

Urip Hudiono, The Jakarta Post, Jakarta

Finance ministers from around the world will hold a two-day meeting in conjunction with the international conference on climate change next month in Bali to discuss economic aspects related to the issue, including its financial impacts and policies to address it.

According to Finance Minister Sri Mulyani Indrawati, the ministers will get together on Dec. 10 and 11 in the hope of paving the way for developing and developed countries to agree on a "common objective on the financial issues of climate change", thereby leading to more appropriate policies for sustainable development and support for the global carbon trading market.

"This (common objective) is important because many developing countries are uneasy about the issue of climate change. For many countries still preoccupied with growing their economies with limited resources, climate change is just an additional obstacle to their development," Mulyani said.

"We therefore expect the meeting to provide a bridge between the needs of developing countries and the interests of developed countries."

Mulyani explained that the meeting of finance ministers would kick off by assessing the economic magnitude and consequences of climate change, and the economic benefits of tackling it now rather than later on.

In an assessment released earlier this year, the United Nation's (UN) Intergovernmental Panel on Climate Change said that efforts to keep global carbon dioxide (CO2) levels at a sustainable 445-535 parts per million (ppm) would only cost 3 percent of global gross domestic product (GDP), and only reduce average annual GDP growth rates by 0.12 percent.

The report comes ahead of the annual conference of the members of the UN Convention on Climate Change (UNFCCC), which will take place in Bali from Dec. 3 to 14. This is expected to initiate talks on drafting a successor to the Kyoto Protocol, which attempts to reduce emissions levels through its clean development mechanism (CDM) regime.

Given the likely economic magnitude of climate change, Mulyani said she hoped the meeting of finance ministers would explore policy instruments to address the issue.

These could include fiscal and other incentives for industry, more financing schemes for the carbon trading market, mitigation and adaptation funds for dealing with the impacts of climate change, and sustainable development policies that would create growth in an environmentally friendly manner.

"Conserving forests could, for example, also be treated as a development policy as it creates employment for the planting and maintenance of the trees," Mulyani said.

During a recent carbon trading forum in Singapore, market players said they expected the Bali meeting to commence work on the drafting of a post-Kyoto Protocol agreement that would set out further emission reduction policies and projects eligible for trading, including forest conversation. The carbon trading market grew out of the Kyoto Protocol's CDM efforts, and allows developed countries to invest in environmentally friendly projects in developing countries, which can then be set off against their own requirements to reduce emissions.

While hopes are high that the finance ministers' meeting will address the economics of climate change, Mulyani admitted she would be happy enough if it marked the beginning of a process leading to a "meeting of minds."

The meeting will present its conclusions during the Bali conference's closing summit on Dec. 14.

Eighteen finance ministers, 8 deputy finance ministers and 8 heads of global financial institutions, out of a total of 39 invited officials, have so far confirmed their attendance.