Public Private Partnership in the post-Kyoto climate regime: Unpacking the silent dilemma

By Joanes Atela

Unpacking Public Private Partnership (PPP)

Public-private partnership (PPP) has become a central driver of climate change actions- both in negotiations and implementation. Whether on clean energy, sustainable forest management or even climate smart agriculture, PPP has been emphasised as the panacea of hope for a climate resilient world. Amidst this hope, however, policy makers, donors and scientists alike have paid little attention to the diagnosis of this concept and whether the form in which it is currently framed carry any premise for the desired climate resilient world. From a layman’s perspective, the PPP Knowledge Lab defines PPP as “a long-term contract between a private party and a government entity, for providing a public asset or service…’’ The definition entails two key components: contractual/institutional and resources/monetary resources for delivering the contract. In most policy and scientific debates, the latter part of the concept ‘monetary resources’ appears to have taken precedence perhaps because it provides ‘direct fix’’ to climate problems and in the words of a Bonn-based  expert I interviewed during my PhD research ‘PPP critically avails resources for climate action because without money, you can do nothing’.

The monetary perspective of PPP has been strengthened by several multilateral and development agencies. The World Bank report on PPP and many leading global studies on financing climate actions, for instance explicitly diagnose PPP with a monetary lens. Terms like ‘enhancing climate change investments’, ‘up-front capital’, ‘project financing’, ‘support for scarce public funds or even monetary value for sustainable ecosystems’ dominate these reports.

Even within the auspices of the UNFCCC, the monetary perspective of PPP remains important- it provides a means of generating and legitimizing market based funds. These funds have been the main driving force for climate actions whether in the Kyoto regimes such as the clean development mechanisms (CDM) or post-Kyoto regimes such as the reduced emissions from avoided deforestation and forest degradation (REDD). While the monetary framing of PPP resonates with the urgency required for climate action, a major concern remains in the fact that it appears to silence other perspectives of PPP and particularly the contractual/institutional elements of synergies, equity and legitimacy of PPP actions.  This posits an implicit but serious dilemma for the post-Kyoto climate regime and particularly in the context of shared responsibility but different interests of the Ps. 

The shared responsibility but different interests

Both public i.e. States and the private actors play central roles in climate negotiations.  They are recognised as legitimate modes of governance eligible to prescribe rules within negotiations and operationalize outcomes.  Mode of governance implies an organised and recognised institutional body within which actors’ activities and interests are embedded. In this, the  State is the legal representative of a country to the global climate negotiations and is expected to provide expertise, resources, legal framework and enforcement mechanisms for implementing the resulting rules within their jurisdiction.

As aforementioned, the private sector including multinational businesses play a key role in mobilising resources required to operationalize negotiations’ outcomes and particularly to complement public resources allocated through the State. This means the role of the State as a public actor and the private sector are expected to be complementary in line with the key pillars of PPP: enabling institutions and resources to deliver outcomes. However, varying interests between the State and the private sector complicates the institutional/contractual conditions needed to achieve this complementarity. Ideally, the ultimate interest of the private sector and as embedded in their mode of governance is profit generation for individual firms and in this, measures that ensure investment security are critical. On the contrary, States have a public mandate of ensuring economic development and equitable resource allocation that could improve the wellbeing of its constituents while enhancing their international climate commitments. Behind these diverging mandates and interests, lies some institutional conflicts that have remained silent in climate change debates around PPP but with potential serious implications for a post-Kyoto climate regime.

The dilemma

The diverging institutional mandates of the States and the private sector coupled with the monetary framing of PPP in policy and practice are major sources of institutional dilemma that revolves around resource power and equity in climate actions.

First, an implicit power struggle over the control of climate funds is a real concern. To date there hasn’t been adequate efforts directed towards building the necessary responsibility and financial sharing framework between the State and the private sector in a manner that facilitates their complementary roles. On one hand, the private sector expect to mobilize and control climate resources for profit generation while on the other hand, the UNFCCC has bestowed the implementation and coordination mandates of most post-Kyoto climate regimes such as INDCs, REDD+ and even the GCF to the State. Most developing countries especially those of Africa e.g. Kenya, Congo, Tanzania therefore expect to control associated funds and use these for economic development. This expected economic transformation through post-Kyoto climate funds however does not match the reality on the ground where multinational private sector players dominate over 80% of climate investments and financial flows. In this, the State is left to control a meagre share of climate funds i.e. assessment fees, licensing fees while the actual financial flows from these investments go to individual multinational firms sometimes with little public benefits within the countries where they are implemented. In fact in some countries such as Kenya, evidence shows the State only controls less than 5% of some of the ongoing post-Kyoto climate investments while the rest remain under the control of foreign multinational companies.  

The monetary framing of PPP also appear to exacerbate inequalities especially when the institutional perspective is silenced. In this, profit seeking investors use their resources to steer investments away from poor communities in a bid to avoid high investments costs. Again this represents a major institutional gap where States still lack the necessary systems to confront the monetary prowess of the private sector and ensure equitable distribution of climate investments.  It is therefore no surprise that over 80% of CDM investments whether on energy or land use were located in relatively developed economies where investment certainty was assured while low income economies- especially those of Africa experiencing the most impacts of climate change - received less than 5% of these investments.

How does this dilemma manifest in practice?

This institutional dilemma manifests in a number of empirical cases especially in Africa. In the Kasigau REDD+ initiative – a private sector venture operating in the Coastal part of Kenya, there has been a strong perception among State actors that the project is a private entity operating with its own funds and the State wouldn’t want to interfere. This has weakened the project’s legitimacy among State departments especially those outside the forestry department thereby creating serious uncertainties for the project’s sustainability. The State- through its Lands Ministry plans to subdivide group ranches in the project are into individualized pieces yet it is through these group ranches that the project has achieved apparent success by building on collective communal commitment. In Tanzania, the Mt Kilimanjaro renewable energy and forest management projects present a case where the State is struggling to wrestle carbon initiatives from other players by changing forest ownership laws in preparation for the expected REDD+ funds. The scenario has degenerated into local resistance and investments uncertainties in these forest areas.  The New Forest Company implementing CDM projects in the Central Forest Reserves of Kiboga District in Uganda presents a case of private sector resource dominance. In this case, the company applies monetary prowess to bend forest management rules to the detriment of local communities and with little indulgence of the State. 

Moving forward

The arguments above presents a reality check for post-Kyoto regimes anchored on PPP. Ideally the concept of PPP as framed currently in policy and practice, remains under capture by monetary perspective mostly embedded in investment returns. This has significantly compromised critical institutional considerations such as equity and rights as desired by article 3.4 of the UNFCCC text. The silencing of the institutional perspective of PPP over the years remains detrimental for post-Kyoto outcomes and especially when these outcomes are confronted with national and local realities. It is therefore time for policy makers, scientists and development agencies to broaden their view of PPP not only as a monetary tool but also as a space for institutional synergies, equity and justice in climate change actions. This is critical if post-Kyoto climate regimes are to mitigate failures witnessed in the Kyoto regime.