Fight over finance: where's the money, ask developing countries

Developed countries shy away from promising more money to developing nations from next year till 2020 for mitigation and adaptation measures

By Arnab Pratim Dutta
Published: Monday 03 December 2012

Climate finance will be on the top of the minds of negotiators as the UN conference on climate change at Doha enters the second week on December 3. In the first seven days of the conference, the developed countries shied away from promising more money from next year until 2020 to developing countries to undertake mitigation and adaptation measures. The US $30 billion fast-start funding which started in 2010 ends this year and the next batch of funding, which is still under deliberation, begins only in 2020.

The developing countries, collectively called G77+China, want an interim fund of $60 billion by 2015. They do not want to go back from Doha without a commitment from the rich nations on this fund. Although differences exist among the developing countries on other issues, they stand untied on finance. In the last informal negotiations on November 30, the Alliance of Small Island Nations (AOSIS) said that finance was an issue that could either make or break the climate change negotiations.

Demand for interim funds

The G77+China wants this money to be routed to them in two ways. One, direct assistance; two, through an agency or a body which will facilitate the transfers. The proposal states “that the main sources of funding by developed country Parties will be public sources, with supplementary financing from other sources, including consideration of alternative sources, subject to measurement, reporting and verification procedures of support as may be agreed upon.”

Africa wants review
The African Group invited developed countries to submit information on their fast start fund spendings by March 2013. It said the details must have the following information:
  • How these resources are considered to be new and additional and which baseline is used to measure additionality to existing official development assistance and financial obligations to financing institutions, and international organizations
  • The basis adopted for sharing the collective commitment of US$30 billion over a three-year period, from 2010 to 2012
  • The nature of financing provided under fast-start finance, including the amount of loans provided, if any, and the sustainability and predictability of the funding provided
  • Channels for provision of fast-start finance
  • How the balanced allocation between adaptation and mitigation was achieved
  • Criteria used for prioritization of funding for adaptation for the most vulnerable countries, such as ÔÇ¿the LDCs, SIDS and Africa
  • Ways in which developing country were enabled to access these resources
There have been numerous problems with the fast-start fund, the main one being the issue of transparency. The developing countries have repeatedly complained that the developed countries have never cared to share, information on how much of these funds are additional to the official development assistance that is already provided to poor countries for poverty eradication.

The African group made a proposal on December 1, which asks that a thorough review be done on the fast-start finance (see 'Africa wants review').

Won't part with more money: Australia, Canada

The rich countries claim that they have exceeded their due share of the fast-start finance by providing US $33 billion. Canada and Australia have said that will not provide any money starting next year while the EU and the US have said they will continue to give money, but the amounts and the means of transferring the money have not been disclosed. G77+China wants a complete roadmap on how this finance will be delivered and the source of the money to be decided before the conference ends.

Finance falls in the domain of the Ad hoc Working Group on Long-Term Cooperative Action (AWG-LCA). The LCA track of negotiations, the developed countries—especially the EU and the US—say, does not require further negotiations and should be closed in Doha. The coming week will see a major showdown between developed and the developing over the unresolved issues in the LCA track of negotiations.

One of the biggest concerns in finance for the developing countries is the Green Climate Fund that is suppose to get under way from 2020. The developed countries want to know the sourcing of this fund. Philippines, which had made the finance proposal on behalf of G77+China, said during the informal meet that although the Green Climate Fund has been established, only outlay for the running this has been created. Money for the developing countries is still elusive.






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