Report card on climate change aid: developed countries not transparent

Emerging economies cannot make emissions reduction conditional to financial support says the US

Published on:

27 Sep 2011, 10:22 am

Developed countries are not transparent about their plans to help developing countries financially deal with climate change. The transparency quotient is weak, revealed a recent report by the International Institute for Environment and Development (IIED). The institute studied fast-start climate finance reports, which developed countries submitted to the UN in May this year.

The fast-start climate finance involves US $30 billion, which the developed countries pledged to give to the developing countries during the Copenhagen Conference of Parties meeting in 2009. This was supposed to be “new and additional” funding with “balanced” allocation for climate change mitigation and adaptation measures during 2010-12. Last year, in the Cancun climate meet, the pledge got reaffirmed and the UN invited developed countries to report progress on the finance by May 2011. IIED studied these reports and ranked them on their transparency quotient.

Norway, which has pledged US $710 million towards fast-start climate finance, emerged with the most transparent reports. But it scored only 52 per cent, followed by Japan with 50 per cent and the European Union, with 48 per cent. New Zealand scored the worst—26 per cent (see 'Study's methods and results').

Study's method and results

The International Institute for Environment and Development study evaluated the transparency of the May reports on 25 criteria in three sets. One, is the summary information adequate and clear? Two, are the methods for measuring and allocating climate finance clearly defined? Three, are data adequately presented for individual projects?

For each criterion, researchers identified best practices and scored contributor countries according to how well they adhered to this and awarded marks of 0,0.5 or 1 to represent no adherence, some adherence and most or all adherence. Each country’s overall score is the percentage of the total count across all 25 criteria.

Norway emerged with the most transparent reports on fast-start climate finance. But, it scored only 52 per cent, followed by Japan with 50 per cent and the European Union, with 48 per cent. New Zealand scored the worst—26 per cent. Lichtenstein and Switzerland emerged as the leaders in transparency when it came to reporting baselines and allocation formulas.

Four of the big players—Australia, the EU, Japan and the US—provided no information at all about how they determined whether funding was new and additional. The EU, Japan and Switzerland emerged as the scorers for providing information on project data. At the other end, Liechtenstein and the US, scored low but Australia, Canada, Iceland and New Zealand got zeroes for every criterion because they failed to provide a detailed account of any of their fast-start climate finance projects.

Source: Scoring fast-start climate finance: leaders and laggards in transparency; International Institute of Environment and Development briefing paper

Several worrying issues emerged. One, it was not clear from the reports of Australia, the EU, Japan and the US whether the funding was new and additional and whether the pledges are separate from their official development assistance, or development aid, commitments. The problem is parties to the United Nations Framework Convention on Climate Change (UNFCCC) have not been able to agree on any specific definition of “additionality” that can be applied uniformly to the pledges.

Monitoring is difficult

Another area of ambiguity is how the investments will be channeled or what financial instruments would be used. Countries are channeling investments through a mix of multilateral, bilateral and public-private institutions and financial instruments range from loans to grants to insurance.

Confusion also exists because countries use different terms to refer to the disbursement of fast-start funds. For example, the EU states have “mobilised” US $3.34 billion of fast-start climate finance in 2010 as part of its overall commitment to provide US $10.3 billion from 2010 to 2012. Like Norway, Australia too has “allocated” the money. Australia in its report claimed in 2010 it allocated one-third of the fast-start package of US $599 million. But Australia, Canada, Iceland and New Zealand did not provide details of any of their fast-start climate finance projects.

Liechtenstein in its report was vague. It said it would allocate CHF 700,000 (US $772,626) to the “International Humanitarian Cooperation and Development” in 2011 and 2012 to foster “climate projects, which are politically supported by the respective authorities.”

It is difficult to track and monitor countries’ pledges for the reasons mentioned above. The implication of this is clear. Unless developing countries know how much money to expect, when and for what, they cannot plan their efforts to address and respond to climate change. Therefore it is imperative that the countries must be transparent about how they will fulfill their climate finance promises.

Another report, by the millennium development goal gap task force, also recommended that fast-start and long-term finance commitments for climate change and mitigation and adaptation must be delivered to developing countries on time. The question is will they deliver?

Conditions attached

The results of the IIED study are not surprising. Several issues will have to be resolved before a final deal at the forthcoming Durban Climate Conference of Parties in November this year is agreed upon. At a meeting of the Major Economies Forum in New York earlier this month, Todd Stern, US chief climate change negotiator, said that certain developing countries were seeking “escape hatches” that would let them back-off their emission reduction targets if industrialized countries failed to deliver financial support.

On the upcoming Durban meet in November this year, Stern added that progress could be made on channeling billions of dollars to poor countries. But the US would not consider a deal “genuinely binding” if it excludes the biggest emerging economies, like China, India and Brazil or if those countries’ commitments were conditional upon financial support from developed countries, Stern said at a media briefing after the meeting of the forum, which is a gathering of 17 of the world’s biggest greenhouse gas emitters from the developed and developing world.

The road to Durban might be full of further disagreements between countries, but the question is will climate change wait for a breakthrough in negotiations.