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Climate: Meet your financial obligations, developed countries told


An interesting debate on finance took place at the Bangkok climate talks as delegations aired their views on what they considered the significant issues on financial resources that had to be tackled in combating climate in the context of the follow-up to the Bali climate conference.
 
As developing countries stressed that there had been little progress on developed countries’ obligations to provide financial resources, the United `States told them to “get real” since most of the money must come from the private sector.
 
China replied that the private sector is not a party to the UN Convention on Climate, whereas governments of developed countries are.  And as to the point made by many developed countries that the world had changed (and thus developing countries that progressed should no longer be treated like developing countries), China said that if a person borrowed some money, he still had to repay the loan even if the one who lent it had become a little better off.
 
These exchanges were made on 3 April in the plenary discussion on finance of the Ad Hoc Working Group on Long-Term Cooperative Action (AWG-LCA) under the UNFCCC.
 
The G-77 and China strongly called on developed countries to deliver their financial obligations under the Convention, instead of undermining the financial mechanisms that have been adopted by the Parties such as the Adaptation Fund.  This was strongly supported by the small island developing countries and the least-developed countries.
The Philippines, speaking on behalf of G-77 and China, reiterated issues on adequacy and accessibility of the funding under the Convention to address climate change by developing countries, namely the Special Climate Fund (SCF) and the Least Developed Countries Fund (LDCF) which both have the Global Environment Facility (GEF) as the operating entity, and the recently established Adaptation Fund (AF). 
 
It said that these existing funds are not enough, and will not be enough in the near term, to meet the financial requirements of developing countries to achieve the objectives of the Convention, especially in the area of adaptation. It reiterated that the developed countries have so far failed to deliver their commitments in finance and technology transfer to assist developing countries to contribute in fulfilling the objectives of the Convention.
 
G-77 and China stressed that the issue is not so much the availability of financial resources, but the fact that the available funds are not being brought under the aegis of the Convention. It raised the serious concerns of developing countries on the establishment of bilateral and multilateral funds on climate change recently which appear to undermine the financial mechanisms under the Convention and the possibilities of bringing in more funds for these mechanisms. 
 
It singled out the World Bank’s recent announcement of the creation of its Climate Investment Fund comprised of a Clean Technology Fund with an estimated allocation of around $5-10 billion and a Strategic Climate Fund which includes a Pilot Program for Climate Resilience with an estimated initial fund of $500 million (See article in SUNS dated 4 April). 
 
The G-77 and China envisaged the establishment of an umbrella fund under the Convention that will bring together the existing financial mechanisms, including possible additional funding mechanisms such as a technology fund and a risk insurance fund.
 
Groups representing the small island developing states and the LDCs also lamented the serious inadequacy of funding for adaptation measures which are considered urgent for vulnerable countries.
 
Barbados, speaking on behalf of the Alliance of Small Island Developing States (AOSIS), said that while most adaptation technologies are already available and are inexpensive, that is not the case for most coastal adaptation technologies which are extremely expensive and are in the hands of developed countries. 
 
It proposed that the Convention set up a Greenhouse Gas fund to complement the existing adaptation fund under the Kyoto Protocol. The new fund can obtain funds on the basis of the “polluters-pay principle” by linking the greenhouse gas emission of Annex 1 countries to the amount of their contribution to the funding for adaptation. 
 
It also cited some proposals for mobilizing finance through market-based measures such as the auctioning of emission allowances, extending positive incentives for forest conservation and concessionary financing for renewable energy projects. 
 
The Maldives (representing LDCs) and Bangladesh also stressed the need to scale up the current funding available within the Convention.  Maldives stressed that the existing funding is inadequate compared to adaptation needs.  Bangladesh also stressed that IPRs should not block technology transfer.
South Africa reiterated that funding for climate change should be sustainable and holistic, not piecemeal and not in a multitude of institutions but in one institution. The funds should also be easily accessible for developing countries.  It supported the governance structure of the adaptation fund (under the Kyoto Protocol) and called for this governance approach to be adopted by other financial mechanisms.
 
In response to calls of developing countries for the delivery of legal obligations on finance under the Convention and the concerns on establishment of climate funds in other bilateral and multilateral forums, the US delegation gave this short message:  “Get real!” 
 
It emphasized that the bulk of financing for climate change will come from the private sector and the challenge for all countries is to stimulate such investments. It’s not the governments that will pay, said the US.  
 
It found it disturbing that funds are useful only of they come under the Convention, and that the US Technology Fund is not popular here.  “Our taxpayers want to attach strings to how our money is spent,” it said.
 
The EU, Norway and the US proposed that issues in finance and investment under the AWG-LCA will be best understood and discussed in an in-session workshop specifically on the theme. They proposed that the Secretariat’s paper on Investments and Financial Flows to Address Climate Change, earlier prepared for a workshop on the topic held in Vienna in October 2007, be used as the main reference to guide the proposed workshop. 
 
The Philippines, speaking for itself, said that this report needs to be updated by the Secretariat to make it consistent with the decisions taken by the Convention, such as that funding for climate change from other institutions should be consistent with the policies, criteria and priorities agreed to by the parties.
“We want to know, when an amount is given, how much of it is in loans, and the purpose of the loans, and if the activities contribute to the activities under the Convention,” sadi the Philippines.
 
“These institutions say they are regional banks and have programmes relevant to climate change, but we want an idea who determines these programmes, how they support developing countries to meet article 4.1 of the Convention, how consistent are they with the priorities of the Convention.
 
“If workshops are held, are conditions met to make them consistent with the decisions of the conference of parties, especially on capacity building?  It is not enough to just ask development banks much they use in climate change funds but more importantly we need to know how the funds are used.”
 
China said that the finance issue had been discussed for many years in the Convention, but there had been little progress made. Implicitly responding to comments (by the US) that most funding would have to come from the private sector and not governments, China said that the developed countries are parties, and the private sector are not parties to the Convention.
 
It agreed with some developed country delegations that had said that the world is changing. “In the case of developing countries, it is because of their hard work,” replied China.  
 
It then gave an example of why the obligations of developed countries still had to be met towards developing countries that had progressed.
 
“Ten years ago I borrowed ten dollars from you and ten years later I find that you have become a bit richer.  Then I think I don’t owe you anything anymore, and the obligation to repay you is not there anymore.  I don’t think this attitude can be accepted.”
 
Thus the developed countries should carry out their legal obligation, said China.  It proposed that the developed countries allocate at least 0.5% of their GDP to help developing countries to confront climate change.

 

Source:Third World Network
Date:Apr 07,2008