Tag: adaptation fund

Adaptation Fund overlooked because there’s a new kid in town?

While we all breathlessly wait for big money to hit the GCF (US$15 billion in pledges is expected by the end of this year), ECO would like to remind everyone that there are other funds in dire need of money too. One of them, the Adaptation Fund, which has projects ready to be implemented in vulnerable countries such as Ghana, Mali or Nepal, is now just waiting for the resources to get those projects started.

Pledges to the Adaptation Fund were among the very few positive outcomes from Warsaw. ECO is shocked that some countries have not yet paid up. Given the urgency of climate change, ECO would love to see the October session kicking off with the transfers of pledged funds from both Belgium and France, who, as the host of the 2015 COP, may want to uphold its commitments.

Honouring pledges made in the past is obviously critical, but so is putting the Adaptation Fund permanently on a more sustainable funding base. This could be done by, for instance, tapping into alternative sources that auto-generate revenues. Until then, the Fund’s board will have to continue to announce fundraising goals as it had to do for 2014 and 2015 ($80m each). ECO expects that Lima will see developed countries make pledges for the tried-and-tested, fully operating, but under-resourced Adaptation Fund.

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Adaptation Fund due for replenishment

ECO wonders if developed countries are scheming to create suspense on the Adaptation Fund over the next couple of days, by orchestrating the announcements of their pledges to start with the lowest first: Norway’s  US $2.5 million was announced yesterday. While that doesn’t quite compare to Sweden’s  $30 million, we believe that every dollar counts. Perhaps we will now see a race to the top, with a string of pledges -- each one higher than the one before -- to reach and exceed the goal of $100 million before COP 19 is over. ECO is excited to see who will turn out to be the highest bidder.

Once again, falling short of the $100 million goal is simply not an option. Surely developed country ministers will want to make that possible, to demonstrate good faith and pave the way for the much larger goal of mobilizing $100 billion per annum in climate finance by 2020.

The argument has been made here and there that the Adaptation Fund is not quite empty yet.  Perhaps so for now, but not for long.  The Adaptation Fund Board predicts that it will run out of money over the course of the next year. And already there are stranded projects (see table nearby).

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ECO’S “COMPROMISE” DECISION FOR WARSAW*

 

*By compromise, ECO mean somewhere in between what is scientifically needed and what YOU tell us is currently feasible.

The Conference of the Parties,

Recalling Article 4, paragraphs 1, 3, 4 and 5 and 7 of the Convention,

Reaffirming the unwavering commitment of parties to keep global average temperature increase well below 2 degrees C above pre-industrial levels and the continuum approach between mitigation, adaptation, loss & damage and finance that is required to ensure equity before 2020.

Reaffirming the urgency to address the current imbalance in mitigation and adaptation finance – in light of recent studies showing the adaptation and loss and damage costs in developing countries will very likely be well in excess of US$100 billion per year by 2020.

Reaffirming the need to raise mitigation ambition levels between now and 2020, and achieving emission reductions on the order of 8-13 Gigatonnes of emissions in the pre-2020 period, beyond existing commitments and actions registered under the UNFCCC.

Supporting the authoritative assessments demonstrating that staying well below 2°C will require several hundred billion of incremental finance per year and the shifting of trillions of dollars of existing private sector investments into low carbon technologies and solutions.

Emphasising that the commitment by developing countries to provide $100 billion for developing countries will be delivered in the form of new and additional public finance, through budgetary allocations from developed countries, supplemented by revenues from alternative sources of public finance

Emphasising the shortcomings of the main revenue stream for the Adaptation Fund in relation to the expected low price of CERs under the Clean Development Mechanism and the need for new and additional commitments by developed countries.

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Decides:

1. That developed country Parties shall provide jointly new and additional public finance amounting to an average of US$20 billion annually for the period 2013-2015, for mitigation and adaptation actions, including for REDD, technology and capacity building.

2. That for the periods of 2016-2018 and 2018-2020, developed country parties shall scale up financing in a linear manner from the current levels to reach $100 billion annually in public finance by 2020.

3. That developed countries shall allocate at least 50% of overall public finance to meeting developing country adaptation needs.

4. To establish a formal process to capitalise the GCF with an initial collective pledge of (…)** by COP19.

5. To call on the relevant bodies to design and implement global measures to raise new streams of public climate finance, particularly through:

i) Redirection of at least 100% of Annex 2 fossil fuel subsidies

ii) Carbon pricing mechanisms applied to the international aviation and maritime transport - in accordance with the principal of CBDRRC and existing commitments under the UNFCCC.

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Welcomes

1. The pledges to the Adaptation Fund of (…)** collectively made by Annex 2 Parties for 2013/2014, as contained in Annex C of this decision, and those made by other Parties.

2. The initial pledges to the Green Climate Fund of (…)** collectively made by Annex 2 Parties as contained in Annex D of this decision.

3. The recent declaration by 11 EU Finance Ministers to earmark at least 100% of the revenue raised through their Financial Transaction Tax to the Green Climate Fund.

Disclaimer

** "there is not enough space on this page to specify the number of billions ECO is expecting"

For official CAN positions, please refer to www.climatenetwork.org

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We Saw Success for Warsaw

 

ECO was impressed by the creative moves of the delegates on the dance floor Saturday night. Now, with only 16 meeting days left this year, ECO expects to see an increasing amount of creative and ambitious Party moves inside the negotiation rooms too, to make the COP in Warsaw a success. (It is worth clarifying that this does not mean wiggling out of commitments!)

2014 - the year of ambition - is just around the corner. The foreseen KP Parties' revision of their targets next spring offers a timely moment for all countries to revise their near term targets, while Ban Ki-Moon’s leaders meeting in the autumn of 2014 presents a great opportunity for tabling new 2025 targets.

In Warsaw, Parties will need to commit to both strengthening their current targets (to bridge the 2020 gigatonne gap), as well as to putting forward new, post-2020 targets in 2014 that are fair and adequate. To ensure that the 2014 pledges will be transparent, quantified and comparable, Parties will need to agree on some guidelines in Warsaw. Equally, the Warsaw Decisions will need to give further clarity on the nature and scope of commitments for countries at different levels of responsibility, capability and development. Commitments should include mitigation and finance and be guided by an Equity Reference Framework (ERF), for which a formal process needs to be established.

While Parties have already agreed to deliver a negotiating text on the 2015 agreement before May 2015, Parties will need to adopt a work plan and milestones for producing this text in Warsaw. Specifically, Parties must agree on key elements for a structure of the 2015 deal so that subsequent sessions can build on them  to move steadily towards a comprehensive final agreement, and not leave all decisions to be resolved at Paris. We all know where that leads…

All developed countries must set out – in a comparable manner - what climate finance they will be providing over 2013-2015, as part of doubling fast start funding levels for this period, and commit to a roadmap for scaling-up global public climate finance and reaching $100bn per year by 2020.

ECO would like to extend a formal invitation to Finance Ministers to take part in the Warsaw COP so that the “high-level ministerial dialogue” (yes, parties in Doha wanted it to be THAT special) actually delivers the decisions we need so urgently on finance. Parties must also pledge specific amounts of finance to the Green Climate Fund, which must be operationalised in Warsaw, and to the Adaptation Fund.

Parties must also agree on a way to ensure that international aviation and maritime transport, which are not included in national emissions targets, make a fair contribution to emissions reductions, and to financing climate actions in developing countries. These are the fastest growing emissions sectors worldwide, and their fuels are currently not taxed, unlike domestic transport sectors, which means they are not paying for their climate impacts, and have an unfair advantage over other sectors.

As should be clear by this point, dear ECO reader, there is much to do in Warsaw and afterwards. This week, the ADP should focus on its work plan from now until the COP. As time is short and ECO is completely fed up with procedural nonsense (SBI anyone?), this does not mean spending the week discussing whether to suspend or conclude the ADP (as ECO can only imagine the potential mess of trying to open another ADP session and the agenda discussion that would ensue). Rather, Parties must set a deadline for the next round of submissions and clarify the content sought. Here, views on the decisions from Warsaw including guidance on a deadline for initial pledges (2014), information on the details of those pledges and the process for review (i.e. the ERF process), as well as initial thoughts on the overall structure of the 2015 agreement, are a minimum.

Finally, you can’t spend all of your time planning. You’ve got to also be doing. So, in addition to the ADP work programme forward, ECO urges Parties to take time preparing the actual tangible outcomes for Warsaw, including in terms of 2013-2015 finance pledges, loss and damage mechanism and near-term ambition. Here’s to a productive week!

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Save the Adaptation Fund!

ECO would like to congratulate Sweden for pledging to the Adaptation Fund (AF) for the 4th time, in a (as yet) lonely attempt to save it (and small island states) from going under. Pledging to the Adaptation Fund has never been this urgent as CER revenues have never been this low, dropping from 100 million USD in 2010 to an estimated 7 million in 2013. ECO has done the maths: it’s barely enough to fund ONE project under the Adaptation Fund. Without new pledges, the Adaptation Fund will have to stop financing projects next year at the latest. ECO wonders, do Parties realize what this means for vulnerable countries facing rising seas and extreme events?

In case the message is not yet clear, ECO would like to reiterate: the one and only Adaptation Fund is drying up at the same time as fast start finance winds down, and needs an urgent round of pledges. In case anyone doubts the value of the AF, it is ranked as the most transparent climate fund and is signatory to the International Aid Transparency Initiative. It prioritises benefits for the most vulnerable communities and promotes institutional progress through direct access.

In case we have not made it clear in every single ECO article, developing countries need assurance that their adaptation needs will be met and the negotiations need to see some trust building if we really want that deal in 2015.

The Adaptation Fund board sent a desperate call for contributions of an additional 100 million USD by the end of 2013, but only about 45 million has been received to date. And that was before the CER price fell this low. ECO believes that 150 million is the minimum necessary by Warsaw to maintain essential Adaptation Fund progress. All eyes on you, USA, Japan, Norway, Germany, France and others.

 

Chart notes: all figures are actual contributed resources. Australia pledged A$10 million in 2010 but has not yet delivered. Sweden´s pledge from two weeks ago has already been counted, since its fulfilment seems to be only a matter of time based on its good track record of fulfilling pledges.

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Adaptation Fund: Progressive But Poor!

ECO would like to cast a bright light on whether there is sufficient progress in responding to the needs of the poor and vulnerable at an implementation level. We note that the Adaptation Fund is now established. It has approved funding for 27 adaptation projects with several projects more waiting to be funded. Furthermore, we see that 15 developing countries have already had their National Implementing Entities accredited and can directly access the Fund, and several more countries are in the process of accreditation. 

ECO also recognises that the Adaptation Fund has become a forerunner, having recently been ranked as the top climate finance institution by Publish What You Fund: the Global Campaign for Aid Transparency. Just two weeks ago it became the first climate fund in the International Aid Transparency Initiative. It has also been an early-mover in adopting an overarching results framework. The Fund has managed to speed up the project approval process while reducing implementing entities´ fees. 
 
ECO wonders why, with such accomplishments, the Adaptation Fund is the one multilateral fund that has received the least contributions from developed countries in recent years.  And to make matters worse, the price for emission reduction certificates (the key income source of the Fund) is now below US$1, largely due to the virtual collapse of the European Emission Trading Scheme. At current CER prices and estimated issuance levels, the Adaptation Fund would receive only $4 to $8 million in additional revenue to 2020. 
 
ECO is concerned that there has hardly been any progress in delivering the Fund’s target of $100 million by the end of 2013.  There are no new pledges and funding seems to be scarce. ECO calls on Parties to send a strong signal that they are committed to addressing the needs of the vulnerable developing countries by putting additional money into the Fund swiftly. 
 
ECO particularly would like to see countries like Japan, Norway, France, Finland, Netherlands, New Zealand, USA, Canada and others, who have not as yet contributed to the Fund, to do so immediately. Australia´s 2010 pledge has still not been deposited. ECO finds it ironic that Germany, the host of the Adaptation Fund, has only made one pledge of 10 million EUR in 2010, which is much lower than that of Spain and Sweden.
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Heros and Zeros: Adaptation Fund Facts & Figures

More and more countries seem to recognise the progress and achievements of the Adaptation Fund in recent years.  Progress so far was featured at a side event last Friday, held jointly by the Adaptation Fund Board.

First the good news.  Only two years after the first call for proposals, 25 concrete adaptation projects have been approved so far and USD 160 million has been allocated.  Direct access is now approved for 14 countries, and many more have expressed interest. 
 
The bad news is that the key funding source, the share of proceeds of CERs from the Clean Development Mechanism, has now almost totally dried up.  At the end of 2010, it was estimated that revenues would come in as much as USD 400 million by the end of 2012, but only USD 180 million can actually be realised with the current all-time low CER price. 
 
Some developed countries have made contributions to the AF to the tune of USD 120 million, and this is a very good thing. Spain and Sweden have been the heros in this, while UK and Germany have contributed only a tenth as much relative to their GDP than Spain or Sweden (roughly a tenth). 
 
But lots of other developed countries have closed their pocketbooks despite the benefits for vulnerable communities addressed by the AF projects. We still have time for pledges coming through from ministers in the next days in Doha, taking their cue from the many individuals who have, once again, reached into their pockets to help build up the Adaptation Fund.
 
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Today´s good deed: Donate Your DSA to the Adaptation Fund

In his remarks to the Parties on Wednesday, the Adaptation Fund (AF) chair underscored the great achievement made by the Fund this year. He emphasised, among other things, that the AF has now accredited twelve National Implementing Entities, which allow for direct access of developing countries to the funds of the AF. Experience shows that this has also triggered the strengthening of institutional capacities to manage project funds. For ECO, this is evidence that direct access is no longer a pilot test programme perceived as highly risky, but rather a reality. In addition, two years after its first call for proposals, the AF has approved 25 concrete urgent adaptation projects covering all fields of adaptation, with several more in the pipeline. A key objective is to target the most vulnerable groups. 

Because of these significant achievements of the AF and at the same time the scarce resources at its disposal, ECO is seriously worried about the dwindling resources and lack of predictability that poor countries are facing. Due to the over-supply of permits, the lack of mitigation ambition and the global economic downturn, prices for CERs, which provide the main source of income for  the AF, have gone down to record lows below US$2.
 
While almost everybody is looking at  the Green Climate Fund (GCF), which will hopefully lead to the long awaited transformational change needed to tackle the climate crisis, ECO would like to draw the attention of Parties to the Adaptation Fund. It is the only operating fund providing direct access under the Convention.  ECO believes that the AF should play an important role until the GCF is operationalised, and beyond. So let us now secure the survival of the AF.
 
In order to increase funds for the AF, Parties are discussing the extension of the CER levy to other mechanisms. Furthermore, since yesterday, individuals can donate funds into the AF through a simple procedure on its website. Dear COP participants: Why not donate one DSA into the AF for your daily good? (The donation function is also open to individuals from non-Kyoto Parties, and, by the way, hosted in the US). The more people contribute, the stronger the signal to incoming ministers that there is support for the AF. Looking into the books of the AF, ECO has found out that some not too poor countries, such as Japan, Norway, France and Canada, have not yet made contributions to fund projects. ECO wants to see additional contributions being pledged in Doha. The system allows for amounts of up to 13 digits (that may be sufficient to solve all adaptation problems now!). So ministers, bring credit cards to Doha!
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Adapting, But Still Funding

The Adaptation Fund (AF) has entered into its fifth year of operation. A couple of weeks before this Bonn session, the Board of the Fund (AFB) at its 17th meeting made substantial decisions for further advancing the Fund´s provisions. In particular, these covered critical aspects such as the guidance for the consultative process, the consideration of most vulnerable communities, the establishment of complaints procedures and increased transparency regarding the technical review of project proposals. In the course of this week, the AFB had a chance to share information on its progress with interested Parties. The AFB can be congratulated for increasing its attention towards these issues and for learning from its own lessons.

This is important for the AF at its critical juncture of raising funds for meeting the adaptation needs of vulnerable countries and financing innovative projects that benefit the targeted areas. The prices for Certified Emission Reductions (CERs), which is the innovative and main funding source of the AF, have drastically decreased over the last months. Part of this is due to the lack of global ambition in mitigation. The EU, with its Emissions Trading Scheme, is one of the key demanders of the CERs. However, the current EU target of  20% reduction is not only well below the ambition indicated by the IPCC with regard to the 2°C limit, but also affects the prospect of the ETS as a functioning setter of price signals for emissions. (Of course, other developed countries lag behind in their mitigation ambition as well).

The direct access  approach of the AF is speeding up, with more and more developing countries managing the associated accreditation process, while sadly the funding gap is increasing, making it almost impossible for the AF to respond to all funding requests.

Few resources have been dedicated to the AF, despite its innovativeness and its progress. Sweden has contributed this year for a second time; Spain is the top contributor, with 45 million Euro. There are still too many developed countries who have not paid into it, some of them sitting on the Board. (And one could also imagine that some developing countries would support the AF in their own interest, e.g. as a learning tool.)

To address this issue, the Adaptation Fund Board has now set the target to raise US$100 million additional funds by the end of 2013. ECO encourages all developed countries to put additional money into the Fund. These contributions should enable the AF to keep pace with need until the Green Climate Fund becomes fully operational, due to increasing funding demands from developing countries.

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