Money – Now, New, and on the Table

9 June 2011

In Copenhagen and reaffirmed in Cancún, developed countries collectively pledged USD 30 billion in ‘fast-start’ finance from 2010-2012 to support developing countries’ mitigation and adaptation efforts, and helping to maintain Parties confidence in the process.

Based on the fast-start finance reports submitted by developed countries, about USD 16.8 billion has been committed or allocated in 2010. However, opaqueness remains. Several countries are clearly not meeting the agreed criterion that the finance should be “new and additional,” and constitute a “balanced allocation between adaptation and mitigation.” On balanced allocation, e.g. France has stated that 80% of its fast-start finance will go to mitigation and REDD+, with the rest to adaptation. This imbalance is not unique and implies that adaptation will remain heavily underfunded. Denmark has a better track record, with 48% of its fast-start finance in 2010 supporting adaptation and capacity building.

Furthermore, countries are not being entirely comprehensive, comparable or complete in reporting information on their finance. While countries do report on whether e.g., grants or loans have been used, they do not provide information on the terms (concessionality) of loans when used, nor on which projects are supported by loans versus by grants. While there is no political agreement on how to define ‘additionality,’ countries should at least be transparent about the baseline they are using to define this. Enhanced reporting guidelines are clearly needed, building towards a common reporting format in the longer term.

Despite this opaqueness, we can and should give developed countries credit for making a perceivable effort to get fast-start finance flowing   and reported on, despite a lack of formal guidance on how to do so. The EU yesterday hosted an open forum on their fast-start finance, which reflected on lessons learned – from the donor side and from the recipient sides – for improving the future provision of, access to, and reporting of financial support. Such stocktaking will help ensure the transparency, effectiveness and efficiency in the delivery of finance in the future, and build much-needed trust between developed and developing countries in the international climate negotiations.