Inflated, shiny figures versus new and additional, climate-specific support

13 May 2017

While the APA discussions on transparency of support had a bit of a difficult start, it’s good to see that the SBSTA negotiations on accounting modalities for the provision of climate finance have already entered the stage of detailed discussions.

 

There seems to be general agreement that better accounting of the climate-specific components of committed funds is desirable. However, ECO wagers that some developed countries may hope to get away with rather generous methodologies when counting projects or programs where climate is only one of many objectives.

 

A solution suggested by one Party is that the receiving and the providing country mutually agree on the proportion reported as climate-specific. This could help developing countries in assessing support received, another post-Paris concept that should move forward.

 

Other useful ideas have been tabled, such as the proposal to count loans and other non-grant instruments on the basis of their grant equivalent €“ this is a better proxy for fulfilling UNFCCC Article 4.3, to cover the incremental cost of action. But delegates should not be swayed by the US’s attempts to shoot down the idea by insisting that loans are a valid instrument under the Paris Agreement’s Article 9. That may be true, but accounting for loans on a net basis does not negate their validity at all. The only problem is that the reported figures, which currently include loans at face value, would look less shiny.  And there is a precedent. The GCF records countries” pledges, if they come in the form of loans, on the basis of their grant equivalent. Also ODA loans, under the revised OECD DAC rules, are now reported that way.

 

Next up is today’s debate on mobilized finance under the SBSTA item. As with public loans, a net approach on accounting may be in order €“ reporting the mobilizing effort finance as a contribution towards meeting obligations, while also recording, and welcoming, the total mobilized finance for information purposes. This would help overcome a key problem in the OECD methodology for the US$100 billion report and roadmap €“ the attribution of mobilized climate finance. Usually, investors are not just mobilized by a donor country intervention, but also by the environment in the host country.