In 2018, Where’s The Finance Again?
30 April 2018
On the way to the Bonn conference center, ECO found it challenging to pin down climate finance in the maze of the 2018 negotiations. Indeed, ECO heard that there is no less than 7 priorities that negotiators will have to deal with by the end of the year: modalities for the accounting of climate finance, Article 9.5, US$100 billion goal, loss and damage finance, GCF and GEF replenishments, Adaptation Fund and reorientation of financial flows (Article 2.1.c).
Finance is crucial, as substantial progress on this issue would help create an enabling environment to achieve robust outcomes by COP24. Given the complexity and importance of the issue, we are happy to suggest some ways to build trust and move ahead on climate finance on route towards COP24:
Keep your (100bn) promise. Developed countries should use all opportunities in 2018 to send the clear signal that the road towards the $100 billion commitment will be reached by 2020. In addition to the biennial assessment to be published by COP24, donor countries could enhance confidence by submitting well ahead of COP24 their strategies and approaches to show how they intend to scale up their financial support by 2020, with a specific focus on scaling up adaptation finance.
Better count it right. This year, countries will finally agree on the modalities for the accounting of climate finance. ECO thinks 4 key rules need to be respected in order to create transparent modalities: ensuring reporting at project-by-project level, reporting of grant-equivalent values for non-grant instruments, reporting of actual climate-specific proportion of funds and allowing mutual agreement between countries about projects/funds to be included in future reports.
Plan for the future. Article 9.5 of the Paris Agreement requests countries who provide financial support to indicate how they intend to respect their commitments. This process will help vulnerable countries to plan and manage their transition towards low carbon and resilient economies. ECO encourages Parties to acknowledge the need for a clear process to communicate predictable sources of finance and to identify which information will be used in the future.
Respond to the inevitable. The increasing needs for Loss & Damage (L&D) finance have to be addressed, and the best chance to do this is during the Suva Dialogue to be held in the coming days. It will need to identify the tools to address all the consequences of L&D, including assessment of scale of potential needs and innovative financial mechanisms like taxation on polluters and on fossil fuel extraction to generated the needed finance.
Be fond of funds. While the GEF recapitalization is coming to an end, the GCF is on the right track to pass the threshold that will trigger its replenishment process by the end of the year. Donor countries should get prepared to send concrete signals by COP24 that they will continue to support the fund and are still committed to improve its governance in the coming years. It is crucial that the Adaptation Fund meets is resource mobilisation target this year to ensure its continued support for the vulnerable countries it serves. Decisions to be taken on its governance, operating modalities and safeguards this year need to send a strong signal ensuring the Fund’s best practices and high standards are maintained.