Part 5: Examining the UN FCCC Financial Mechanism
Update: Correction appended to this post
Introduction
Introduction
To be honest,
the UNFCCC financial mechanism is one of the most contentious issues in the
climate change negotiation process, and a concise look into its inner workings brings to light a number of issues that have been the cause of the tug of war
between Parties. This is a highly politicized issue, and after much
deliberation, I thought it wise to bring out the issues that have been
contentious, rather than examine the different political angles in the process.
Brief overview
of the UNFCCC Financial Mechanism
I can bet that
you have all heard of the famous Brundtland Report of 1987. For starters, this
report is more commonly known as “Our Common Future”, and it is famous for
bringing to the global arena the concept of sustainable development. However,
it is important to note that there were a number of interesting things
discussed in this report; the one that is most relevant to this report called
on the need “to assign significant financial resources to address the global
environmental challenges.”
Role of the COP
in the UNFCCC financial mechanism
It is important
to clarify the role of the COP (Conference of Parties) in the UNFCCC financial
mechanism so as to avoid any confusion down the road. Simply put, COP is the
governing body of the Climate Change Convention (CCC) and it decides on the
policies, programme priorities and eligibility criteria of the financial
mechanism.
Current Funds
The GlobalEnvironment Facility (GEF) is the main fund under the UNFCCC financial
mechanism. In addition, there are four special funds:
1. Special Climate Change Fund – managed by the GEF
2. Least developed Countries
Fund – managed by the GEF
3. Green Climate Fund – falls under the Climate Change Convention
4. Adaptation Fund - falls under the Kyoto Protocol
In this blog
post, we will mainly focus on the Global Environment Facility (GEF), while the
other funds will be discussed in a forthcoming post.
Brief history of
the GEF
It is important
to note that the financial mechanism of the UNFCCC provides funds on a grant or
concessional basis.
The
establishment of the GEF was partly due to a UNDP – WRI (World Resources
Institute) study that brought forth proposals on establishing an international
fund for the global environment. The GEF became a
pilot facility of the UNFCCC in 1990, where it was being tested for the first
time. In 1992, it became an interim operational entity of the financial
mechanism for UNFCCC and Convention for Biological Diversity (CBD). At COP 4,
it was confirmed as an operational entity of the UNFCCC.
Linkage between
UNFCCC and GEF
Since GEF was a
facility for both UNFCCC and CBD, there was need to establish a legal linkage
between UNFCCC and GEF. This linkage led to the restructuring of the GEF into:
·
A Trustee – participants’
assembly that would convene every three years
·
A Council
·
A Secretariat
·
The Implementing Agencies
·
Scientific and Technical
Advisory Panel (STAP)
Main objectives
of the GEF
The main
objective of the GEF was to provide funding to countries interested in either
starting up projects or introducing environmental components to existing
projects. The main areas of concern for the GEF were:
·
Depletion of the Ozone layer
·
Green House Gas emissions
·
Biodiversity
·
Pollution of international
waters
Onset of
problems
From the very
beginning, the GEF was beset by numerous problems, mainly attributed to its
fundamentally flawed design. One of the main challenges was the introduction of
the ill-fated Resource Allocation Framework, which in essence watered down and
even annihilated some of the objectives of the GEF. Political
bickering began when the GEF was launched. Before this, developing countries
were calling for a Green Fund, and what they got in response was the GEF, which
they perceived as a pre-emptive project of the developed countries. Also, the
transparency and participation in the GEF activities was questioned, as
developed countries, who contributed more to the GEF, took control of its
operations and locked out other parties, mainly from the developed countries.
Since the World
Bank and UNDP set out to run the fund, there were concerns that these two
institutions did not have sufficient capacity to address serious environmental
matters. The details of
the linkage between the GEF and UNFCCC were not clear, and they were the main
cause of the weak nature of GEF. The main weakness was in tweaking the GEF,
which was addressing more than one Convention, to address the issues of UNFCCC
COP climate change.
The financial
resources allocated to the GEF under the Convention are grossly inadequate, and
this has been made worse by the global financial turmoil of the last four
years.
Changes in
context
Because we are talking about money
matters, it is important to note that the global financial scenario now and in
the ‘80s and ‘90s is pretty different. The effects of the global financial
recession of the last four years are still lingering, affecting the flow of
funds into the UNFCCC financial mechanism.
Also, there are
many more ways in which funds are being channelled to address climate change
issues, such as the Clean Development Mechanism, innovative green energy as
well as carbon-friendly technologies. Most of these channels are market-based.
Efforts to
strengthen the UNFCCC Financial Mechanism
·
Establishment of level of ambition
The GEF was
weathering an onslaught from all directions, and the calls for it’s
restructuring led to some few changes. The Bali Action Plan, for example,
established the level of ambition, as well as the level of resources, for
funding climate change activities in developing countries.
·
Standing Committee
At COP 16,
Parties decided to establish a Standing Committee to assist the COP in
exercising is functions with regards to the financial mechanism of the
Convention.
·
Long-term Finance
At COP 17 (DurbanPlatform), parties decided to make Global Climate Fund (GCF) an operational
entity of the financial mechanism of the Convention; this was in accordance
with Article II of the Convention. COP 18 (Doha, Qatar), will aim to conclude
the arrangements between COP and GCF. The main emphasis will be on enhancing
accountability.
Conclusion
Thus, it is
apparent that the GEF was poorly conceived, and the window of getting a more
functional fund is closing. In the next post, we will examine the special funds
we had mentioned earlier on in great detail, as well as the outlook of the
future of the UNFCCC financial mechanism. See you then!
Correction:
It has been incorrectly insinuated in this post the the GEF (Global Environment Facility) is a fund; in essence, it is a facility, and the fund associated with the GEF is the GEF Trust Fund, whose trustee is the World Bank.
Correction:
It has been incorrectly insinuated in this post the the GEF (Global Environment Facility) is a fund; in essence, it is a facility, and the fund associated with the GEF is the GEF Trust Fund, whose trustee is the World Bank.
PS: As usual, if you are interested in contributing to this COP series, please send an email to mbevakl@gmail.com and I will be glad to have you on board!
Useful links used in this research:
- Brundtland Report: http://conspect.nl/pdf/Our_Common_Future-Brundtland_Report_1987.pdf
- Global Environment Facility (GEF): http://www.thegef.org/gef/
- Resource Allocation Framework (RAF): http://www3.unfccc.int/pls/apex/f?p=116:42:2011527075018979
- Bali Action Plan: http://unfccc.int/resource/docs/2007/cop13/eng/06a01.pdf
- Durban Platform: http://unfccc.int/files/meetings/durban_nov_2011/decisions/application/pdf/cop17_durbanplatform.pdf
- The Financial Mechanism of the UNFCCC: http://www.oxfordclimatepolicy.org/publications/documents/ecbiBrief-FMHistory.pdf
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