Additional adaptation funding

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

Print Friendly, PDF & Email

Date produced: 02/06/2010

1. What is the correct interpretation of the wording “mobilizing jointly $100 billion a year by 2020” as set out in the Copenhagen Accord para 8?

2. Will this joint funding be additional to pledged funds by specific developed countries (e.g. Germany Climate Change Initiative; Norway (NORAD) for REDD implementation for e.g. Guyana and Indonesia, USAID Climate Program; AUSAID, etc.)?

Summary: There is great scope for debate around the intent and meaning of the finance provisions in the Copenhagen Accord (“the Accord”) and room for many different interpretations.  The simple answer is that there is no clear interpretation and it is hoped that progress will be made on the issues surrounding finance during the current negotiations at Bonn (June 2010). Our advice sets out some issues to be considered in interpreting the Accord’s provisions on both the US$100 billion funding and the meaning of “new and additional”.

The Accord is a political statement not a COP decision, but indicates the intention/position of the drafters on financing. The meaning of  “mobilising jointly” the US$100 billion funding announced in the Accord is to be negotiated at Bonn and beyond. Questions include the amount of financing, source, mechanisms, institutions and governance.

Under the UNFCCC, Bali Action Plan and the Accord, funding is to be “new and additional”. What should be considered “additional” funding is being debated at Bonn. It is not yet clear how existing domestic climate funding commitments will relate to the US$100 billion figure.

The United Nations Secretary-General’s High Level Advisory Group on Climate Change Finance (“AGF”) is due to report the progress of its work on Saturday 5 June in Bonn and may help to clarify these issues.

Meaning of “mobilizing jointly $100 billion a year by 2020″

Under paragraph 8 “developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020”. This wording suggests a goal or target rather than a legally binding obligation. It can be compared with the stronger use of “commitment” in relation to the US$ 30 billion for the period 2010 to 2012.

The use of the phrase “mobilizing” rather than “providing” (which is the word used in relation to the US$30 billion fast-start funding) suggests that the developed countries can organise or procure finance but do not actually have to provide it themselves. This may envisage mobilizing private finance, because in relation to the US$100 billion goal the Accord makes clear that “this funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.”

The phrase “jointly” assumes that the developed countries will act together but there is no indication of how.  However, it is worth noting that the LCA text, which was proposed after the Accord and replicates much of its wording in this area, provides at paragraph 26 of Chapter 1 that from 2013 developed countries will provide funding “based on an [assessed][indicative] scale of contributions” which will be determined by the COP.

Although the meaning is not free from doubt, the amount of US$100 billion “a year” by 2020 suggests that the aim is to make US$100 billion available each year from 2020. This would be consistent with a gradually increasing level of finance from 2013 to 2020 although there is nothing to make this clear.  In contrast the US$30 billion is clearly stated to be “for the period 2010 to 2012.”

The US$100 billion funding also appears to be intended to be made conditional on “meaningful mitigation actions and transparency on implementation” by developing countries.

The only clear provisions on how funding may be provided are in relation to new multilateral funding for adaptation where a “significant portion” is to be provided through the Copenhagen Green Climate Fund. The Accord also sets up a High Level Panel (which has since become the AGF) to study how revenue will be contributed under the guidance of COP.

“New and additional”

It is not yet clear whether the US$ 100 billion funding is intended to be additional to pledged funds by specific developed countries (e.g. Germany Climate Change Initiative; Norway (NORAD) for REDD implementation for e.g. Guyana and Indonesia, USAID Climate Program; AUSAID, etc.).

Although there is a general reference to new and additional funding at the start of the paragraph 8, there is no specific reference to the funding being “new and additional” in the context of the US$100 billion goal. The absence of the express words in relation to the US$100 billion contrasts with the position in relation to the US$ 30 billion where the commitment is to come from “new and additional resources”. It is possible to argue that the opening words of paragraph 8 apply to all finance under paragraph 8 and so all finance should be “new and additional” but the express use of those words in relation to the US$ 30 billion and not the US$ 100 billion can also be taken to make a deliberate distinction between the two funds.

The requirement that funding provided by developed countries is “new and additional” is in the Convention and Bali Action Plan as well as the Accord. What exactly this means is being negotiated, and is unclear. It depends on what baseline is taken and how the different categories of assistance are defined to determine what falls into which pot of money.

Some developed countries argue that funding is only “new and additional” if it is additional to their current flows of Official Development Assistance (“ODAs”), whereas most developing countries tend to argue that it must be additional to existing aid targets (where these are higher than current flows). Some even suggest that it should be “new and additional” to current aid spending. In his observations for the first meeting of the AFG, Nicholas Stern advised that “prolonged and agonised naval-gazing on the meaning of additionality in this context [aid] is unlikely to be productive. I suggest we focus on new sources as the approach likely to give the most confidence in additionality over the medium term.”

Serious questions also remain around whether any private finance flows should be counted as ‘new and additional’ funds. It is clearly envisaged by paragraph 8 that significant levels of private finance will be counted towards the US$100 billion figure. However, there are concerns that the inclusion of private sector funds could dilute any commitment by developed countries for public funding. For example, the World Bank claims that the US$3 billion allocated for its climate investment funds (“CIFs”) in 2009 triggered (or facilitated the production of) an additional US$27 billion, some of it from the private sector. Because US$100 billion actually falls far short of previous estimates of the level of funding required, some argue that the US$100 billion needs to be made up of public funding, on top of which further private finance can be raised. There is also a question about whether the revenues from carbon trading will be included, as it is argued by some that carbon credits bought from developing countries are offsets to developing country emissions and not “new and additional” to existing commitments to make emission‐reductions.