Adaptation Fund under KP

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 However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments.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: 12/02/2013

1. What are the legal options available to ensure that the Adaptation Fund becomes an operating entity under the Convention?

2. What are possible steps to undertake during the next year to ensure that COP19/ CMP9 adopts the recommendations to make the Adaptation Fund an operating entity under the Convention?

3. What needs to be done at COP18/CMP8 to ensure that Q1 and Q2 above can occur/ proceed? Please also advise on any issues which could prevent/ intervene.

1. The Adaption Fund is established on the basis of Article 12 (8) of the Kyoto Protocol and by Decisions 5/CP.6 and 10/CP.7. The Adaptation Fund “shall be financed from the share of proceeds on the clean development mechanism project activities and other sources of funding” and it was decided that the “share of proceeds shall be two per cent of the certified emissions reductions issued for a clean development mechanism’s project activity.” In Decision 28/CMP.1, it was decided that the Adaptation Fund “shall function under the guidance of, and be accountable to, the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol.” In Decision 1/CMP.3, it was decided that “the operating entity of the Adaptation Fund shall be the Adaptation Fund Board, serviced by a secretariat and a trustee,” and in Decision 1/CMP.4, it was decided that the Global Environment Facility (GEF) provides secretariat services to the AFB and the World Bank serves as trustee of the Adaptation Fund on an interim basis.

2. This special financing from the shares of proceeds on CDM occurs only because the Adaptation Fund is a financing mechanism under the Kyoto Protocol with its CDM (Article 12). Thus, if the Adaptation Fund is completely detached from the Kyoto Protocol and put under the Convention, this special financing mechanism will no longer be utilized. It will no longer be an Adaptation Fund under Article 12 (8) of the Kyoto Protocol. We understand that the query does not intend to do this as it still refers to the “Adaptation Fund”, nor we see any substantive merits in this drastic restructuring.

3. None of “potential scenarios” considered by the Adaptation Fund Board in its Strategic Prospects for the Adaptation Fund (AFB/B.19/5 (13 November 2012), para.11) goes as far as having the Adaptation Fund completely relocated under the Convention.

4. Although the Kyoto Protocol shares the institutional structure of the UNFCCC it is usually considered a legally autonomous treaty regime. Relocating the Adaptation Fund under the Convention would at least require a set of additional COP and CMP decisions creating and/or transferring organizational structures and assets. The World Bank and the Global Environment Facility which, on an interim basis, serve as trustee and secretariat, respectively, of the Adaptation Fund would need to be involved in the process.

5. The Adaptation Fund Board’s most far-reaching “institutional integration” scenario considers the possibility of a greater degree of integration with the Green Climate Fund (GCF) under the Convention. The report suggests a possibility of the Adaptation Fund still under the Kyoto Protocol servicing as an “adaptation window” of the GCF. We consider that this option of making the Adaptation Fund as a “GCF window” satisfies the query’s intent of making the Adaptation Fund more effective and sustainable under the overall authority of the Convention.

6. Putting the political feasibility aside, we consider the following steps are legally necessary to make the above restructuring of the Adaptation Fund to be realized.

(i) Prior to the COP19/CMP9, we should at least have the following recommendation by the Adaption Fund Board/GCF Board:

(a) Recommendation from GCF Board to amend the structure of GCF with regards to the addition of Adaptation Fund as “window” of GCF. (The GCF Board is the body authorized to add, modify or remove additional windows. (Para. 39 of GCF Governing Instrument). Thus, recommendation is required.)

(b) Recommendation from the Adaption Fund Board will also facilitate the smooth transition.

(ii) The decisions at CMP9 should have at least the following elements:

(a) Procedure to terminate the operation of current Adaptation Fund and how this Fund will be placed under the authority of COP as a “window” of GCF.

(b) The future of Adaptation Fund Board: terminated or to be continued under GCF? (Para. 4, Decision 5/CP.6).

(c) Procedure for developing countries to access the new Adaptation Window of the GCF: through AFB or GCF Board?

(d) To make sure that new Adaptation Window and exiting GCF will not overlap in their operations. (Para. g of Decision 5/CMP.2).

(iii) The decision at COP19 should have at least the following elements:

(a) Definition of a “Window” of GCF, which is financed both by Kyoto Protocol mechanism and the voluntary contribution made under the Convention.

(b) Which body will run, manage, monitor and evaluate the new Adaptation Window: GCF Board, AF Board or combination of both? (Para. 4 of Dec. 10/CP.7, Para. 104-105 of Decision 1/CP.16, Para. 57, 59-60 of GCF Governing Instrument).

(c) If a special new supervising body were to be established for this Adaptation Window, its composition. (Para. 9 of GCF Governing Instrument).

(d) The operational guidelines for the new Adaptation Window. (Para. 8 of Dec. 5/CP.7, Para. 1 of Dec. 10/CP.7).