Bringing the Adaptation Fund Board under the UNFCCC

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Date produced: 11/12/2009

What would be the procedure to get the Adaptation Fund Board (AFB) under the LCA outcome?

Executive Summary

The question concerns whether, in a scenario where the LCA results in COP decision/s only without any treaty or protocol, such COP decision/s are able to appoint the Adaptation Finance Board (“AFB”) as the main climate change finance institution.  We believe that this may be possible but that the steps involved are complex and are likely to require considerable consensus among parties.  The scenario requires collaboration between the COP and CMP to transform the AFB from a KP body to one under the UNFCCC which is unlikely to have been contemplated by either instrument’s draftsmen.


The context for the question is the AWG-LCA draft COP decision of December 11, 2009. Paragraphs 35 to 44 of that text deal with adaptation financing.  Paragraph 35 begins by saying that “The financial mechanism under Article 11 of the Convention shall be further operationalised…”.

Paragraphs 40 to 43 appear to contemplate the establishment of a new body or fund to work within the financial mechanism structure of the Convention under the authority of the COP.  The existing financial mechanism under Article 11 of the Convention is the GEF and, under the AWG-LCA draft text, any new body of fund under paras 40 to 43 would presumably be expected to work closely with the GEF.

The COP’s authority to deal with financial mechanisms comes from Article 7(2) of the Convention which empowers it to mobilise financial resources in accordance with, inter alia, Article 11.  Article 11 defines the financial mechanism and provides that it should be an ‘existing international entity’.  The GEF was given the role.   Article 15 of the Convention requires 6 months prior notice of amendments.

There is some doubt about whether the AFB can be regarded as an ‘existing international entity’ for these purposes.  The history behind the wording of Article 11 is that it reflects a preference for the GEF to fulfil the role.  Arguably it means ‘existing’ at the time the UNFCCC came into force.

The above issue needs to be overcome before the COP can proceed to displace the GEF with the AFB by means merely of a COP decision.  The COP might resolve the matter by taking a decision interpreting Article 11 to mean ‘existing’ at the relevant time, i.e. when the COP takes the decision to appoint the AFB.  The COP’s rules of procedure remain in draft and we understand that its practice is to determine ‘matters of substance’ by consensus and ‘matters of procedure’ by majority, with the Chair having the power to rule on which matters  fall into each category.  Assuming that interpretation of Article 11 for the purpose of displacing the GEF with the AFB is a matter of substance, consensus is likely to be required and may be difficult to achieve.  If achieved, however, consensus would reduce the likelihood of any subsequent challenge.

If the above hurdle can be surmounted, the steps needed to move the AFB from under the KP to under the UNFCCC would be complex and potentially time-consuming but they may be able to be taken in compliance with the KP and the UNFCCC without requiring amendment to either.  The steps would involve the COP and CMP each taking decisions in compliance with Articles 17(5) and 13(2) of the UNFCCC and KP respectively (regarding only parties to each instrument participating in decisions) with the effect that the AFB mutates from an organisation created pursuant to Article 12(8) of the KP into one drawing its authority from Article 11 of the UNFCCC.

The CMP would need to decide to revise prior decisions regarding the AFB and submit the AFB to the authority of the COP.  The AFB would need to revise its own structures pursuant to this in order to include non-KP parties on its board.  We understand that the draft rules of procedure for the CMP are the same as for the COP.  The change to the constitution and function of the AFB would be likely to be a matter of substance requiring consensus in the CMP.

The COP would need to decide:

(i) interpretation of Article 11 as above;

(ii) to appoint the AFB in place of the GEF in respect of financial mechanisms under the UNFCCC;

(iii) to commence the steps necessary to unravel previous arrangements, for example, MOUs and funding arrangements with the GEF which may have timing implications depending on their terms and level of co-operation by the GEF; and

(iv) to provide funding to and enter into arrangements with the AFB.

The above process gives the parties the opportunity to design into the AFB such level of influence and representation as is appropriate for countries that were hitherto unrepresented such as the US, which would not submit to the authority of the AFB without reform.  The process is complex due to the need to fit the steps required within the existing rules governing finance, COPs and CMPs.  The parties have far less room for manoeuvre than if they were to adopt a new protocol which could be used to create a new finance mechanism in similar fashion to the way the AFB was created pursuant to Article 12(8) of the KP.