The 2009 Copenhagen Accord made a concrete, dollar pledge to vulnerable countries feeling the impacts of climate change first and worst. Richer nations agreed to give developing countries US$30 billion in 'fast-start' finance to tackle climate change between 2010 and 2012, scaling up to US$100 billion a year by 2020. The funding was to be 'balanced' between mitigation activities that reduce emissions, and adaptation to cope with impacts already underway – a principle reiterated in the Cancun Agreements the next year. Fast-start adaptation finance, in particular, is crucial for the poorest countries to deal with unpredictable disruptions they have done almost nothing to cause.

Since Cancun, donor countries have made little progress toward their overall fast-start adaptation target. At only between 19–25% of total fast-start finance, adaptation funding is still far from balanced with mitigation, and it lacks transparency.

Current adaptation finance also fails to fulfil broader expectations dating back to the original 1992 UN Framework Convention on Climate Change (UNFCCC) that these funds should be adequate to address vulnerable countries' urgent needs. Here we review progress and shortfalls on these and related promises, and propose three ways the 2011 UN climate negotiations in Durban could establish more adequate support for adaptation.

Promise 1: Adequate finance

Parties have agreed to take 'precautionary' and 'adequate' measures to anticipate climate change, prevent or minimise its causes and reduce its adverse effects. This means taking action even amid scientific uncertainty. Although the funding pledges in Copenhagen are a step towards a precautionary approach, they fall well below even highly conservative estimates of what is needed to prevent harm in vulnerable communities.1

The types and sources of funds are also an issue. It is not clear what proportion of adaptation funding will be pure grants, loans with concessionary terms, or purely market-rate loans. Vulnerable countries are not able to repay loans for adaptation, nor should they have to. Copenhagen's language also invokes 'a wide variety of sources, public and private.' In spite of repeated complaints about this mixing of two very different types of finance, the Cancun Agreements offer no more clarity on what proportion of funding should be raised publicly. Adequate funding is all but impossible under these vague terms.

In addition, the Cancun texts promise 'predictable' funds, which is essential for developing countries to budget and plan for adaptation responsibly. But predictability has not increased since Copenhagen, as wealthy governments have not mustered the will, political support or taxes to raise climate finance.

Adaptation funding is still not balanced with mitigation, and it lacks transparency

'Scaled up' is another phrase that has not been adequately addressed. After years of watching wealthy nations put token voluntary contributions into UN climate funds (see Table 1), developing nations pushed for meaningful, scaled-up funding at Copenhagen. 'Scale-up' is also coming to stand for the period from 2012, when fast-start finance ends, to 2020, when annual pledges are ten times larger. There is no language in either the Copenhagen or Cancun texts discussing a plan for these crucial years.

Finally, Copenhagen and Cancun also promise 'new and additional' funding. These much-debated words suggest climate finance will be over and above conventional development aid known as Official Development Assistance (ODA) – but their meaning in practice has been ambiguous. Many countries offer no explanation of their baseline. If developed countries are allowed to recycle their ODA towards climate finance, or rename past pledges as commitments to fast-start finance,2 they undermine the credibility of global promises and damage trust in the political process.

Promise 2: Fair burden sharing

Most donor countries have similarly failed to justify the way they divide the burden of confronting climate change. The convention says that parties should protect the climate system 'on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.' But when it comes to climate finance, wealthy countries have not embraced this principle for either adaptation or mitigation.

A recent study found that only two of ten contributors that reported their fast-start finance activities to the UNFCCC indicated how they calculated their fair share of funding.3 Developing countries need this transparency to predict future funds and to hold donors to account.

Promise 3: Balanced funding

The Copenhagen Accord and Cancun Agreements promised balanced allocation between adaptation and mitigation. Fast-start donors have pledged between US$4.8 billion and US$6.3 billion to adaptation, 19–25% of total climate finance4 (see Table 1) – only a minor improvement on the 11–15% pledged a year ago.5

Even some basic commitments to adaptation have not been fulfilled. For example, of the US$2 billion required to fund National Adaptation Programmes of Action (NAPAs) for the least developed countries (LDCs), donors had contributed a mere US$415 million.6

Promise 4: Needs-based targeting

Adaptation funds should go first to those most vulnerable to climate impacts, as promised in several recent agreements, including Cancun. Vulnerable groups are not only geographically exposed to physical threats such as sea level rise, drought or disease, but are especially susceptible to harm because of poverty and powerlessness. The Cancun Agreements identify LDCs, Small Island Developing States and African countries as the 'most vulnerable' developing countries, but give no further guidance on assessing vulnerability and distributing adaptation funds appropriately.

More explicit criteria are needed to answer the many questions facing funding agencies and contributor countries. Should donors contribute to individual projects, or national programmes? Should vulnerability be assessed locally, regionally or nationally? What time frame should funds be targeted to?

Promise 5: Transparent, recipient-driven governance

Despite pledges of transparency in Bali, climate finance has been poorly reported and impossible to track and verify. Climate finance is highly fragmented, with dozens of donors, including governments, multilateral agencies, private foundations and civil society organisations. With so many funding channels and very little information, it is difficult for both donors and recipients to assess where money is going. Developing countries are left not knowing how much support to expect, when and for what.

The Cancun Agreements also promised to channel adaptation and mitigation funds through 'a governance structure providing for equal representation of developed and developing countries' – a response to developing countries' united demand for climate finance to be administered by the UNFCCC, where they can articulate needs and guide the response. UNFCCC parties have established the Adaptation Fund to facilitate participatory, recipient-driven approaches, and are working towards a similar structure in the Green Climate Fund. Developing countries have pushed to gain majority representation on the boards that oversee these funds.

These moves are part of a larger agenda to avoid donor micromanagement and establish more democratic mechanisms in which recipient countries make decisions about the use of funds. Greater control by recipients also streamlines access to funds, whereas traditional donor funding has been slow to reach those in need.

But UNFCCC-controlled funds have received only one per cent of fast-start climate finance. Questions of how much money could or should flow through the Green Climate Fund have yet to be answered. Adaptation funding structures based on just principles will be largely hollow victories if they continue to control only tiny amounts of funds.

Meeting the promises in Durban

There are three essential steps Durban delegates should take toward robust, effective adaptation funding that fulfils past promises.

First, the normal source of development assistance – national treasuries raising tax revenues – seems unlikely to provide adequate and predictable funding. To fund the scale-up period and beyond, Durban negotiators should work out a series of financing mechanisms that are international, constant and substantial in size. A truly adequate amount to green the global economy and buffer societies from climate impacts would be far above US$100 billion a year – and the scientific uncertainties around the exact figure do not obviate responsible action.

A small levy on international airline travel, bunker transport fuel or international financial transactions, for example, would go far to close the adaptation finance gap. If revenues were channelled into UN funds already celebrated for their just and participatory practices, such as the Adaptation Fund and the Green Climate Fund, these funds would change from mere symbolic victories into vital sources of support for developing countries. Such a levy should prioritise providing a predictable, grant-based revenue stream to finance adaptation activities, which has thus far been largely missing.

Second, climate finance negotiations have a blind spot: the scale-up period from 2013 to 2019. In this period – after the fast-start years but before the US$100 billion-per-year pledge for 2020 – developed nations need defined targets for each year and mechanisms to keep the expansion of funding on track. Only then will they develop systems capable of generating the amounts committed by 2020. Without annual targets regularly met, cynicism will replace any goodwill created with the Copenhagen and Cancun pledges.

Third, notwithstanding the creation of UNFCCC-led funds, most money in the next few years will likely flow bilaterally or through multilateral channels not governed by the convention. This makes transparency and central accounting even more crucial. Durban negotiators should create a central accounting framework and registry, perhaps under the UNFCCC's Standing Committee; provide a global definition of 'new and additional' adaptation finance; and agree to standardize a format for more precise project-level reporting of financial flows.

The future of two decades of climate diplomacy is on the line in Durban. It is pivotal that any agreement going forward specify and deliver on fair and effective funding, as was promised in Copenhagen and Cancun. The funding must be adequate and predictable, and be delivered justly and transparently. Poor and vulnerable nations should be the first to receive funds, and should have a say in fund governance. The final year of fast-start climate finance is upon us, and developed countries must make decisions individually and jointly in Durban to fulfil their promises.

Notes

  • 1 United Nations Development Programme. 2007. Human Development Report 2007/2008: Fighting Climate Change: Human Solidarity in a Divided World. UNDP, New York.
  • 2 Adam, D. 2010. Where's the Money? The status of climate finance post-Copenhagen. Climate Finance Policy Brief No. 1. Overseas Development Institute, London.
  • 3 Ciplet, D. et al. 2011. Scoring Fast-start climate finance: leaders and laggards in transparency. IIED Briefing. IIED, London.
  • 4 The lower end of this range represents the actual adaptation pledges reported by donor countries. To obtain the higher end, we added two estimates of adaptation funds not yet reported. First, some donors have reported total fast-start finance up to 2012 but adaptation funding only up to 2010; we used the proportion each country designated for adaptation compared with their total committed in 2010 to estimate amounts for 2011–2012. Second, some donor countries have reported total fast-start finance but not the portion designated for adaptation; we used the estimated high-range average proportion of adaptation funding from reporting countries, and applied this average to countries that did not report their adaptation portion. For complete data used in calculating this range, see the more comprehensive table in the online version of this briefing.
  • 5 Ciplet, D. et al. 2010. Fast-start adaptation funding: keeping promises from Copenhagen. IIED Briefing. IIED, London.
  • 6 Least Developed Countries Fund, see www.thegef.org/gef/LDCF.