International climate finance / 100 billion

COP22 in Marrakesh: Some commitments, but no fundamental change in funding for adaptation

German Environment Minister Barbara Hendricks pledged another 50 million Euro for the Adaptation Fund. Photo © Jan Kowalzig, Oxfam

As in previous years, climate finance was one of the most controversial issues at this year’s climate conference COP22 in Marrakech – one that has been hotly debated since the Copenhagen conference in 2009, when the industrialized countries pledged to raise the assistance to developing countries to $100 billion annually by 2020. This was intended to help them both with reducing their emissions and adapting to climate change.

Donor countries consider themselves all set with the $100 billion roadmap

Rather than promising a rapid, significant increase of the Copenhagen pledge, it was decided in Paris to extend the $100 billion pledge to the year 2025 and otherwise reduced pressure on industrialized countries to provide adequate long-term finance to developing countries, by inviting all parties to the agreement to contribute to climate finance. The COP22 in Marrakech was thus a litmus test of how seriously the industrialized countries would take their financial obligations after the Paris Agreement entered into force, particularly with regard to providing adaptation finance, the eternal stepchild of climate finance. The answer was clear: apparently not very.

Donor countries did in fact finally publish their a $100 billion roadmap shortly before Marrakech, according to which its public climate funds for developing countries are slated to grow to $67 billion annually. The remaining gap to the target level should be closed by leveraging private funds. Developing countries and international civil society have been calling for such a roadmap for years. However, the optimistic accounting used by donor countries drew widespread criticism, which is why the COP22 decision on long-term financing is indirectly welcomed the roadmap, but rejects the industrialized countries’ attempt to apply the OECD accounting method to reporting the financial support they provide under the Paris Agreement. Precisely this reporting is part of the current negotiations in one of the subsidiary bodies of the UNFCCC. But more than a half-hearted exchange did not happen yet and it will be taken up in the negotiations in Bonn in May.

Funding for adaptation: Open questions from Paris are not solved in Marrakesh

For an “African COP”, as it had been grandiosely touted by the Moroccan presidency, the industrialized countries’ announcement that funding for adaptation would double to around $20 billion by 2020 merely highlighted its inadequacy. This would correspond to one fifth of the $100 billion promise being provided as public funding for adaptation to climate change in 2020. When the Paris Agreement stipulated a “balance” between mitigation and adaptation finance, the developing countries were thinking more along the lines of 50:50 than 80:20.

This is a further reason for why the Green Climate Fund (GCF) commitment to allocate than half of its $10 billion in pledges for adaptation measures is exemplary.

Instead of the (not binding) doubling to $20 billion annually for measures to adapt to the impacts to climate change, developing countries demanded at least a quadrupling of adaptation finance. But in vain: The final decision on climate finance only contains warm words and a repetition of older decisions.

Pledges for then Adaptation Fund

While some new financial pledges for adaptation were made in Marrakech, they were only in the tens of millions, not billions. Germany’s willingness to pledge €50 million to the Adaptation Fund, which is constantly struggling for financial survival, is certainly laudable. However, this does not change the overall picture and the shortcomings in the support for adaptation in developing countries. The fact that the Adaptation Fund has to appear, hat in hand, at the COP, year after year, is symptomatic. It is precisely this fund which has distinguished itself with innovations in support of concrete climate adaptation projects, such as direct access to finance for national institutions from developing countries. With around $81 million pledged by Germany and other EU countries in Marrakech, the fund’s resource gap is closed for the time being – if only until the next COP?

Ultimately, it would be preferable to draw up a long-term financing strategy for the Adaptation Fund. It was originally meant to be funded by a levy on Clean Development Mechanism (CDM) emission reduction certificates. This source has almost completely dried up, therefore it comes as no surprise that developing countries want to see the Adaptation Fund under the umbrella of the new Paris Agreement to ensure its long-term existence. This is linked to the idea to fund the Adaptation Fund via the Sustainable Development Mechanism (SDM) from Article 6 of the Paris Agreement. Not unlike the CDM, the SDM allows countries to offset some of their own emissions reduction targets by supporting climate change mitigation in other countries. The operationalization of the SDM is only at the beginning, but it is already agreed that a small transaction fee has to be paid – which could go to the Adaptation Fund.

Green Climate Fund: Asking for more direct access

Another COP focus from the Southern perspective was access to financial resources from the Green Climate Fund (GCF) and other funds. Africa does have several national and regional organizations (from Morocco, Senegal, Kenya, Togo, Nigeria and Ethiopia) that are accredited by the GCF and can access and implement funds directly. However, a large part of the funds continue to be deployed by multilateral development banks such as the European Bank for Reconstruction and Development (EBRD) that also finances fossil fuel exploration and investment projects. The fiduciary and transparency standards that numerous national agencies and organization do not (yet) meet represent some of the greatest obstacles for access. More capacity building as well as a prioritization of national implementing entities via the GCF accreditation process is thus urgently needed.

There is another reason for the attention the GCF got: Some $2.5 billion of that amount still outstanding from the promised contribution to the fund by the United States are now in doubt after the elections and the upcoming presidency of Trump.

Lili Fuhr & Liane Schalatek, Heinrich-Böll-Foundation
with additions of Jan Kowalzig, Oxfam
This text was originally published as part of a longer article on COP22 on: