The Adaptation Fund at COP30: A credibility test for the new climate finance target

Der Anpassungfonds ist ein zentraler Baustein für gerechte Klimafinanzierung. Photo: J. Englart, via Flickr, CC BY-SA 2.0

For years, the Adaptation Fund (AF) has been regarded as one of the key instruments for supporting the countries most affected by the climate crisis. The fund is valued equally by countries in the Global South and North, as well as by international civil society. Above all, it has set standards and strengthened the ownership of many countries by giving national institutions direct access to its resources.

Despite its undisputed strengths, the fund is now under considerable pressure. Over the past two years, developed countries have clearly failed to meet their own targets for raising funds. As a result, the AF lacks the financial reliability it needs to expand its important role in the international climate finance framework.

Lack of a replenishment mechanism – a structural weakness of the Fund

Unlike other multilateral funds, the AF does not have a regulated replenishment mechanism. Instead, its financing depends on annual mobilisation rounds, primarily in the context of the international climate conferences. The Paris Agreement does provide for additional revenue for the AF via its market mechanism established in Article 6: a mandatory share of 5% of the proceeds from Article 6.4 and possible voluntary contributions under Article 6.2 are to flow into the fund in future. However, these funds are not expected until the end of 2026 at the earliest – and even then they remain uncertain due to market volatility, fluctuations in demand and external shocks. They are therefore not suitable for reliable, long-term planning and can only supplement the funding provided by contributing countries.

Minimum target for 2025 – too little for a real scaling up

In order to ensure its ability to act, at least in the short term, the AF has set a lower limit of 300 million US dollars for its fund mobilisation in 2025. This figure is the result of a political compromise – sufficient to keep the fund alive, but far from what would be needed for real scaling up. This would require funds on a completely different scale – many times the amount currently being targeted. One thing is clear: without ambitious, multi-year and reliable commitments, especially from developed countries, the fund will remain structurally limited.

Germany and the EU have a particular responsibility here. Not only must they ensure that the minimum target is achieved, but they must also pave the way for increasing contributions, especially as long as payments from Article 6.4 revenues cannot be reliably planned. This is the only way to meet the new collective quantitative goal for climate finance (NCQG), which calls for at least a tripling of UNFCCC fund outflows by 2030 and forthe share of climate finance channeled through multilateral climate fund to increase significantly. Ambitious mobilisation of funds for the AF at COP30 in Belém is therefore more than just a financing detail – it is a crucial credibility test for the entire NCQG.

Governance issues – transition and board composition

In addition to financing, the final transfer of the fund from the Kyoto Protocol to the Paris Agreement is also on the agenda in Belém. This is a step on which there is broad agreement. However, the composition of the AF decision-making body (Board) remains a controversial discussion point in the negotiations. Until now, developing countries hold the majority on the AF Board – a key element that distinguishes the AF from other funds and contributes significantly to its high level of acceptance.

Many developing countries are now concerned that renegotiating the composition of the Board could jeopardise their majority. This uncertainty has so far blocked progress on the full transfer of the fund to the Paris Climate Agreement. One thing is clear: undermining this majority would cause lasting damage to the credibility of and trust in the fund.

What needs to happen in Belém

In order for the AF to continue to play a key role in adaptation financing in the future, three points must be achieved at COP30 in Belém:

• Reliable financing: Developed countries must fully meet the minimum target of USD 300 million for 2025 and commit to increasing multi-year contributions.
• Clear signal for the NCQG: The AF must be strengthened as a central instrument for implementing the new climate finance target – for example, through an explicit commitment in high-level statements, political backing from key players and the pledge of additional long-term funding.
• Preservation of the governance structure: The majority of developing countries on the AF Board must not be called into question.

However, it is far from certain that COP30 in Belém will create these conditions. If the commitments made by developed countries fall short of expectations or if the governance issue is not resolved, the AF risks remaining structurally weakened. This would jeopardise not only its own future, but also the credibility of the new global climate finance target.

Julia Grimm, Germanwatch