UNFCCC Tackles Finance Flows At COP22 Week 1

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The UNFCCC’s Standing Committee on Finance presented its second Biennial Assessment of climate finance flows* to COP22 on Monday afternoon, November 7. The finance flows assessment found that in 2013/14, an average of $41 billion per year in public finance was reported flowing from developed to developing countries. 75% went to mitigation and only 25% for adaptation, reflecting the priorities at the time. The Biennial Assessment measured global spending on climate change to be $714 billion a year in 2013/14. It increased 15% from 2011/12 — a positive direction. However, as the SCF indicates, annual investment in fossil fuel energy is $1.6 trillion, more than double the climate change amount.

World climate change finance flows 2013-2014 (unfccc.int)

An in-session workshop on Tuesday, November 8, considered modalities for accounting of public finance, with a view toward making a recommendation for consideration and adoption by CMA1. Standing Committee on Finance co-chairs Outi Honkatukia (Finland) and Rafael da Soler (Brazil) facilitated this event. Active participation of the wider climate finance community — multilateral development banks, development finance institutions, international organizations, think tanks, the private sector, academia, and civil society organizations — enriched the discussions. A technical paper summarizing information from the in-session workshop will be prepared for a UN meeting next May.

Delegates spent much of Wednesday discussing Donald Trump’s US election victory and its implications for both the Paris Agreement and American domestic policy. COP youth demonstrated notable frustration and outrage with the election result.

On Thursday, nations agreed to establish contact groups to work on these agenda sub-items:

  • Long-term climate finance at COP22
  • Report of the Standing Committee on Finance and review of the functions of the SCF
  • Report of the Green Climate Fund and guidance to the GCF
  • Report of the Rio-initiated Global Environment Facility and guidance to the GEF
  • A process to codify data provided in accordance with Paris Agreement Article 9.5 (developed country communication on providing financial resources to developing countries and mobilizing climate finance)

Honkatukia reported on the Biennial Assessment and overview of climate finance flows and the 2016 SCF Forum.

GCF Board Co-Chair Zaheer Fakir (South Africa) reported a balanced portfolio within the fund, with resources dedicated as follows:

  • Adaptation sector, 28%
  • Mitigation, 27%
  • Cross-cutting between mitigation and adaptation, 28%

Bolivia reminded of Paris Agreement decisions on developing guidance to the GCF to provide finance for alternative policy approaches, and lamented that the GCF postponed considering this issue to its next board meeting. Nicaragua invited the GCF to reassess the membership of private banks to avoid “some embarrassing entries” and, with India, highlighted insufficient funding of the GCF. The contact group will follow up.

Chizuru Aoki of the GEF reported its contributions. Among them:

  • Support to INDC preparation
  • Allocation of $554 million to 59 mitigation projects
  • $189 million for 85 capacity-building projects

India expressed regret at the downward trend in allocation of resources. The contact group will follow up.

Finally, on Friday, the long-term climate finance contact group, co-chaired by Georg Børsting (Norway) and Andrés Mogro (Ecuador), began identifying elements for a draft long-term finance decision. The components included:

  • How to avoid a finance gap
  • Access to and delivery of finance
  • SCF recommendations and work on loss and damage
  • Adaptation finance

The group then focused on the upcoming 2017 workshop on long-term climate finance. Members commented on the workshop’s scope. The Philippines, for the G-77/China group, called for the next meeting to:

  • Be informed by the High-Level Ministerial Dialogue on Climate Finance
  • Increase clarity on how to scale up climate finance
  • With the Independent Association of Latin America and the Caribbean, consider how to advance adaptation finance

The European Union said the workshop should help understanding the “apparent gaps” in clarity. Canada noted submissions on strategies and approaches that can increase clarity. Australia made reference to the October climate finance “Roadmap to US$100 Billion.”

Projected finance levels in 2020 (nrdc.org)

Egypt, for the African Group, suggested reflecting Decision 1/CP.21 paragraphs 53 (on the existing collective mobilization goal) and 55 (information in parties’ communication on providing financial resources to developing countries and mobilizing climate finance). Switzerland opposed. The co-chairs will collect submissions to structure further discussions.

Delphine Eyraud of France chaired the Report of the SCF and review of the functions of the SCF. At this session, parties commented on the draft decision. Many welcomed the report, though some urged inclusion of nonmarket approaches. The group acknowledged a useful forum on loss and damage that engaged with the private sector, and it recognized the SCF’s achievements in building linkages with other bodies (such as the Technology Mechanism).

One subgroup felt the SCF would benefit from engaging with the United Nations Conference on Trade and Development and the private sector in developing countries. Another called for clear timelines and outputs from this session on how to advance adaptation in developing countries.

Green Climate Fund contact group co-chair Richard Muyungi of Tanzania called for initial reactions to the draft decision text. Many welcomed the SCF’s report and draft guidance.

The Philippines, for the G-77/China, stressed the need to ensure that the GCF continues to serve all developing countries. Egypt, for the African Group, suggested highlighting that the GCF is “an institution to stay.” The Like Minded Group of Developing Countries sought ways to help the GCF Board with transforming the pledges made by countries into finalized support.

Maldives, for Alliance of Small Island States, and South Africa felt that accreditation remains too complex. The US and New Zealand highlighted the important role of the private sector in ensuring that the fund functions. Nicaragua said that private sector investments in general could be best directed toward renewable energy, energy efficiency, reforestation, and avoidance of deforestation. Co-Chair Muyungi invited written submissions on the draft decision text to structure further discussions.

GEF contact group Co-Chair Stefan Schwager (Switzerland) introduced the items to be considered (FCCC/CP/2016/6 and Add.1 and 2, FCCC/CP/2016/8 and FCCC/CP/2016/INF.1) and invited written submissions on the draft decision text to structure further discussions.

For the G-77/China, the Philippines underscored the need for coherence of financing and “enhanced support to enable enhanced actions.” Canada suggested focusing on areas of congruence and on increased effectiveness. Discussions will continue.

Friday afternoon also marked the first of two facilitative dialogues on Enhancing Ambition and Support: Assessing Progress in Implementing Paragraphs 3 and 4 of Decision 1/CP.19. The second will be held during week 2 of the conference.

Important financial considerations will also be discussed next week at the High Level Ministerial Dialogue on Climate Finance on Wednesday, November 16.

*Descriptions of the initial report and other developments during COP22 come primarily from the IISD Reporting Services Coverage of UNFCCC COP22, Earth Negotiations Bulletin, the World Resources Institute, and other online sources.

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