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Lessons learnt and next steps in the negotiations presented

Benito MüllerEast and Southern African Regional Workshop

Hilton Hotel Nairobi 3 March 2010

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capacity

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for sustained capacity building in support of international climate change negotiations

pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

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The Issue of Distributive Justice and Thematic Balance

Distributive Justice

• Traditional ODA neither involves obligations to pay, not entitlements to receive. Hence, strictly speaking, there is no issue of contributing or receiving ‘a fair share’

• The nature of financial payments for climate change activities, particularly in the case of adaptation and response to climate impacts is one of restitution.

• Hence there are both obligations to pay and entitlements to receive, which implies that equity, in these sense of either shouldering a fair share of the payment burden, or receiving a fair share of the revenue is an issue.

• At present, the focus really has only been of the former (e.g. Mexican and Swiss proposals). Few have raised the issue of how to distribute climate finance equitably.

Thematic Balance

Climate change finance involves a number of different themes (mitigation, adaptation ,technology transfer, etc. ), and the issue of ‘thematic balance’ is whether each of these themes receives an appropriate share of the revenue.

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(a) Retained, Fragmented, Decentralized (b) Devolved, Consolidated, Decentralized (c) Retained, Consolidated, Centralized

International Consolidated Fund

Country A

Country B

Country C

InternationalSources

Recipient Country D

National (Consolidated) Fund

FundedActivities

Fragmented v. Consolidated

Centralized v. Decentralized

Devolved v. Retained

International Consolidated Fund

Country A

Country B

Country C

InternationalSources

Recipient Country D

FundedActivities

Recipient Country D

Country A

FundedActivities

InternationalSources

IFIs/IGOs/Funds

Country B

Country C

Three Fundamental Dichotomies

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700

0 500 1000 1500 2000 2500 3000

Funding approved annualy ($million)

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Multilateral Fund (0.19 people/$m)

Global Fund(0.21 people/$m)

0

1000

2000

3000

4000

5000

6000

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8000

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0 10 20 30 40 50

Funding approved annually ($billion)

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Expected Size(0.2 people/$m)

Centralized Decision Making: The Problem of Administrative Size

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Operating Entity

Administrative Services

RFM TrusteeThematic Assessment Units

(one per disbursement window)

Secretariat Services

Expert Advisory Panel(s)(as required)

Funded Activities

Domestic Level

International Level

Legend:

Governance Relation (‘under the authority of’) Contractual Relation (MOU or contract)

Designated Funding Entities

Executive Board

External Audit

Internal Audit

UNFCCC Conference of Parties (COP)

Direct Access

RFM Core: Consolidation and Decentralization through Devolution

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Funding versus Disbursement

Disbursements to Designated (National) Funding Entities

Funding is financing (incl. approval and evaluation) of activities such as projects, programmes)

Disbursements are dependent on the disbursement criteria for each theme, as well as the thematic allocations (both approved by the COP on recommendation by the EB). They do NOT rely on evaluations of projects, plans or strategies.

Disbursement Criteria

Disbursement criteria will vary from theme to theme. For example

• Mitigation disbursements could be on a performance basis, with an flat per country component: x million + y million for the MRV reduction in the previous period

• Adaptation disbursements should be carried out by a very simple disbursement formula, e.g. a flat per country component + a component proportional to the number of poor inhabitants.

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The bulk of the transactions in terms of size of the RFM is (ultimately) meant to be carried out through ‘money-in-money-out’ disbursements to designated (national) funding entities.

However, there will still be a need for international funding in the more traditional sense, such as currently developed under the Adaptation Fund.

• For one, not all funding purposes lend themselves naturally to be devolved to the country level. While mitigation and adaptation per se would seem to be prime candidates for such a devolution, funding decisions for certain types of capacity building and technology transfer activities may be better kept at the international level.

• Even with respect to the other themes, there will for some time to be the need to retain a more traditional international funding capacity, for it may take some time before all countries will be able to participate in the devolved disbursement regime.

RFM International Funding

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UNFCCC COP

Finance Board

The LCA Draft Decision

Climate Fund/Facility

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RFM Administration

Legend:

Governance Relation (‘under the authority of’) :

‘Contractual’ Relation (MOU or contract) :

Oversight and governance/contractual:

RFM Operating Entity

Disbursement/Certification :

International funding/Coordination:

UNFCCC COP

Funded Activities

Designated Funding Entity

Finance Board

Funded Activities Funded Activities

Operating Funding Entity I (Mitigation)

Operating Funding Entity 2 (Adaptation)

Coordination or Consolidation: Potential for Compromise?

Climate Fund/Facility

Administrative Services, incl. Thematic Assessment Units

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cbiThank you!