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They emphaised again the major problems with the Global Environment Facility (GEF) including mandatory co-financing, lack of direct access to financing and the lack of predictability of financing for implementation of adaptation actions.
The Subsidiary Body for Implementation (SBI) under the United Nations Framework Convention on Climate Change (UNFCCC) met on Tuesday in two plenary sessions. SBI is one of the subsidiary bodies under UNFCCC, the other being Subsidiary Body for Scientific and Technological Advice (SBSTA). It addressed a series of agenda items, including the report of and the guidance to the Global Environment Facility (GEF), which allocates funding and support to developing countries for mitigation and adaptation activities. The GEF is the operating entity of the financial mechanism of the UNFCCC with the World Bank as the trustee. The GEF implementing agencies are the World Bank, UNDO and UNEP. Negotiations on the 5th replenishment of funds for the GEF are ongoing and expected to conclude in early 2010.
A review of the UNFCCC financial mechanism is being considered by the Conference of the Parties.
The CEO and Chair of the GEF Monique Barbut reported that it is making progress and evolving. It is making reforms. The GEF said it is responding to guidance by (UNFCCC) Parties. For example, in response to guidance it had adopted a strategy/program at the 14th Conference of the Parties (COP) under the UNFCCC, it had expanded support for technological improvement activities, and that its top-priority has been financing the full cost for developing countries to comply with Article 2 of the UNFCCC, (which states that the ultimate objective of the Convention is to achieve ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system'). Further, she said that in response to a request at COP 12 the GEF has sped up funding for LDCs and proposes direct access to the GEF for national communications.
She said that in the past the GEF was seen at too bureaucratic. It has made reforms. The average preparation time of projects is 12 months, down from 24 months, and it can further improve.
She also said that the GEF seeks a long term picture of financing, and that a strong replenishment of funds is needed. The GEF proposes to link the replenishment with increasing monitoring, reviewing and verifying of projects.
Sudan on behalf of the G77 and China said that the review of the GEF is closely linked to the process in the Ad-hoc Working Group on Long-Term Cooperative Action (AWG-LCA). It said the Group will ensure that no decision will undermine or prejudge the decisions in the AWG-LCA. This is the 4th review of the financial mechanism under the UNFCCC and it emphasised the words ‘financial mechanism' as Parties are not just looking at the GEF, but assessing more broadly what should be the framework for a financial mechanism. Parties are looking to see if financial provisions, technology and capacity building have been adequately provided to developing countries. It stated that the Group will look at this issue in a comprehensive manner.
The Group also stated that they appreciate the reform program for the GEF, but noted that it has come 15 years after the implementation of the Convention. During this time a number of issues have arisen; importantly, that of co-financing, which punishes the poorest of the poor. If I need some money and I ask for a loan, co-financing says I will give you the money if I can find someone who will give me three times this. But I go to the GEF for help because I do not have any money. So the poorest can get no financing at all. So then the World Bank offers us loans from the global financing facility. This is a very serious concern for us. Has anything been done about that?
Another issue, it explained, is the predictability of financing. It explained that developing countries are dependent on how much replenishment of funds there will be. However, conditions are placed on funds before pledges are even made. For example, mitigation is given priority in GEF funding over adaptation. $233m was allocated for mitigation to leverage $2.07 billion in co-financing. This also illustrates the scale of the co-financing. So you have to get loans before you can get the GEF money.
The Group also highlighted that adaptation is urgent, yet urgency is not part of the picture in the report. It said that good governance is essential for meeting commitments and ensuring predictability and should include recipient country participation.
Lesotho of behalf of the Least Developed Countries (LDCs) stated that the report of the GEF points out that the GEF is very much alive despite the LDCs' disappointment with the work program and work on national adaptation programmes of action (NAPAs). It explained that Decision 5, of COP 14 stipulated that the GEF should implement the full work program, not just LDCs' work with NAPAs but their work with other areas.
Lesotho stated that almost all LDCs have completed NAPAs, but it is concerned that there is not sufficient financing for full implementation of NAPAs. It said that it appreciates improved access to implementation, but said that the waiting for implementation is still long. It declared that co-financing is inappropriate for NAPAs. It said that changes in climate and climate change science means that they will need to update their NAPAs.
China noted that review of the financial mechanism is not the same as reviewing the operating entity of the mechanism. It said that the big problem is the lack of funds from developed countries. Developed countries have not met their financial obligations under the Convention. It strongly requested developed countries to increase funding. It said it supports the GEF efforts to improve. The GEF needs further reforms to improve it capacity to operate as an operating entity of the financial mechanism under the Convention.
Algeria on behalf of the African Group said that although the reforms of the GEF are encouraging, they are still inadequate and need to be further strengthened. Work needs to be done on addressing urgent priorities and the functioning (of the GEF) is still complex. It said that the GEF should help people to better understand its functions and roles. The resources for financing are inadequate and GEF alone cannot meet all the needs of developing countries. It only partially meets the needs.
Antigua and Barbuda noted that the ratio of loans to GEF financing is 3 to 1. It said that LDCs have been bearing the brunt of the loans. This is not the intent of the Convention. It said that the World Bank is not the best basis for environment projects. Yet it is used by countries as they do not have co-financing. The UNEP is better positioned to do these projects, but do not provide the loans. So the co-financing gives negative incentives for countries to get financing from the GEF. It stated that the GEF reforms have taken care of the easier issues. The issues it needs to address are co-financing, direct access to financing and predictability that are key.
Sweden on behalf of the European Union said it reaffirms the GEF as an operating entity of the financial mechanism of the UNFCCC and reaffirms support for reform of its work. Reform could help it play its role in the Convention. It said that Parties need to find the optimal role of the GEF in the financing architecture.
Switzerland on behalf of the Environmental Integrity Group said that the need for greater funding is apparent in the report. The GEF funding alone is not sufficient to meet the needs of developing countries, hence the financing discussions under the AGW-LCA. It reiterated support for GEF as the catalyst for action on financing. It will support the 5th replenishment of funds.
Mali said that the implementation of NAPA projects for them is a priority. These action programs have been in existence since 2001, yet only 12 out of 48 have been implemented so far, so where is the urgency? It said that the need for co-financing is a very serious obstacle to the projects.
Gambia said that most LDCs have completed NAPAs, but the funding available for implementation is insufficient.
Uganda said voluntary contribution to funds should be reviewed. It should be made compulsory and should include timelines.
The SBI discussed various other implementation issues, such as technology transfer, capacity building, national communications from Annex I Parties, the Consultative Group of Experts for National Communications from non-Annex I Parties, and some other issues.
The Chair of the SBI established a Joint Contact Group between the SBI and SBSTA on the issue of technology transfer. She also proposed a contact group on Article 4, paragraph 8 of the Convention which addresses actions related to funding, insurance and the transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change and/or the impact of the implementation of response measures.
A number of issues were delayed for discussion until the COP16. Some Parties, notably from developed countries such as Switzerland, had wanted to delay discussions of some issues saying that, "the shape and commitments under certain issues would look different depending on what is happening at the AWG-LCA". Delaying decisions at the SBI has been happening in the past two years as developed countries refuse to move forward on many important implementing issues such as technology transfer, capacity building and finance.
TWN Update No. 6
Copenhagen News Update
9 December 2009
Published by the Third World Network
www.twnside.org.sg
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